Revitalizing Consumption: The Impact of China’s Vehicle Trade-in Program

Continuing to Enhance Trade-In Programs to Stimulate Consumer Spending

As of May 11, 2025, according to data from the Ministry of Commerce, the number of applications for the automobile trade-in subsidy has reached a total of 3.225 million, which includes 1.035 million for scrapped vehicles and 2.19 million for replacements. Since the implementation of the automobile trade-in policy in 2024, the cumulative number of subsidy applications has exceeded 10 million.

Data from the Passenger Car Market Information Association reveals that in April, retail sales in the national passenger car market reached 1.755 million units, marking a year-on-year increase of 14.5%. From January to April of this year, cumulative retail sales totaled 6.872 million units, a year-on-year growth of 7.9%. Cui Dongshu, Secretary-General of the association, stated, “This year, the early launch of the trade-in policy and the prompt implementation of subsidies have contributed to good growth in the passenger car market. In April, retail sales of passenger cars reached the second-highest level for that month in history, only behind 1.81 million units sold in April 2018.”

Since the beginning of this year, the increasingly refined policy framework has driven significant equipment updates and consumer goods trade-ins, injecting new vitality into the consumer market. This has become a crucial strategy for expanding domestic demand and boosting consumption.

As a major hub for the Chinese automotive industry and a key player in automotive consumption, Shanghai has been actively implementing the national automobile trade-in policy since 2024. The city aims to establish a long-term mechanism that makes it easier to dispose of old vehicles and encourages consumers to purchase new ones. To further promote consumer spending this year, the Shanghai government has rolled out a comprehensive set of related policies to broaden the support scope and increase replacement subsidy standards.

With the stimulation from the new policies and the full launch of offline activities such as auto shows and the “May 5 Shopping Festival,” automotive consumption in Shanghai is experiencing a remarkable revival.

Implementing a Comprehensive Consumer Policy

In May, SAIC Motor Corporation reported that its vehicle sales in April reached 377,000 units, reflecting a year-on-year increase of 4.6%, achieving a four-month consecutive rise in sales. Among these, sales of new energy vehicles surged to 128,000 units, a staggering year-on-year growth of 71.7%, setting a new record for the year.

Automotive industry analysts believe that since the second quarter of this year, consumer demand in Shanghai’s automobile market has been rapidly released, largely due to a series of favorable policies introduced by both central and local governments.

Before the Spring Festival, the Shanghai Municipal Commission of Commerce announced related policies to further support automobile trade-ins in 2025. In April, the city decided to expand the range of vehicles eligible for trade-in subsidies to include vehicles registered outside of Shanghai. The updated policy extends the subsidy eligibility from “small passenger cars registered in Shanghai” to “small passenger cars registered outside of the province.”

At the end of April, the 2025 Shanghai Auto Show coincided with the sixth “May 5 Shopping Festival.” Taking advantage of the new vehicle launches, various districts in the city organized diverse promotional activities to stimulate automotive consumption, with several districts offering district-level purchase subsidies. Preliminary statistics indicate that Putuo District hosted the “Automobile Quality Consumption Carnival and Five Senses Lifestyle Festival,” launching a subsidy policy that offers at least 3,000 yuan in district-level discounts for new car purchases. Jiading District organized automotive promotional activities in conjunction with the “Shanghai Auto Culture Festival,” offering up to 2,000 yuan in district-level subsidies for eligible vehicles, including newly purchased used cars. Fengxian District hosted a car consumption carnival with subsidies that further amplify the effects of national and local automotive incentives to stimulate large-scale consumption. In the Pudong New Area, a purchase subsidy of 3,000 yuan is available for new fuel-efficient cars and new energy vehicles that meet the National VI B emissions standard, with a total of 30,000 available slots. This subsidy can be combined with national and local trade-in incentives, leading to a maximum total subsidy of 23,000 yuan.

Regarding trade-in subsidies, the city government continues to enhance the national scrappage policy, expanding eligibility for old fuel vehicles from National III and below to include certain National IV and below vehicles, further supporting the scrapping and replacement of older vehicles. The local trade-in policy, known as “local subsidies,” has now included hybrid vehicles in the support range for purchasing new energy vehicles. Additionally, consumers replacing eligible fuel vehicles can receive a subsidy of 13,000 yuan, an increase of 1,000 yuan from last year. Furthermore, measures have been introduced to facilitate the trade-in process for vehicles registered outside the city, offering subsidies in line with Shanghai’s policies.

Generating New Momentum for Consumption Growth

In 2024, applications for automobile trade-in subsidies in Shanghai exceeded 150,000, driving new car sales of over 30 billion yuan. In the second half of 2024, the number of scrapped vehicles in Shanghai increased by more than 70% year-on-year. In 2025, Shanghai will implement the national automobile scrappage and replacement policy, further expanding the support range and increasing subsidy standards for vehicle replacements.

Under the influence of this comprehensive set of policies, the consumption potential of Shanghai’s automotive market is accelerating its release. On the final day of the Shanghai Auto Show, the National Exhibition and Convention Center was still bustling with visitors, including families and overseas guests. Popular models drew crowds, requiring waiting lines to experience them. The auto show has become a significant engine driving automobile consumption in Shanghai. An insider from an automotive company noted that even after the venue lights were turned off at closing time, many consumers remained engaged in discussions and negotiations.

According to the latest data from the Shanghai Municipal Commission of Commerce, during the “May Day” holiday, the sales revenue in the Longemont New Energy Vehicle Street in the Zhongshan Park business district skyrocketed by 99%. In Putuo District, the total order volume for automotive sales companies increased by over 60% year-on-year. Sales figures for companies such as BYD and BMW in Pudong saw increases of 160% and 60.6% respectively.

With the continuous improvement of the trade-in policy framework, a win-win situation is emerging. This not only allows high-quality products to reach households at more affordable prices but also creates a positive cycle where demand drives supply and supply creates demand. This provides sustained internal momentum for high-quality economic development, marking a new chapter in the collaborative advancement of consumption upgrades and industrial transformation.