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New trade-in scheme set to boost Chinese car market

Recently the Chinese Ministry of Commerce, Ministry of Finance and 7 other departments jointly issued a new round of subsidies to boost the car market this year. Announced as the “Implementation Rules for Car Trade-in-Subsidy” it offers a subsidy of up 10,000 yuan (1,400 USD) for buyers who trade-in older cars for new ones before the end of the year. A number of brands have joined in by offering additional incentives for trade-ins.

The trade-in scheme runs from now until December 31, 2024 and is primarily aimed at scrapping China III standard and below cars as a cash for clunkers type plan. Chine III is an emission standard broadly equivalent to Euro III. It is a very old standard and applies to petrol cars registered before June 30, 2011 and diesel cars registered before June 30, 2013. This means that the cars eligible are all well over 10 years old.

Also covered in the scheme are new energy vehicles registered before April 30, 2018. Buyers who scrap a car in either of these two categories will then receive a 10,000 yuan (1,400 USD) subsidy to buy a new energy car. As a reminder, new energy is the term China uses for both all electric vehicles and PHEVs. There is also a subsidy of 7,000 yuan (950 USD) for those who scrap a China III or lower car and buy a new ICE car with a displacement of 2.0 liters or less.

To get the subsidy consumers need to register the relevant paperwork on the website of the National Automobile Circulation Information Management System or the “Car Trade-in” mini program before January 10, 2025. Paperwork needed includes the vehicle identification number for the scrapped car, Scrapped Motor Vehicle Recycling Certificate, Motor Vehicle Cancellation Certificate, along with the vehicle identification number of the new vehicle, the Uniform Invoice for Motor Vehicle Sales and the Motor Vehicle Registration Certificate plus of course the purchaser’s personal identification information.

Funds for the scheme come from both the central and local government. The central government shouldering 50% of the money for the eastern provinces, 60% for the central provinces and 70% for the western provinces. It seems that some other locations such as Shanghai may have additional schemes although the Shanghai scheme is very lacking in details about the actual benefits of the scheme which is meant to run between 2024-2027.

A number of brands have joined in to offer further incentives to get buyers to choose their vehicles. Dongfeng brand Forthing is advertising a total discount of 70,000 yuan (9,600 USD) including 60,000 yuan (8,300 USD) plus individual city incentives – it is not clear whether the 60,000 yuan from Forthing is dependent on meeting the criteria of the scheme.

SAIC-Volkswagen are offering an additional subsidy of up to 20,000 yuan (2,750 USD) along with other sales incentives. Buick has launched a 5 billion yuan (690 million USD) car purchase promotion until the end of May advertising the government trade-in scheme. Existing BMW/Mini owners can received up to 18,000 yuan (2,500 USD) of insurance and tax benefits or chose an interest free financing plan with 0 down payment when purchasing a qualifying BMW before June 30.

Posters from brands advertising the scheme and additional incentives

Sources: Ministry of Commerce of the People’s Republic of China, Autohome, Fast Technology

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