Trade-in drives car consumption to the new

Original title: Trade-in to leverage automobile consumption to the new

China Consumer Daily reporter Wu Bofeng text/photo

The automobile consumer market is once again facing favorable policies. Not long ago, 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 "Action Plan"). The Action Plan proposes to implement the trade-in of consumer goods and carry out the trade-in of automobiles, and by 2027, the transaction volume of used cars will increase by 45% compared with 2023. In addition, the new policy also puts forward specific opinions on encouraging manufacturers to promote automobiles and replace vehicles. The industry generally believes that these policies are expected to promote the continuous release of automobile consumption potential.

Chart: The trade-in policy boosts the vitality of the consumer market.

Encourage the development of car trade-in

At present, the number of cars in mainland China has reached 340 million. In the face of the continuous increase in the volume of the in-use car market, how to further increase consumers' demand for car purchases? In recent years, the relevant departments have aimed at solving the problem of "exchanging the old for the new".

In July 2022, 17 departments, including the Ministry of Commerce and the State Administration for Market Regulation, jointly issued the Notice on Several Measures to Invigorate Automobile Circulation and Expand Automobile Consumption, clearly proposing to promote renewed consumption and promote the stable development of the domestic auto market. In this context, as a concrete action measure for this goal, the introduction of the new policy has undoubtedly attracted the attention of all parties in the consumer market.

The "Action 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.

In fact, in the face of the increasingly mature automotive market, there is a great demand and potential for upgrading. Cui Dongshu, secretary general of the National Passenger Car Market Information Association, told the "China Consumer Daily" reporter that the new deal emphasizes the importance of launching a new round of large-scale equipment renewal and trade-in of consumer goods, which will greatly promote the growth of the automobile consumer market this year, and is expected to bring more than one million passenger car update increments, which is very important for the development of the new car market.

Affected by the introduction of this new policy, auto companies have recently launched a series of marketing campaigns around trade-in, and the amount of subsidies has also exceeded the previous level. Nearly 40 car companies, including Dongfeng Company, FAW-Volkswagen, Geely and BYD, have successively launched trade-in subsidy policies, with cash subsidies ranging from 5,000 yuan to 55,000 yuan, and there are even automobile companies that have launched replacement subsidies of 10 billion yuan. Taking Chery Group as an example, its subsidiaries Chery, Xingtu, Jietu and iCAR jointly announced a subsidy replacement policy of 10 billion yuan. Among them, the Tiggo 8 series in the Chery brand can be traded-in for up to 40,000 yuan, and many other models can be traded-in for up to 30,000 yuan.

The reporter noticed that after the automobile companies have launched the replacement subsidy policy, the number of people who come to the store to see the car has increased significantly. Li Shen, a consumer in Beijing who plans to buy a car in the first half of this year, told China Consumer Daily: "I have been looking at cars with my family since the beginning of this year, and the introduction of the new policy has prompted auto companies to attract people's attention with greater discounts, and the market price of my favorite models has also dropped to a certain extent." ”

A few days ago, the Jinan Municipal Bureau of Commerce announced that from March 28 to June 30 this year, individual consumers can apply for a one-time government subsidy if they transfer their non-operating passenger cars registered in Jinan under their own names, and purchase new passenger cars from participating car companies in the event. The subsidy standard is divided into two types: new energy passenger vehicles and fuel passenger vehicles, of which the maximum subsidy for new vehicles purchased is 5,000 yuan, and the maximum subsidy for new vehicles purchased is 4,000 yuan.

In addition, Shanghai, Tianjin, Chengdu and other places have carried out a wide range of various forms of car trade-in and related automobile consumption season activities.

It is worth mentioning that the "Action Plan" encourages the optimization of automobile purchase restrictions according to local conditions and promotes the construction of an information interaction system for the whole life cycle management of automobiles in the requirements for carrying out car trade-in. It is reported that in order to meet the production and living needs of the people, in accordance with the Ministry of Public Security's "Motor Vehicle Registration Regulations", Linyi City, Shandong Province opened the Lu W license plate for small cars on March 29, becoming the fifth "double license plate city" in Shandong Province.

The share of domestic brands is expected to increase further

It is foreseeable that under the stimulus of relevant policies, many vehicles with a long service life in the market will enter the scrapping stage, which means that many consumers are faced with the choice of buying a new car.

Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, told the reporter of China Consumer Daily that with the continuous release of relevant favorable policies, the desire of potential car buyers to see cars in stores has increased, and a series of promotional activities launched by car dealers have injected confidence into the automobile market to complete the sales target as scheduled. "In the auto market, the trade-in ratio is around 40%, which is an important part of promoting the growth of automobile consumption. The direction of the policy layout is to trade in the old for the new, which is intended to leverage the potential of the consumer market. She said.

In recent years, as the development concept of "New Four Modernizations" continues to be deeply rooted in the hearts of the people, new energy vehicles have become the main theme of the development of the automobile market. In the first quarter of this year, the cumulative sales of new energy vehicles in China were nearly 2 million, with a year-on-year growth rate far exceeding the average level of the overall auto market. In this context, independent brands that have laid out the field of electrification in advance are undoubtedly profiteers.

According to data from the China Association of Automobile Manufacturers, as of the end of February, the market share of self-owned brand passenger cars accounted for nearly 60%, surpassing the joint venture brand in a short period of time. With the domestic auto market setting off a wave of replacement, independent brands that have already held the initiative in the auto market are expected to usher in more development opportunities.

The reporter combed through the information of new cars on the market and found that in March, major car companies launched a total of 106 new cars, of which 76 new cars were launched by independent brands, accounting for 72%. Further analysis shows that new energy SUVs, new energy MPVs and other market segments have become the focus of independent brand layout.

In addition, from the perspective of the industrial chain and supply chain, there is a lot of room for improvement in the power battery, second-hand car market and other links.

Cui Dongshu believes that among the people who replace vehicles, there will be many consumers who choose new energy vehicles as a new means of transportation, which is not only a potential benefit to the new energy vehicle consumer market, but also conducive to the sustainable development of independent brands.

In addition, the Action Plan encourages banking institutions to appropriately reduce the down payment ratio of passenger car loans, and reasonably determine the term and credit limit of automobile loans under the premise of legal compliance and controllable risks. The reporter learned that a number of banks, including Ping An Bank and China Merchants Bank, have implemented new policies such as trade-in and support for new energy vehicles. For example, the Auto Consumer Finance Center of Ping An Bank can receive a new car loan interest deduction coupon for customers who are about to settle a new car loan or have the intention of replacing a new car, which can be used to offset the interest generated by the customer's new car loan for replacing the vehicle.

Improve the recycling network of waste products

In the automotive market, little attention has been paid to the extent to which the recycling channel for used cars has developed compared to the new and used car market. However, as the number of cars continues to grow, the number of scrapped cars is also increasing year by year. Data shows that since 2011, the number of scrapped cars in mainland China has increased gradually, but compared with developed countries, the recycling rate of scrapped cars in mainland China is still hovering at a low level. Therefore, it is urgent to implement vehicle recycling actions.

The "Action Plan" requires that the mandatory scrapping standards for motor vehicles and vehicle safety and environmental protection inspection standards be strictly implemented, and old cars that meet the mandatory scrapping standards will be eliminated in accordance with laws and regulations. The reporter noted that Yan'an City, Shaanxi Province, Quzhou City, Zhejiang Province and other places have successively issued regional motor vehicle scrapping subsidy policies to encourage consumers to replace old and high-emission cars with more environmentally friendly and energy-saving new cars, and further promote automobile consumption to accelerate in the direction of green upgrading.

In addition, the Action Plan proposes that by 2027, the recycling of end-of-life vehicles is expected to increase by about 1 time compared to 2023. At the same time, we will further improve the recycling network of renewable resources, optimize the layout of scrapped automobile recycling and dismantling enterprises, and promote the door-to-door pick-up service model.

In fact, the recycling and dismantling of end-of-life vehicles 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 and promoting circular economy.

It is reported that after the release of the new deal, the Jiangsu Provincial Department of Commerce, the Jiangsu Provincial Public Security Department and other 7 departments issued the "Notice on the Special Rectification Action Plan for the Scrapped Motor Vehicle Recycling Industry in Jiangsu Province", proposing that before the end of July this year, the local commerce departments will take the lead in forming a comprehensive rectification summary, and pay attention to collecting and sorting out effective practices, especially to crack down on illegal recycling and reselling of scrapped motor vehicles, and strive to form a typical experience; Mechanisms for implementing industry regulations.

The industry expects that the automobile recycling and dismantling industry will form an industrial scale of 100 billion yuan after 2025. In the past two years, the sales of new energy vehicles have surged, driving the rapid start of the power battery recycling market. Considering that the dismantling value of batteries after recycling exceeds 30,000 yuan, it is expected that the overall automobile recycling market space will exceed 200 billion yuan by 2030.

Cui Dongshu said that the current automobile consumption is in a critical period of green transformation. Focusing on encouraging large-scale trade-in, which can not only promote high-quality automotive products to enter the consumer market, but also provide a driving force for the supply side to continue to accelerate the green transformation, and boost the long-term development of the mainland auto market.

Source: China Consumer Daily