Whether it's home appliances, consumer goods, automobiles, or even real estate, the most common description people hear when talking about these industries is that they have entered an era of both increment and stock. If it is an objective law that high-speed growth cannot be sustained for a long time, then it is very important to revitalize the stock, and the trade-in is undoubtedly an effective starting point.
On March 13, the State Council issued a notice on the issuance of the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods" (hereinafter referred to as the "Plan"). Among them, keywords such as "upgrading", "eliminating backward products", "scrapped cars" and "second-hand cars" are mentioned many times. Therefore, in addition to the new car market, the used car and scrapped car recycling and dismantling industry is regarded as the most beneficiary area of this round of trade-in. Can this heavy policy red envelope be delivered to them steadily?
The transformation of the old and new drivers in the automotive market is accelerating
In recent years, the relevant departments of the state have been consistent in the policy direction of encouraging the elimination and scrapping of automobiles and supporting the trade-in of automobiles. In July 2023, the National Development and Reform Commission and 13 other departments issued the "Several Measures to Promote Automobile Consumption", which pointed out that it is necessary to support the renewal of old cars and accelerate the cultivation of the second-hand car market. In September 2023, the Ministry of Industry and Information Technology and other seven departments jointly issued the "Work Plan for the Steady Growth of the Automotive Industry (2023~2024)", which includes promoting the scrapping, renewal and consumption of used cars. Encourage local comprehensive use of economic, technical and other means to promote the elimination and scrapping of passenger cars with emission standards of China III and below, and non-standard commercial vehicles in violation of regulations. Promote the improvement of the recycling system of scrapped motor vehicles, and smooth the channels for scrapping and recycling. Support the large-scale development of second-hand car circulation, and strictly implement the comprehensive cancellation of restrictions on the relocation of small non-operating second-hand cars that meet the National V emission standards, and promote the free circulation of second-hand cars and cross-regional operation of enterprises.
After the issuance of the above documents, many local governments across the country responded positively. Seven departments, including the Beijing Municipal Bureau of Commerce, issued the "Beijing Municipal Plan on Encouraging Automobile Replacement Consumption", which provides a subsidy of 10,000 yuan per vehicle for new energy passenger vehicles that are scrapped or transferred out for more than 6 years (inclusive). The car trade-in subsidy activity released by Guangzhou can apply for a subsidy of up to 10,000 yuan per vehicle for individual consumers who own Guangdong A fuel vehicles to complete the update of automobile indicators through vehicle scrapping, dismantling, cancellation, transfer out, etc., and purchase models within the specified range from car dealers in Guangzhou.
Driven by the policy, according to the ownership estimate announced by the Ministry of Public Security at the beginning of the year, about 7.56 million vehicles will be scrapped in 2023, an increase of 1.85 million from 5.71 million in 2022. In 2023, a total of 18,413,300 vehicles will be traded in the national second-hand car market, a year-on-year increase of 14.88%.
The "plan" released this time proposes in the overall requirements to coordinate the expansion of domestic demand and deepen the supply-side structural reform, implement four major actions: equipment renewal, consumer goods trade-in, recycling and recycling, and standard improvement, vigorously promote the production and application of advanced equipment, promote the continuous increase in the proportion of advanced production capacity, promote more high-quality durable consumer goods into residents' lives, smooth the resource recycling chain, and greatly improve the quality and level of national economic circulation.
On March 14, it was reported that the policy details of the implementation measures and standards of the car trade-in action plan are being formulated, and if it goes well, it is expected to be introduced in the second quarter of this year.
In line with the overall meaning expressed in the plan, Sheng Qiuping, Vice Minister of Commerce, said at the China Electric Vehicle 100 Forum (2024) held on March 16 that the mainland automobile market is accelerating transformation and reshaping, the development of new energy vehicles has ushered in new opportunities, the market penetration of new energy vehicles has increased year by year, the transformation of new and old kinetic energy has accelerated, and the automobile market has entered the era of both stock and increment from the incremental era, and the potential for trade-in is huge.
A new round of subsidies will be relayed in many places
In the "plan" issued this time, it is first mentioned that it is necessary to adhere to the market-oriented and government-guided, better play the role of the government, increase policy support such as fiscal and taxation, finance and investment, and play a good policy combination to guide businesses to make appropriate profits and form a scale effect of upgrading.
Focusing on the trade-in of automobiles, the "Plan" proposes to increase policy support, smooth circulation and blockage, and promote automobile echelon consumption and renewal consumption. Organize and carry out national car trade-in promotional activities, encourage automobile manufacturers and sales enterprises to carry out promotional activities, and guide the industry to compete in an orderly manner.
The reporter learned that the "plan" has received positive responses from all over the country, and even some cities have launched specific implementation measures in one step.
On March 14, the Danzhou Municipal Ecological Environment Bureau of Hainan Province, together with the Danzhou Municipal Public Security Bureau and the Danzhou Municipal Finance Bureau, jointly issued the "Implementation Plan for the Elimination of Financial Subsidies for Old Diesel Vehicles in Danzhou City", giving a subsidy plan for the elimination of old diesel vehicles: 7,000 yuan/vehicle for micro passengers, 10,000 yuan/vehicle for small passengers, 15,000 yuan/vehicle for medium-sized passengers, 25,000 yuan/vehicle for large passengers, 8,000 yuan/vehicle for micro vehicles, 13,000 yuan/vehicle for light vehicles, 18,000 yuan/vehicle for medium-sized vehicles, and 25,000 yuan/vehicle for heavy-duty vehicles.
On March 2, before the release of the plan, the Shanghai Municipal Commission of Commerce issued a new round of fuel vehicle trade-in subsidy policy and new energy vehicle replacement policy, in the form of a maximum of 10,000 yuan car purchase subsidy, to promote the trade-in and stimulate market consumption. Specifically, individual consumers who scrap or transfer non-commercial fuel passenger cars with emission standards of China V and below, and purchase new non-operating China VIB fuel passenger cars, can apply for a one-time car purchase subsidy of 2,800 yuan, and scrap or transfer non-commercial passenger cars, and purchase new non-operating pure electric passenger cars, can apply for a one-time car purchase subsidy of 10,000 yuan.
According to the "Analysis of the National Passenger Car Market in February 2024" released by the National Passenger Car Market Information Association, if non-commercial vehicles are calculated according to the 15-year scrapping life, new vehicles in 2008 will enter a centralized scrapping period around 2023. The surge in new cars that began in 2009 should have accumulated a good foundation for the scrapping of passenger cars in 2024, and it is believed that the domestic auto market in 2024 still has a good space for steady growth, driven by the multiple needs of new purchases, additional purchases and replacement purchases.
Opportunities and challenges coexist for end-of-life recycling enterprises
According to public information, the recycling and dismantling of scrapped cars is an important part of the recycling of renewable resources. This kind of dismantling and recycling refers to the recycling of scrapped motor vehicles, harmless treatment, and dismantling of reusable parts and main assemblies under the premise of compliance with laws and regulations. In the downstream application market, recycling and dismantling is related to the recycling and reuse of metal and non-metallic materials, which is of great significance for protecting the environment, saving resources and promoting a circular economy.
The "Plan" points out that it is necessary to persistently encourage the advanced and eliminate the backward. Establish a long-term mechanism that combines incentives and constraints to accelerate the elimination of backward products and equipment. Strictly implement the mandatory scrapping standards for motor vehicles and vehicle safety and environmental protection inspection standards, and eliminate old cars that meet the mandatory scrapping standards in accordance with laws and regulations. Optimize the layout of scrapped automobile recycling and dismantling enterprises, and promote the door-to-door car pick-up service model.
The plan also sets a clear target: by 2027, the recycling of end-of-life vehicles will about double compared to 2023.
Gao Yanli, vice president of the China Materials Recycling Association, told reporters that in recent years, with the gradual implementation of the country's goals of promoting the development of circular economy, strengthening environmental protection and ensuring resource safety, the recycling and dismantling industry of scrapped motor vehicles has made great progress. At present, there are about 1,500 domestic enterprises with scrapped motor vehicle recycling and dismantling qualifications, and the market scale is expanding rapidly, with the recycling and dismantling capacity of the whole industry exceeding 32 million vehicles per year, and the enterprise site area, mechanization level, professional dismantling team, and resource processing capacity have been rapidly improved. However, it cannot be ignored that the current situation of enterprises collecting cars has not completely changed, the price of scrap steel has plummeted, the sales of remanufactured parts are not smooth, and the tax policy restricts the industry to become bigger and stronger.
In her view, it is difficult to pass on the policy dividend to the scrapped car recycling industry, because on the one hand, the object of the trade-in subsidy is the car owner, and on the other hand, the market price of resource reuse has fallen sharply, so for enterprises, the more scrapped cars are recycled, the more they will lose. Despite this, the whole industry should still actively cooperate with the "Plan" and do a good job in service.
It is reported that according to relevant laws and regulations, the mandatory scrapping standards for motor vehicles are mainly for commercial vehicles, and only incentives for the scrapping of private cars are not mandatory. Therefore, whether the enthusiasm of car owners for the scrapping of private cars can be mobilized mainly depends on whether there is a subsidy and the amount of subsidy.
The reporter found that the "plan" specifically mentioned that it is necessary to promote the practice of "reverse invoicing" of resource recovery enterprises to natural person sellers of scrapped products. Gao Yanli introduced that the "reverse invoicing" practice is very beneficial to the scrapped automobile recycling industry, because the whole industry cannot obtain the input tax invoice, that is, the "first invoice", if it can be "reverse invoicing", it will greatly reduce the tax burden of the whole industry. However, at present, some enterprises have applied for the implementation of the "simplified collection law", and the value-added tax is levied at 3% and must be implemented for three years. If the above-mentioned enterprises can also enjoy "reverse invoicing", it will greatly stimulate the enthusiasm of the whole industry. At the same time, she stressed that she hoped that the implementation plan and detailed rules around the "plan" would be introduced as soon as possible to shorten the wait-and-see period of the industry.
Car dealers adjust their business strategies according to their own characteristics
In addition to car scrapping, the "Plan" has also released benefits for the second-hand car market, proposing that by 2027, the domestic second-hand car transaction volume will increase by 45% compared with 2023. According to the data, the second-hand car transaction volume in mainland China in 2023 will be 18.41 million, and if the increase reaches 45%, that is, the second-hand car transaction volume in 2027 is expected to reach 26.7 million.
According to the relevant person in charge of the daily auction car, benefiting from the policy encouragement, the daily auction car launched the "Spring Festival Car Auction Festival" in March and took out tens of millions of yuan to encourage platform buyers to take the lead in acquiring second-hand cars in the Beijing auction market through commission coupons. According to statistics on March 20, the transaction volume of the Beijing auction increased by 47% compared with the same period in January.
Pan Guoqiang, secretary-general of the Hunan Used Car Circulation Association, said that as far as the automotive industry is concerned, the country's promotional policies in the past two years have indeed played a greater role in promoting the digestion of manufacturing capacity and tapping consumption potential. After the implementation of consumption promotion policies, new car consumption and used car transactions, which had previously been sluggish, both achieved an annual increase of more than 10%. Relying solely on the power of the market itself, in such a complex environment as in recent years, this is almost impossible to achieve.
He expects that the number of used cars traded in mainland China will reach at least 25 million in 2027. First of all, looking at the global automobile market, when the number of cars owned by 1,000 people in a country reaches a certain proportion, second-hand car consumption will become the mainstream of the market, and the mainland is experiencing a stage where second-hand cars catch up with new cars. Secondly, with the active intervention of policies and the increasing frequency of new generation consumers changing cars, it is the general trend for second-hand car transactions to maintain rapid growth. Whether the transaction volume will exceed 30 million units in 2027 depends on the recovery of the economy and the growth of national income.
However, he also cautioned that the implementation of similar policies may have different effects for different types of car dealers. For example, for second-hand car dealers who have been operating quasi-new cars for less than three years, the pressure brought by the policy may outweigh the benefits, but for second-hand car dealers who operate models with a long age and a large number of vehicles, the benefits should be greater than the pressure. Therefore, he suggested that second-hand car dealers who mainly deal in quasi-new cars can consider concurrently dealing in new cars, and can directly apply for corresponding subsidies after selling new cars; dealers who operate high-age second-hand cars should strengthen their interaction with new car dealers, actively cooperate with new car dealers to complete replacement, and obtain a large number of high-quality car sources at the same time. Of course, if second-hand car dealers can get the support of national policies at this time, such as in addition to trade-in, they can also get subsidies for trade-in, then it will definitely play a positive role in promoting second-hand car consumption.
A 45% increase in used cars is expected in four years
Since the beginning of this year, from the proposals of the National People's Congress and the National People's Congress to the relevant documents of the Ministry of Commerce, the trade-in of the old has been emphasized. The intensity of such policies and the attention paid to them by the relevant authorities are unprecedented. Consumption is an important measure to drive economic growth, and automobile consumption undoubtedly plays an important role.
Chai Haifeng, CEO of Xinche Zhilian (Beijing) Information Technology Co., Ltd., pointed out that the current number of cars in mainland China has reached a record high, and the growth of new cars has encountered a bottleneck, and the government and car companies have not hesitated to provide huge subsidies to drive the increase in automobiles, which shows that the current growth of the new car market is very weak. The "trade-in" policy has stimulated the sales of new cars and promoted the upgrading of the automobile industry, thereby stimulating the growth of domestic demand and undoubtedly injecting new vitality into the automobile market. At the same time, this policy also encourages consumers to treat car consumption more rationally and avoid waste of resources. However, the price war between car companies may not end there.
From the perspective of second-hand cars, the instability of new car prices has not been recovered, the intervention of the policy is to benefit consumers, automobile manufacturers and sales companies to carry out price wars, more is the competition between brands, as well as the competition between sales companies, the price war caused by this competition, when the consumption of automobiles grows further, may intensify.
Chai Haifeng emphasized that this wave of policy dividends will bring development opportunities to the second-hand car industry. At present, the second-hand car market is still dominated by car sources, and second-hand car dealers should actively respond by introducing some "old for old" subsidies to get more car sources. At the same time, in the face of this huge policy dividend, second-hand car companies should also speed up self-upgrading and self-improvement, improve self-integrity requirements, accelerate the construction of digital system, and create a platform-based sales model. At present, the state's tax reduction and exemption policy for second-hand cars is still continuing, but the enthusiasm for second-hand car corporate tax payment is not high enough, and it is hoped that the relevant departments will further refine the second-hand car tax and clarify the collection method and time of value-added tax and enterprise income tax, so as to better promote the process of "upgrading and unifying" the second-hand car industry.
"As long as the policy guarantee is sufficient, the second-hand car industry is cultivated and expanded, and there are no objective factors hindering the development of the second-hand car industry, then the goal of a 45% increase in second-hand car trading volume by 2027 compared with 2023 is expected to be achieved. Chai Haifeng said.
Source: China Automotive News