A woman in Nanchang, Jiangxi province, learns about the features of a new energy vehicle at a BYD dealership with the help of a saleswoman. (BAO GANSHENG/FOR CHINA DAILY)
China's push to encourage the automotive industry is taking shape through measures including the expansion of trade-in policies, strengthening the used car market and easing purchasing restrictions, boosting confidence among automakers, dealers and consumers.
An injection of long-term special treasury bonds amounting to 300 billion yuan ($41.4 billion) will be issued in 2025 to support the expansion of consumer goods trade-in programs, notably automobiles, which was outlined in an action plan revealed by the central government in mid-March.
Compared to 2024's 150 billion yuan in treasury bonds, it is expected to invigorate market activity, said Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association.
Driven by these trade-in policies, domestic passenger vehicle retail sales reached 22.89 million units in 2024, a 5.5 percent year-on-year increase, with rapid growth in new energy vehicles penetration.
In early 2025, China expanded the scope of vehicle scrapping and replacement while improving subsidy standards for trade-ins. With new trade-in policies rolling out regionally, the China Passenger Car Association estimates that 5 million vehicles will be scrapped and 10 million vehicles will be replaced this year.
Consequently, domestic car retail sales are projected to reach 23.4 million units, a 2 percent year-on-year increase, while NEV retail sales are expected to hit 13.3 million units, growing 20 percent to capture a 57 percent market share, the CPCA predicted.
The auto consumption chain is set to be extended through pilot reforms in car distribution and an increased focus on the automotive aftermarket, encompassing car modifications, leasing and recreational vehicle camping.
Lang noted that the action plan emphasizes service-oriented consumption, which aligns with the current state of the auto industry where car supply exceeds demand, yet the need for high-quality services remains unmet.
While 4S stores still dominate China's auto aftermarket, third-party brands are growing rapidly, said Xu Haidong, vice-chief engineer of the China Association of Automobile Manufacturers.
As the market becomes more standardized and diverse in demand, the value of the auto aftermarket will increase, emerging as a key growth area for China's auto industry, Xu added.
The rising popularity of RV camping exemplifies this trend. However, challenges such as inadequate facilities, unstable water and electricity supply as well as insufficient sewerage at campsites hinder the development of this sector.
Addressing these issues and improving infrastructure could significantly boost consumption and promote automotive culture in China.
The used car market will also receive a boost through enhanced cross-regional transaction measures and the development of third-party platforms to assist secure and convenient trade, according to the action plan.
According to CADA statistics, there were 19.61 million used cars transacted in 2024, a 6.52 percent year-on-year increase, with a total transaction value of 1.29 trillion yuan. Notably, the transaction volume of secondhand NEVs exceeded 1 million units for the first time, reaching 1.13 million units, an increase of 47.97 percent.
Zhang Xiang, an auto industry researcher at the Beijing-based North China University of Technology, noted that China's used car market is still small compared to Europe and the United States. Expanding this market could benefit both used and new car sales by increasing car turnover.
He suggested establishing an industry database to collect information on each used car, allowing consumers to transparently purchase secondhand vehicles.
It is noteworthy that the action plan mentioned reducing consumption limits and removing unreasonable restrictions to ensure that long-term non-plate households can purchase cars.
Guosen Securities stated that gradually easing purchase restrictions will release new car demand, leading to sales growth, with first-time buyers creating an incremental market.
A report by China Merchants Securities pointed out that relaxing these restrictions is a low-cost, quick-acting stimulus measure.
Traffic expert Xu Kangming said that the lottery-based vehicle plate application was initially intended as a short-term measure. However, in some major cities it has lasted for over a decade. This policy is increasingly seen as unfair to households without cars and long-term non-plate applicants. As the number of vehicles grows, the restriction's effectiveness in alleviating traffic congestion diminishes.
In recent years, various regions have gradually eased car purchase restrictions. Except for Guizhou and Hainan provinces, which have lifted all restrictions on NEVs, cities such as Shenzhen, Hangzhou and Tianjin have relaxed limits by increasing quotas or optimizing rules.
An expert noted that for megacities like Beijing and Shanghai, lifting all car purchase restrictions is unlikely. Given the severe traffic congestion, completely removing limits would worsen road conditions.
According to the Ministry of Public Security, by the end of 2024, Beijing and Shanghai had more than 7 million and 5 million vehicles on their roads, respectively.
京公網安備 11010202009201號