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With higher subsidy amounts and faster processing procedures, the new round of car trade-in policies allows "real money" benefits to reach consumers directly, and the domestic demand potential of the automobile industry is being released at an accelerated pace.

Recently, the Ministry of Commerce and seven other departments officially issued the "Notice on Further Improving the Car Trade-in Program", and a new round of car trade-in programs was officially launched. Efforts will be intensified to promote car trade-in programs from the aspects of raising subsidy standards, expanding subsidy scope, and increasing financial support.

The new policy has had an immediate effect in stimulating the automobile consumer market.

Recently, a Securities Times reporter visited several offline car stores in Shanghai and found that the new policy has increased the number of customers inquiring in stores. At the same time, some car companies have formulated corresponding tax reduction and exemption promotions to seize the market opportunities for car replacement and renewal.

Industry insiders interviewed believe that the new round of car trade-in policy will provide strong support to the auto market in the second half of the year, and the growth rate of the new energy vehicle market may further increase.

Subsidy standard doubled

Compared with the first round of old-for-new details released in April, the most eye-catching clause in the new round of details is the "subsidy standard has been significantly increased."

On August 16, the Ministry of Commerce and seven other departments issued the "Notice on Further Improving the Work of Auto Trade-in" (hereinafter referred to as the "Notice"). The "Notice" mentioned that for individual consumers who meet the regulations and scrap their old cars and buy new cars, the subsidy standard will be increased from 10,000 yuan for purchasing new energy passenger cars and 7,000 yuan for purchasing fuel passenger cars to 20,000 yuan and 15,000 yuan respectively.

Key policy information points (Source: Chinese government website)

"The automobile industry is an important engine for the high-quality development of my country's economy. Replacement subsidies can make people more willing to consume. This policy is expected to greatly promote automobile replacement consumption." Lin Shi, secretary-general of the Intelligent Connected Vehicle Branch of the China-Europe Association, said in an interview with a Securities Times reporter that the release of the new rules is very timely. Since car companies are generally engaged in price wars, old-for-new policies can further reduce the costs of car companies through subsidies, which is a great benefit to the automobile industry.

Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Conference, said that with the changes in the development stage of automobile consumer goods, the demand for the replacement of passenger car stocks has continued to increase. In recent years, my country's automobile consumer market has generally entered the "era of both increase and stock" from the "incremental era". Recently, the country has led the changes in consumer demand and implemented the scrapping and replacement of automobiles, which is conducive to accelerating the transformation of the consumer market from "whether there is one" to "how good it is".

In addition, the latest subsidy policy also benefits some car owners who have already scrapped their vehicles. The Notice requires that all eligible subsidy applications submitted between April 24 this year and January 10 next year can be subsidized according to the standards specified this time. For subsidy applications that have been issued according to the previous standards, the difference can be made up according to the latest standards.

In addition to scrapping and updating, replacement and updating are also included in the subsidy scope. The National Development and Reform Commission will arrange ultra-long-term special treasury bond funds to support local governments in improving the ability to replace old consumer goods with new ones, and promote the scrapping and updating of automobiles and the replacement and updating of passenger cars for individual consumers.

"The new round of detailed rules are more humane, and also plugged some loopholes in the early implementation." A self-owned brand dealer in Shanghai told reporters that according to the detailed rules, the owner of the scrapped car and the owner of the newly purchased car who apply for subsidies should be the same consumer, and the old motor vehicle that enjoys the subsidy must be in the name of the new owner before July 25. In other words, the act of "cheating subsidies" by temporarily transferring old motor vehicles has been banned, so that consumers who really want to replace new energy vehicles can benefit.

A surge in store inquiries

"Recently, there are a lot of people looking at cars, and a large part of them are here to inquire about the subsidies for replacing old cars with new ones."Xpeng MotorsAn offline store staff member told the Securities Times reporter that there are many subsidy policies recently, and the store has arranged special personnel to explain the policies to customers. After the new round of trade-in details were released, the number of customers visiting the store increased by 30% compared to usual, and the questions they inquired focused on which models can be scrapped and subsidized, and the trade-in operation process.

In addition to the national policy of subsidizing old cars for new ones, various regions also have different subsidy measures. Taking Shanghai as an example, from January 1, 2024 to December 31, 2024 (both days inclusive), if an individual user purchases a new pure electric passenger car, the registered use nature is non-operating, and transfers (excluding change of registration) the non-commercial passenger car registered in Shanghai under his/her name within the prescribed period, Shanghai will provide the individual user with a one-time car purchase subsidy of RMB 10,000.

In addition, various car companies are increasing their replacement discounts. "If you replace a new car on our used car platform, in addition to the government replacement subsidy, the manufacturer will also provide an additional subsidy of 4,000 yuan."BuickStore staff told reporters that many consumers recently came to see cars for the subsidies, and store sales would advise customers to replace their cars during the window period of the replacement policy, and would also help customers complete the replacement procedures.

The reporter learned thatBYDIt also launched a preferential purchase subsidy of 2,000 to 8,000 yuan.TeslaAfter the release of the trade-in policy, store staff were also trained on the policy. "We will have more professional vehicle service personnel in the delivery process. Once the old car scrapping process is involved, the vehicle service personnel and replacement service providers will assist Tesla consumers in solving the problems they encounter." Tesla store staff said. Some car companies have also started door-to-door recycling of old cars and provide consumers with replacement subsidies.

"I have a fuel car that was registered more than ten years ago, and I'm really ready to change my car. If I sell it to a used car dealer, no one might be willing to buy it for a few thousand yuan. This time, I can get a subsidy of at least 20,000 yuan through the trade-in program." Mr. Xu, a car owner in Shanghai's Pudong New District, told reporters that the subsidy range for this trade-in program is more precise, which is very cost-effective for those who are changing their cars.

Driving the penetration rate of new energy vehicles

Experts interviewed believe that in recent times, a series of trade-in policies have had a relatively obvious stimulating effect on the new energy vehicle industry. According to the China Passenger Car Association, in July this year, the sales of new energy vehicles exceeded that of fuel vehicles for the first time. The increase in support for the trade-in of new energy vehicles may continue to increase the growth rate of the new energy vehicle market.

"The old-for-new policy can directly drive the development of the new energy vehicle industry." Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of the North China University of Technology, told reporters that at present, compared with developed economies in Europe, the United States, Japan and South Korea, my country's car replacement cycle is longer and the number of cars per thousand people is lower, and the new energy vehicle market still has great development potential.

It is worth mentioning that since March this year, the country has launched a car trade-in campaign, and the policy has gradually taken effect. According to the data of the Ministry of Commerce, as of 10:00 on August 13, 2024, more than 600,000 applications for car scrapping and renewal subsidies have been received, and more than 10,000 new applications have been received in a single day. From January to July this year, the national automobile recycling volume was 3.509 million, a year-on-year increase of 37.4%. After the implementation of the automobile scrapping and renewal subsidy policy, the number of scrapped cars has increased rapidly. Among them, in July, the national automobile recycling volume was 731,000, a year-on-year increase of 93.7%.

Pacific Securities research report shows that compared with the "Car Trade-in Subsidy Implementation Rules" issued in April, the increased subsidies for old-for-new car exchanges are expected to accelerate the release of terminal demand for holding cash to purchase, and the scope of subsidies will be expanded to passenger cars, commercial vehicles, two-wheeled vehicles, power batteries, etc. Car trade-in will usher in a new round of market.

"The release of the new policy is undoubtedly beneficial to the entire automotive industry chain." Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, said that raising the subsidy standard for scrapped and updated vehicles will bring greater stimulus effects, and it is expected to drive at least 1 million additional scrapped and updated vehicles nationwide, providing strong support for automobile consumption and the growth of the auto market in the second half of the year.

Clear the bottleneck of replacement

While the potential of domestic automobile consumption is accelerating, there are still some bottlenecks to be solved in the implementation of the old-for-new policy. During the interview, the Securities Times reporter found that some consumers are still unfamiliar with the subsidized models and procedures.

"I only know that there is such a policy, but I don't know how much subsidy I can get for scrapping my old car and when the subsidy will be issued." Some consumers said that they have a vague understanding of the channels for recycling old cars. Apart from going to 4S stores and used car trading markets, they don't know what other more open and transparent recycling channels there are on the market.

Experts interviewed believe that in order to dispel consumers' concerns of "not wanting to change" or "not daring to change", it is also necessary to smooth the resource recycling chain from the perspective of the industrial chain and supply chain. Zhang Xiang believes that after the implementation of the automobile scrapping and renewal subsidy policy, the number of scrapped cars has increased rapidly, and the automobile recycling market is huge.

"At present, if we can promote the continuous improvement of the recycling industry and do a good job in recycling raw materials such as steel, rubber, metal, and lithium batteries, we can not only reduce the amount of mineral mining, but also protect the environment, which will also create a better environment for the green and healthy development of the automobile industry." Zhang Xiang said that the current new energy automobile industry is developing rapidly in terms of technological innovation and product upgrades. With the driving effect of the old-for-new policy and the improvement of consumers' requirements for intelligent performance, it is expected that core technologies of smart cars such as autonomous driving, automotive chips, digital cockpits, high-precision maps, and car-road-cloud will also usher in a period of rapid development.

Lin Shi suggested that automobile practitioners should consider how to adapt to the current market characteristics of the automobile consumer market's shift from new purchases to replacement purchases, seize consumers' consumption trends in technology, energy consumption, intelligent driving, etc., enhance consumers' consumption confidence, and give consumers the motivation to replace.