Shanghai issues action plan for boosting car renewal, consumption

Shanghai (Gasgoo)- In alignment with the "Action Plan to Promote Large-Scale Equipment Renewal and Trade-In of Consumer Goods" by China's State Council' and the "Action Plan to Promote Trade-In of Consumer Goods" by 14 departments including China's Ministry of Commerce, the Shanghai Municipal Commission of Commerce has launched the "Shanghai Action Plan to Accelerate Automobile Renewal and Consumption (2024-2027)" (hereinafter referred to as the "Action Plan") to accelerate vehicle retirement and renewal while optimizing the automotive market structure.

According to the Shanghai Municipal Commission of Commerce, automotive renewal consumption is a hallmark of urban automotive markets in economies that have reached a certain level of development. Given Shanghai's economic growth and the capacity of its urban roadways, the city's automotive market has transitioned from growth to renewal consumption. By the end of 2023, Shanghai had over 5 million vehicles, with more than 30% of new car purchases being replacements for older vehicles. This proportion exceeds 50% for new oil-fueled vehicles. In recent years, the ratio of new car sales to used car transactions has approached 1:1, indicating significant potential for growth in the renewal consumption market.

The Action Plan sets several targets to be achieved by 2027:

Reduce the average age of used cars in transactions by one year;

Increase the volume of used car transactions to 900,000 units, a 50% rise from 2023;

Double the export volume of used cars to 15,000 units;

Double the volume of scrapped vehicle recycling to 50,000 units.

The Action Plan encompasses a total of 9 task and measures. Some key measures are shown as below:

(1)   Implementing national trade-in policies:

In 2024, a one-time subsidy will be provided to consumers who scrap fuel vehicles that meet China III or lower emission standards or new energy vehicles registered before April 30, 2018, and purchase qualifying new vehicles. Subsidies include 10,000 yuan for purchasing new energy vehicles and 7,000 yuan for oil-fueled vehicles with engines of 2.0 liters or less.

(2)   Implementing local trade-in subsidy policies:

In 2024, Shanghai will implement a new round of detailed regulations for the vehicle replacement program. Eligible individuals who trade in their old cars for new China VI b emission standard fuel-powered passenger vehicles will receive a one-time purchase subsidy. Specifically, for old cars with emission standards of China IV or below standards, the subsidy is 4,000 yuan; for those with China V emission standards, the subsidy is 2,800 yuan. Individuals who trade in their old cars for new pure electric passenger cars will receive a one-time subsidy of 10,000 yuan. Car owners who meet both national and local policies are encouraged to apply for the relevant subsidies concurrently.

(3)   Accelerating retirement of old vehicles:

Strict enforcement of mandatory vehicle scrappage and safety and environmental inspection standards will be implemented. Policies will be introduced to subsidize the retirement and renewal of China IV diesel vehicles and China II non-road mobile machinery. Taxi fleets will be encouraged to renew based on vehicle usage.

(4)   Encouraging development of used car dealerships:

Locally registered used car dealerships in Shanghai with annual sales exceeding 3,000 units will receive rewards of up to 5 million yuan. Annual performance evaluations of the policy will be conducted to inform the next round of revisions.

(5)   Promoting trade-in services by manufacturers:

Car manufacturers are encouraged to offer comprehensive services, including new car production, sales, leasing, and used car refurbishing. Support will be provided for manufacturers to introduce trade-in incentives and collaborate with used car dealers on sales or leasing. Comprehensive service spots will be established at manufacturing plants to offer registration and inspection services.

(6)   Optimizing export process for used cars:

Online processing for the registration of used car export enterprises and the issuance of export licenses will be implemented. Eligible companies will be supported in applying for specialized new energy vehicle export license plates. Pilot export-oriented used car markets will be established in qualifying districts.