China aims to double the amount of scrapped cars recycled by 2027 compared to 2023.
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China has released details of its policy on the trade-in of old cars as part of efforts to boost consumption.
Fourteen government departments, including China's Ministry of Commerce, jointly released the action plan to promote consumer goods replacement today to accelerate the nation's trade-ins of cars and home appliances.
The plan sets specific targets:
By 2025, passenger cars with emission standards of China 3 and below will be phased out at an accelerated pace, and the market share of energy-efficient home appliances will be further increased.
By 2025, recycling of scrapped automobiles will increase by 50 percent from 2023, and recycling of used appliances will increase by 15 percent from 2023.
By 2027, the recycling volume of scrapped automobiles will double from 2023, the volume of used car transactions will increase 45 percent from 2023, and the recycling volume of used home appliances will increase 30 percent from 2023.
In vehicle replacement, China will increase policy support, including encouraging financial institutions to lower down payment ratios for loans, encouraging insurance organizations to offer a wider range of products and setting reasonable insurance rates for new energy vehicles (NEVs).
Companies are encouraged to upgrade used car recycling services to facilitate used car delivery.
Automobile manufacturers are encouraged to carry out used-vehicle trade-in business, and used-car dealers are encouraged to provide warranty services.
China will also improve the quality of used car exports and support used car exporters in expanding overseas markets, according to the document.
Local governments are encouraged to improve infrastructure including charging, battery swap, parking and intelligent transportation.
Notably, a new policy released on April 3 relaxes policies on personal-use auto loans as part of efforts to stimulate consumption.
Financial institutions can independently determine the maximum ratios of loans for traditional-powered and NEVs for personal use, according to an announcement jointly issued on April 3 by the People's Bank of China and the National Financial Regulatory Administration.
Previously consumers were required to make a down payment of at least 20 percent for conventionally powered vehicles and at least 15 percent for NEVs.
In January, China's Ministry of Commerce said in a briefing that the country would promote the trade-in of automobiles and home appliances this year, which is a key focus for boosting consumption.
After that, car companies including Geely, Voyah, and Nio (NYSE: NIO) announced trade-in subsidies they were offering.
On April 1, Nio announced subsidies of up to RMB 1 billion ($140 million) for gasoline car trade-ins, saying the move was in response to China's consumer goods trade-in initiative.
Starting April 1, gasoline car owners who purchase a new Nio vehicle through a trade-in will receive an additional RMB 10,000 in option fund subsidies, the electric vehicle (EV) maker said in a statement.
($1 = RMB 7.2371)
Nio launches up to RMB 1 billion trade-in subsidy to lure petrol car customers
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