China renews car trade-in subsidy to boost hybrid, EV sales

CHINA has renewed a trade-in subsidy of up to 20,000 yuan (S$3,724) to help underpin sales of fuel-efficient vehicles, including electric cars and hybrids.

Buyers who trade in an old car for a new electric vehicle (EV) or plug-in hybrid will receive a 20,000 yuan subsidy, while people who purchase a petrol car with an engine smaller than two litres will get a 15,000 yuan rebate. The pool of old vehicles that qualify for the programme has also been widened, according to a policy document published on Wednesday (Jan 8).

The cash-for-clunkers programme gave a big boost to sales – especially of EVs and hybrids – after its introduction last year, with more than 3.7 million vehicles purchased under the programme.

Manufacturers and investors had been eagerly waiting to see whether the subsidy, which expired Dec 31, would be renewed for this year. Automakers such as Nio and Li Auto offered incentives in early January to match the rebate so customers would continue to spend while waiting for the policy announcement.

“All regions and departments actively promoted the consumption trading old-for-new policy and saw great results,” Ministry of Commerce official Li Gang said in a briefing to announce the policy on Wednesday.

There were more than 2.9 million old vehicles scrapped and over 3.7 million new cars purchased, bringing in auto sales worth 920 billion yuan last year, Li said.

The trade-in programme does not just apply to cars, but also includes home appliances – with microwave ovens, rice cookers and water purifiers also now eligible for subsidies of up to 20 per cent of the purchase price. Officials said last week the programme would also be broadened to cover tech devices such as mobile phones and smartwatches in an effort to spur consumer spending to bolster the flagging economy.

Chinese auto stocks were mixed in Hong Kong trading. Market leader BYD fell 2.3 per cent, while Li Auto dropped as much as 1.4 per cent. XPeng however, rose 1.6 per cent. BLOOMBERG