Introduction

China's car purchase subsidy policy is evolving, becoming more generous and diversified.

The Chinese auto market is currently experiencing a resurgence fueled by policy-driven consumption.

Last year, China's auto market flourished, with annual car production and sales surpassing 30 million units, setting a new record. Notably, the car purchase subsidy policy played a pivotal role. According to the Ministry of Commerce, in 2024, over 2.9 million vehicles were scrapped and replaced, and over 3.7 million vehicles were upgraded, driving car sales worth over 920 billion yuan. Since the implementation of the "two new" policies in 2024, over 60% of new energy vehicle (NEV) sales were attributed to trade-ins.

Whether scrapping old cars for new ones or upgrading existing ones, the subsidy policy has directly spurred sales worth 920 billion yuan, signaling that "effective policies lead to active consumer buying".

Building on the success of last year's car purchase subsidy policy, shortly after the start of 2025, the "Notice on Doing a Good Job in the Scrapping and Renewal of Automobiles in 2025" (hereinafter referred to as the "Notice"), jointly issued by the Ministry of Commerce and eight other departments, indicated that this year, not only will certain vehicles meeting the National IV emission standard be included in the subsidy scope, but specific standards for replacement and renewal subsidies will also be clarified.

Specifically, the "Notice" states that individual consumers who scrap gasoline passenger cars registered before June 30, 2012, diesel and other fuel passenger cars registered before June 30, 2014, or NEVs registered before December 31, 2018, and purchase NEVs or fuel passenger cars with a displacement of 2.0 liters or less listed in the "Catalog of New Energy Vehicle Models for Reduction and Exemption of Vehicle Purchase Tax" issued by the Ministry of Industry and Information Technology will receive a one-time fixed subsidy.

For scrapping eligible old cars and purchasing NEVs, a subsidy of 20,000 yuan will be provided; for scrapping eligible fuel passenger cars and purchasing fuel passenger cars with a displacement of 2.0 liters or less, a subsidy of 15,000 yuan will be offered.

The "Notice" reveals that the new policy includes eligible "National IV" emission standard fuel passenger cars within the scope of old cars eligible for scrapping and renewal subsidies, unifying and standardizing the maximum subsidy limit for national car replacement and renewal. Notably, this is the first time that individual consumer scrapping models have been expanded to include "National IV" models.

This year's new subsidy policy further broadens the subsidy scope based on last year's scrapping and renewal policy, anticipated to further boost auto consumption.

In February, following the national car purchase subsidy policy, "double new" subsidy policies from Hunan, Sichuan, Hebei, Jiangxi, Beijing, Shenzhen, and other provinces and cities were successively issued, echoing national policies and reigniting market confidence.

Take Hunan Province as an example.

On February 19, Hunan took the lead in announcing the implementation details for scrapping and renewing automobiles in 2025. In terms of scrapping and renewal, the subsidy standards align with national policies, with a maximum subsidy of 20,000 yuan; for replacement and renewal, purchases within the range of 50,000 yuan (inclusive) to 100,000 yuan (exclusive) receive a subsidy of 9,000 yuan per fuel vehicle and 11,000 yuan per NEV; for purchases within 100,000 yuan (inclusive) to 200,000 yuan (exclusive), the subsidies are 11,000 yuan and 13,000 yuan per vehicle, respectively; and for purchases of 200,000 yuan (inclusive) or more, the subsidies are 13,000 yuan and 15,000 yuan per vehicle, respectively. Compared to 2024, subsidies across all three tiers have increased by 1,000 yuan.

On February 20, He Yadong, the spokesperson of the Ministry of Commerce, stated, "Since the beginning of this year, the Ministry of Commerce, along with various regions and relevant departments, has worked diligently and swiftly to expand the implementation of trade-in programs for consumer goods, ensuring that benefit measures for the people are implemented early and benefits are reaped by the masses."

With the successive introduction of regional policies, as of February 19, the nationwide count of scrapped and renewed automobiles reached 169,000. Driven by the trade-in program, related industries have maintained a relatively rapid growth trajectory. Since the start of the year, the national scrap car recovery volume has increased by approximately 35% year-on-year, and the retail sales volume of NEVs has surged by over 20% year-on-year.

It is foreseeable that with the relaxation of new policy standards, the potential of the auto market will be further unleashed.

According to calculations by the Circulation Association, there are currently around 12 million passenger cars eligible for subsidies under the scrapping and renewal policy, with emission standards of National III and below. With the expansion of eligible scrapping and renewal models this year, over 10 million additional passenger cars meeting the National IV emission standard and over 1 million additional NEVs will become eligible, presenting a significant opportunity for the new policy to bolster the auto market in the new year.

Some industry insiders predict that this year, over 23 million passenger cars will be eligible to apply for scrapping subsidies, marking substantial a expansion compared to last year. The new policy is expected to encourage more consumers to participate,, further propelling auto consumption growth. Some are even optimistic that with the promotion of the new policy car sales in 2025 will reach 32.9 million units, an increase of 4.7% year-on-year.

Against this backdrop, on February 24, Cui Dongshu, Secretary-General of the Passenger Car Association, penned an article stating that based on the positive January passenger car industry data and considering the pro-consumption policy orientation of national policies and future environmental trends, the Passenger Car Association's prediction team made minor adjustments to the 2025 industry annual forecast in mid-February, "It is anticipated that passenger car retail sales will reach 23.43 million units in 2025, an increase of 2% year-on-year, and an increase of 70,000 units compared to the January forecast value."

"With the gradual rollout of trade-in programs in some regions, the auto market has entered a post-festival recovery cycle. This year's policies were released and implemented early, positively impacting the auto market in February and beyond. The incremental factors in February are primarily driven by policy incentives and the natural market recovery post-festival," analyzed Cui Dongshu, Secretary-General of the Passenger Car Association.

Terminal results have also affirmed this observation.

Data indicates that since entering February, the auto market has shown signs of recovery spurred by policies. According to the latest data from the Passenger Car Association, from February 1 to 16, 2025, passenger car retail sales reached 581,000 units, an increase of 11% year-on-year. In terms of wholesale, national passenger car manufacturers distributed 588,000 units, a year-on-year surge of 65%.

Looking ahead, with the continued efforts of national and local "double new" subsidy policies, robust support will be provided for the advancement of the auto market. Under the increasingly generous and diversified subsidy policies, consumers' wallets are bound to be tempted.