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Our reporter Chen Maoli reports from Beijing

"Whether in terms of the amount of subsidies or the scope of subsidies, the strength of the 'old for new' car program this time is greater than ever before. This is enough to show that under the current economic situation, the relevant government departments are determined to boost the economy and expand consumption. It is expected that car sales will rise in the short term."

Yang Jigang, a researcher on the "New Four Modernizations of Automobiles" industry and partner of Zhixing Taolue, pointed this out when he was interviewed by a reporter from China Business News about the subsidy policy for "old for new" automobiles.

In order to stabilize and expand automobile consumption, the Ministry of Commerce and seven other departments recently issued the "Notice on Further Improving the Work Related to Automobile Trade-in" (hereinafter referred to as the "Notice").

The Notice states: "For individual consumers who scrap fuel passenger cars with National III emission standards or below or new energy passenger cars registered before April 30, 2018 between April 24, 2024 (including that day, the same below) and December 31, 2024, and purchase new energy passenger cars or fuel passenger cars with a displacement of 2.0 liters or less that are included in the "Catalogue of New Energy Vehicle Models for Vehicle Purchase Tax Reduction and Exemption" of the Ministry of Industry and Information Technology, the subsidy standard will be adjusted."

The new subsidy standards are as follows: For those who scrap the above two types of old cars and purchase new energy passenger cars, a subsidy of 20,000 yuan will be provided; for those who scrap fuel passenger cars with national emission standards of III or below and purchase fuel passenger cars with a displacement of 2.0 liters or less, a subsidy of 15,000 yuan will be provided.

"New energy passenger vehicles before April 30, 2018 are eligible for scrapping subsidies, which is a rare benefit for early new energy vehicle owners. Most of the early new energy pure electric products launched in China were 'oil-to-electric' products, and the battery life was generally within 300 kilometers. In terms of battery efficiency, they were not as good as the pure electric vehicles launched after 2019." Yang Jigang said.

Regarding the current car "old for new" subsidy policy, most industry insiders believe that it can effectively drive growth in car sales.

Cui Dongshu, secretary general of the China Passenger Car Association, said in an analysis: "It should be able to effectively drive the strong growth of about 2 million scrapped vehicles in the auto market this year, and it will also help drive more than 100 billion yuan of incremental renewal consumption. By releasing the demand for renewal in the auto market, it will improve the severe situation of excessive price wars in the auto market, which is a great benefit to manufacturers and dealers."

Cui Dongshu further pointed out: "Scrapping and renewal brings new growth, which can improve dealers' sales and profitability. Only when the dealer system is stable can the circulation of cars be stable, and consumers can enjoy better all-round services."

Data from the China Association of Automobile Manufacturers showed that from January to July this year, passenger car sales were 13.974 million units, with a slowing growth rate and a slight increase of 4.5% year-on-year; in July, domestic sales of passenger cars were 1.595 million units, a year-on-year decrease of 10.1%.

"In the context of an overall slowdown in growth, boosting consumption through subsidies such as targeted scrapping and renewal can stimulate market vitality to a certain extent. From another perspective, for an ultra-large market with an annual production and sales volume of over 30 million vehicles and a car ownership of 336 million vehicles (Ministry of Public Security data as of the end of 2023), automobiles are still an important tool for expanding domestic demand and boosting consumption," Yang Jigang pointed out.

It is worth mentioning that all eligible subsidy applications (including applications for which subsidy payment has been completed) submitted between April 24, 2024 and January 10, 2025 will be subsidized according to the standards specified in this Notice. Among them, for subsidy applications that have been paid according to previous standards, local governments will make up the difference according to the standards specified in this Notice.

The owner of the scrapped car and the owner of the newly purchased car who apply for the subsidy should be the same individual consumer. The scrapped fuel passenger car with National III or lower emission standards or the new energy passenger car registered before April 30, 2018 should be registered in the name of the applicant before July 25, 2024 in accordance with the requirements of the "Notice on Several Measures to Further Support Large-Scale Equipment Renewal and Consumer Goods Trade-in" issued by the National Development and Reform Commission and the Ministry of Finance; from the date of issuance of this notice, during the subsidy application review period, the newly purchased car should be registered in the name of the applicant.

Cui Dongshu suggested: "Scrapping and renewal is a complete chain that requires the efforts of all parties to achieve. In particular, dealers need to work hard to promote consumers' scrapping and renewal. It is necessary to effectively contact those old car owners, many of whom have been out of the normal warranty system. Therefore, the vehicle management department and other departments need to promote the effective transmission of relevant information, so that owners of scrapped cars can know their rights and interests and favorable policy details in a timely manner, and realize better promotion of scrapping and renewal."

(Editor: Zhang Shuo, Reviewer: Tong Haihua, Proofreader: Yan Jingning)