Trade-in to promote consumption, the automotive industry to the "new" gallop

In order to boost the economy and stimulate consumption, trade-in has become one of the key tasks of the mainland to promote automobile consumption this year. From the fourth meeting of the Central Financial and Economic Commission in February this year to encourage and guide a new round of large-scale equipment renewal and consumer goods trade-in, to the State Council in March issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in", and then to the Ministry of Commerce and other 14 departments issued the "Action Plan for Promoting the Trade-in of Consumer Goods" (hereinafter referred to as the "Action Plan") will promote the replacement of automobiles as one of the three key tasks of consumer goods trade-in, focusing on new cars, second-hand cars, scrapped cars, The trade-in of all aspects of the whole life cycle of automobiles, such as the automotive aftermarket, will be promoted by increasing policy support, smoothing the circulation and blocking points, strengthening the guidance of reform and innovation, and promoting the whole chain.

The relevant person in charge of the Department of Consumption Promotion of the Ministry of Commerce pointed out that the market for consumer goods such as automobiles has a large complex volume and a strong driving effect. At present, it has been nearly 15 years since the last round of promoting the trade-in of consumer goods nationwide, and the demand for renewal has entered a period of concentrated release.

Policy incentives are unimpeded, and the potential of circular consumption continues to be released

In the first quarter of this year, the auto market ushered in a "good start": exports increased by more than three percent year-on-year, and domestic demand urgently needs to be driven by policies. According to data released by the China Association of Automobile Manufacturers (hereinafter referred to as the "China Association of Automobile Manufacturers") on April 10, the cumulative production and sales of automobiles in the first quarter were 6.606 million and 6.72 million units, respectively, an increase of 6.4% and 10.6% year-on-year, respectively, a new high in the first quarter since 2019.

After the Spring Festival this year, the new cars of various enterprises were listed in a centralized manner, offline activities such as auto shows were carried out one after another, and promotional policies such as trade-in were introduced in some regions, which drove the rapid growth of automobile sales month-on-month and year-on-year. The China Association of Automobile Manufacturers said that in the first quarter, the economic operation of the automobile industry started smoothly and achieved a good start, and various policies introduced in the near future will effectively stimulate the growth of the domestic auto market in the second quarter.

The Action Plan clearly states that by 2027, the recycling volume of scrapped cars will double compared with 2023, and the transaction volume of second-hand cars will increase by 45% compared with 2023.

At present, many places have introduced preferential policies for car trade-in. Chongqing Municipality, Shanghai Municipality, Tianjin Economic Development Zone, Jinan City, Shandong Province and other regions have quickly responded to the call of the state and successively launched a new round of fuel vehicle trade-in subsidy policy and new energy vehicle replacement policy. The industry generally believes that the introduction of scrapped updates, trade-in and other related policy rules, with local promotion, corporate marketing has formed a benign interaction, is expected to promote the continuous release of automobile consumption potential.

Bai Ming, a member of the Academic Degrees Committee of the Research Institute of the Ministry of Commerce, pointed out in an interview with a reporter from China City Daily that compared with the previous trade-in action, this round of policies has obvious differences, it focuses more on stimulating the purchase potential of different groups of consumers, and focuses on the effective transformation of stock and increment between the old and the new, combining the energy level and the optimal structure, and finally smoothing the high-quality cycle of supply creating demand and demand driving supply.

Zhu Keli, executive director of the China Information Association and founding president of the National Research Institute of New Economy, also said in an interview with a reporter from China City Daily that durable consumer goods such as automobiles are an important part of modern life, and the speed and quality of their upgrading directly affect the quality of life and happiness of consumers. Through government support and enterprise concessions, consumers can reduce the cost of replacement and increase their willingness to renew, thereby effectively stimulating market vitality and consumption potential. The implementation of the Action Plan can release market demand and benefit the development of circular economy and other related industries, which is of great significance for stabilizing market expectations and boosting consumer confidence.

Increase fiscal and financial support, and appropriately reduce the proportion of down payment for car loans

"If you're considering a loan to buy a car, it's a good deal right now, with a variety of preferential installment options, including an interest discount of up to 7,800 yuan, a 24-installment zero-interest fixed loan of 80,000 yuan, and a 5-year ultra-long-term loan with a down payment ratio as low as 15%. The sales staff of a 4S store in Beijing told a reporter from China City Daily that this was a financial plan for car purchases that had just been launched in the store.

The reporter recently visited the market in the Beijing area and found that a number of car brand 4S stores have adjusted the previous car purchase finance plan, launched zero interest, zero down payment plan, and even provided up to 30,000 yuan of financial discount to attract more consumers.

Some store sales staff said that due to the lower cost of car use and the latest policy benefits, the number of citizens who have the need to replace fuel vehicles has increased significantly recently. The newly launched financial replacement policy and the promotion of the Qingming holiday have brought a wave of small sales peaks to the stores. Now, replacing an old car as a down payment and enjoying a low-interest loan to buy a new car has become a new model for buying a car in stores in the near future.

In fact, the adjustment of the auto loan ratio has long been expected. Since the second half of last year, the government and financial regulators have repeatedly proposed financial support to expand automobile consumption and promote the trade-in of old cars. The "Action Plan" also makes arrangements for increasing fiscal and financial support policies, requiring insurance institutions to further enrich auto insurance products and services. In addition, the People's Bank of China and the State Administration of Financial Supervision and Administration recently jointly issued the Notice on Adjusting Relevant Policies for Auto Loans (hereinafter referred to as the "Notice"), clarifying that financial institutions may, under the premise of legal compliance and controllable risks, independently determine the maximum proportion of loans for self-use traditional powered vehicles and self-use new energy vehicles based on the borrower's credit status and repayment ability.

The reporter learned from the relevant person in charge of a joint-stock commercial bank that before the issuance of the "Notice", according to the regulations of the People's Bank of China and the former China Banking Regulatory Commission in 2017, the maximum proportion of loans for self-use traditional power vehicles and self-use new energy vehicles was 80% and 85% respectively.

The "Notice" adjusts this ratio to be determined by financial institutions independently, which means that the maximum loan issuance ratio can reach 100%, that is, the full amount will be issued according to the price of the car purchased, and the "zero down payment" car purchase is expected to be realized.

"The 'zero down payment' for self-use is undoubtedly a big plus for the auto market. Huang Yongsheng, secretary general of the Guangdong Automobile Industry Association, said in an interview with a reporter from China City Daily that the relaxation of the proportion of car loans lowers the threshold for consumers to buy cars, which can stimulate consumption, especially improve the desire of entry-level consumers to buy cars. In addition, this policy is also beneficial to financial institutions, greatly improving the flexibility of auto loans, and empowering auto consumption by launching more diversified and customized car purchase credit products, so as to break through the "last mile" problem of second-hand cars, new energy vehicles and other consumption.

"This initiative is actually a combination of punches, not only to provide convenience for entry-level consumers who buy new cars, but also to release the potential of some consumers who need to replace them. Bai Ming believes that at present, the mainland automobile market has changed from an incremental market to a market that attaches equal importance to stock and increment, and the demand for replacement and purchase is increasing.

Banks are also gearing up to seize the consumer credit opportunities offered by trade-ins. Liang Shidong, director of retail business of Postal Savings Bank, pointed out at the 2023 annual results conference held not long ago that this year, consumer credit should be promoted to improve operational efficiency and user experience through the optimization of processes and the intensification and refinement of operations, such as realizing same-day application and same-day disbursement of auto loans.

In recent years, the state has continuously strengthened financial supervision, and the possibility of consumption risks is relatively small. However, some veterans in the auto finance industry reminded that although the "zero down payment" policy has brought benefits to the market, "zero down payment" is not equal to "0 yuan purchase", and consumers still need to carefully consider their own economic ability and credit situation to choose the right auto finance products.

The two-wheel drive of "policy + activity" promotes the green and circular development of the industrial chain

This year is the "Year of Consumption Promotion", and the trade-in of consumer goods is one of the highlights. At the recent regular policy briefing of the State Council, Xu Xingfeng, director of the Department of Market Operation and Consumption Promotion of the Ministry of Commerce, said that a large number of consumption promotion activities will be organized, and a series of local station activities of the "National Consumer Goods Trade-in Action" will be held in accordance with the principle of "there are activities to trade in the old for the new". It is understood that the first event was launched on April 13 during the 4th China International Consumer Goods Expo and Hainan International Consumer Season, aiming to form a wave of publicity and participation across the country through a series of local station activities.

Sheng Qiuping, Vice Minister of Commerce, pointed out at the Hainan Station event that the Ministry of Commerce adheres to the two-wheel drive of "policy + activity", focuses on promoting the trade-in of consumer goods, and carries out a series of activities of "Consumption Promotion Year", taking multiple measures to stabilize and expand consumption, and consolidate and strengthen the economic recovery trend.

Wang Du, vice president of the China Automobile Dealers Association (hereinafter referred to as the "Dealers Association"), said in an interview with a reporter from China City Daily: "The two-wheel drive of 'policy + activity' can effectively open up the consumption path and enhance the enthusiasm of consumers to buy cars, thereby stimulating the overall consumption of the automobile market and bringing multiple opportunities for the development of the automobile industry." ”

He believes that in this process, the government has adopted the idea of "policy guidance, market-oriented, and multi-party participation", and the policy focus is on scrapping and renewing, replacing and renewing, which can maximize the use of limited funds and meet more consumer demand.

In addition, Wang Du revealed that the circulation association will cooperate with the Ministry of Commerce and local automobile business authorities to actively carry out various activities, and plans to carry out more than 300 series of activities to promote consumption of automobiles across the country, adhere to the old car trade-in, and strive to achieve car sales of 600,000 units and sales of more than 80 billion yuan through activities within the year. At the same time, the Circulation Association will also carry out extensive publicity and education activities, while enhancing consumer awareness and encouraging more consumers to participate, it will also carry out comprehensive trade-in policy training activities for dealers.

Wang Du suggested that more market mechanisms should be brought into play, so that local governments, brand car companies, and new and used car dealers can organically collaborate, give full play to their respective advantages, provide consumers with more abundant and comprehensive new products and services, so that more scrapped cars can flow into formal scrapping channels, and promote the green and circular development of the automobile industry chain.

■China City Daily reporter Sun Xuefei