China introduces measures to stimulate automotive industry growth

China is introducing new measures to boost its automotive industry. These plans include expanding trade-in policies, strengthening the used car market, and easing purchasing restrictions. These steps aim to improve confidence among automakers, dealers, and consumers. In 2025, China will issue 300 billion yuan (about $41.4 billion) in long-term treasury bonds. This funding will help support consumer trade-in programs for cars, as announced by the government in mid-March. Compared to the previous year's 150 billion yuan, this increase is expected to energize the market. Last year, domestic passenger vehicle sales increased to nearly 22.89 million units. This represents a growth of 5.5% from the previous year, with significant sales of new energy vehicles (NEVs). For 2025, the market is expected to see the scrapping of 5 million vehicles and replacement of 10 million, according to the China Passenger Car Association. Domestic car retail sales are projected to rise to around 23.4 million units in 2025, marking a 2% increase from the prior year. NEV sales are forecasted to hit 13.3 million units, a notable 20% growth giving NEVs a 57% market share. Efforts are being made to extend automotive services beyond just selling cars. This includes car modifications, leasing, and recreational vehicle camping. There is a growing demand for high-quality services even as car supply exceeds demand. While traditional dealerships dominate the market, third-party brands are increasingly gaining traction. The used car market is also set to improve thanks to new transaction measures and the development of third-party platforms. In 2024, sales of used cars reached 19.61 million, a 6.52% increase from the previous year. The sale of secondhand NEVs surpassed 1 million units for the first time, increasing by almost 48%. Experts believe there is still room for growth in China's used car market, which lags behind markets in Europe and the U.S. They suggest building an industry database to help consumers make informed decisions about secondhand vehicles. The new action plan includes easing purchase restrictions, particularly for long-term residents who do not own vehicles. Analysts agree that relaxing these limits can stimulate new car sales. Purchase limits have faced criticism, especially in major cities like Beijing and Shanghai, where heavy traffic congestion persists. There are calls for these restrictions to be lifted, but experts caution that removing all limits could worsen road conditions. As of the end of 2024, Beijing had more than 7 million vehicles registered, while Shanghai had over 5 million.