Interpretation of automobile replacement subsidies: Is it a financial issue or the prelude to policy adjustment?

Since June, there has been a notable change in the automotive market. According to announcements released by local commerce departments, many cities, including Zhengzhou and Luoyang in Henan, Chongqing, Shenyang in Liaoning, and Huizhou in Guangdong, have announced the suspension of accepting applications for automobile replacement and upgrade subsidies. Most of the official reasons given are straightforward: the subsidy funds have been exhausted. This news has surprised many consumers who are still observing the market or in the process of purchasing a car, and has also attracted wide attention in the market.

The so - called automobile replacement subsidy is a financial incentive measure introduced by the government to promote automobile consumption and accelerate the elimination of old vehicles. Simply put, when individual consumers sell their old cars through the second - hand car market (i.e., replacement) or have them scrapped by a regular enterprise (i.e., scrapping) and then purchase a new car, the government will provide a one - time cash subsidy.

The purpose of this policy is clear: Firstly, it aims to lower the threshold for consumers to purchase cars through real - money subsidies and stimulate the vitality of the automotive market. Secondly, it serves as a guide to accelerate the elimination of old cars with high energy consumption and sub - standard emissions, and optimize the vehicle structure on the roads. Thirdly, it strongly encourages consumers to buy new energy vehicles, supporting the country's energy conservation, emission reduction, and the transformation and upgrading of the automotive industry.

The subsidy amount is not uniform across the country but is jointly funded by the national and local governments. There is a basic subsidy standard at the national level, and local governments will increase the subsidy amount based on their own financial situations and market goals, which is what we commonly call the "national subsidy" plus the "local subsidy".

Therefore, the subsidy amounts that consumers in different regions can ultimately receive vary greatly, ranging from a few thousand yuan to over ten thousand yuan, or even more than twenty thousand yuan. Usually, the subsidy for purchasing new energy vehicles is higher than that for fuel - powered vehicles, and the subsidy amount may also be higher for more expensive new cars.

Since the subsidy directly reduces the cost of purchasing a car, this policy has been warmly welcomed by consumers since its introduction.

Now, although many places have pressed the "pause button", it does not mean that the "trade - in" policy for automobiles has come to an end. From all available information, this "pause" seems more like a phased adjustment rather than a permanent termination.

Most official notices in various regions use the term "suspension" rather than "termination", which in itself leaves room for the subsequent restart of the policy. The main reason for the suspension is the early exhaustion of the budget funds, which precisely shows the popularity of the policy and the strong market demand. Local governments also need some time to evaluate the effectiveness of this round of the policy and plan and prepare for the funds for the next round.

From the national perspective, the general direction of encouraging automobile consumption and "trade - in" has not changed. Not long ago, relevant national departments clearly stated that in the new round of policies, some vehicles meeting the "National IV" emission standards will also be included in the subsidy scope for scrapping and upgrading. This move clearly indicates that the national support continues and the coverage is expanding.

It is foreseeable that after a short period of evaluation and preparation, the new round of automobile replacement subsidy policy is likely to be restarted. At that time, the new policy may be optimized and adjusted in some details, such as adjusting the subsidy amounts for different models or simplifying the application process to make it more targeted and sustainable.

Based on the current policy orientation and market situation, we can make several possible speculations about the next - stage automobile replacement subsidy policy.

The new subsidy policy may no longer be a simple "one - size - fits - all" approach. It may tilt more towards new energy vehicles, offering higher subsidy amounts for pure - electric and plug - in hybrid models, while the subsidies for fuel - powered vehicles may be gradually reduced or more stringent displacement restrictions may be set. In addition, the subsidies may also make more detailed classifications for vehicles at different price levels to ensure that the funds can more effectively benefit ordinary consumers.

In addition to direct cash subsidies, future subsidies may take more diversified forms. For example, "automobile consumption vouchers" that can be directly deducted from the car price when purchasing a car may be issued, or cooperation with financial institutions may be carried out to provide low - interest or even interest - free loan discounts for eligible car buyers, maximizing the leverage effect of fiscal subsidies.

Dynamic subsidies are also an important aspect. Just as the country has included some "National IV" vehicles in the subsidy scope, future policies may continue to expand the scope of old cars eligible for subsidies to release more potential for car replacement. At the same time, new standards may be set for aspects such as energy consumption, range, and intelligent level of newly purchased vehicles to guide the automotive industry towards higher - quality development.

Each region may introduce more region - specific subsidy plans based on its own urban development plan, environmental carrying capacity, and financial situation. For example, first - tier cities may concentrate all subsidy resources on new energy vehicles, while other cities may retain support for energy - efficient fuel - powered vehicles, forming a policy pattern that suits local conditions and has different focuses.

For consumers, although the short - term "window period" without subsidies is a bit regrettable, in the long run, the policy dividends of the government's encouragement of automobile consumption are still worth looking forward to. All in all, the new round of subsidy policy is likely to pay more attention to "precision" and "guidance", aiming not only to stimulate sales but also to promote the healthy, green, and sustainable development of the entire automotive market.

This article is from the WeChat official account "Cheyun" (ID: cheyunwang), author: Miao Zheng. It is published by 36Kr with authorization.