Subsidies are phased out comprehensively. Is the car market in a panic during the National Day holiday?

Guided by policies and after years of ups and downs, the new energy vehicle industry has ultimately become the biggest driving force for China's automotive industry to move from the periphery to the center of the stage. Entering 2025, regardless of whether the price war sweeping the entire auto market has put great pressure on every automaker involved, in terms of the trend, it's always right to fully bet on the new energy market.

In addition, with the policies for trading in old cars for new energy vehicles providing support, the entire Chinese auto market is presenting a bustling scene in the wave of new energy development.

“As of September 10, the number of applications for trading in old cars for new ones this year has reached 8.3 million.” On September 13, at the 2025 China Automotive Industry Development (TEDA) International Forum, with this achievement, the Ministry of Commerce also declared that in the next step, it will thoroughly implement the decisions and arrangements of the superior authorities, vigorously boost consumption, comprehensively expand domestic demand, and promote the high - quality development of the automotive industry.

It can be predicted that due to this series of support measures to ease difficulties, the Chinese auto market may continue to show a hot trend in the future.

Interestingly, recently, Jiangsu Province also issued the “Announcement on Adjusting the Policy of Trading in Old Cars for New Ones in Jiangsu Province in 2025”, announcing that as of 24:00 on September 28, 2025, the subsidy policy for vehicle replacement and renewal in the whole province will be officially suspended, and quota management will be implemented for vehicle scrapping and renewal.

Everything related to the development of the auto market seems to have an uncertain direction. When the policy support is gradually withdrawn and the Chinese auto market starts to face the market challenges alone, can it still show an irresistible sales growth rate? Without policy incentives, can consumers still maintain their enthusiasm for buying cars?

01

Remarkable Results, but It Will End

Since the real - estate bubble burst due to some unexpected events, everyone knows how important the automotive industry is in the entire national economy. In the past, in the early stage of new energy development, the state also promoted the development of the entire industry by subsidizing automakers. However, when the subsidies are specifically given to consumers, the core purpose has shifted from accelerating industrial progress to promoting consumption.

That is to say, seeing that the new energy industry has gradually become the cornerstone for the growth of China's automotive industry, automobile consumption naturally plays a crucial role.

In fact, driven by policies, in the first eight months of this year, China's automobile production and sales reached 21.051 million and 21.128 million vehicles respectively, with year - on - year increases of 12.7% and 12.6% respectively. Among them, the cumulative production and sales of new energy vehicles reached 9.625 million and 9.62 million vehicles respectively, with year - on - year increases of 37.3% and 36.7% respectively. The sales of new energy vehicles accounted for 45.5% of the total sales of new vehicles.

Regarding this result, we can't say that 100% of consumers choose to buy cars now because of subsidies at all levels. But obviously, when buying a car becomes an optional thing, the suddenly - available subsidies must have played a very key role.

We have witnessed the sales situation of the entire auto market this year. If we continue the development model of the auto market in its heyday, it would be very difficult to mobilize the enthusiasm of potential users. So, even without subsidies, automakers themselves have all - round means.

Throughout the year, we've always been saying how cheap the new cars of a certain automaker are and how powerful their product capabilities are. In essence, they are all variants of the price war.

When it comes to the intensifying price war in 2025, it seems on the surface to be a market battle initiated by several automakers. But now it seems that the overall situation of the consumer market has already been set.

Compared with the past, now, for those who want to buy a car, the first consideration when choosing a car is the low price. Regardless of the brand or the class, cars in the market are only divided into cheap and expensive ones. As this view spreads in the market, any new car launched now can only gain a little exposure on social platforms if its selling price is lower than that of similar products.

Regarding this current situation, it's hard to say whether it conforms to the logic of the forward evolution of the automotive industry. After all, given the current environment, it's impossible to return to the era when automakers could make money easily and consumers bought cars without thinking.

But in the long run, can such a state really make the internal circulation of the Chinese auto market run in a positive cycle?

Now, just before the National Day holiday, the purchase subsidies in coastal developed provinces have been continuously tightened and even cancelled, which really caught everyone off guard.

To put it bluntly, when the replacement subsidy disappears, the cost for consumers to buy a car directly increases. Previously, vehicles that met the policy requirements could enjoy a cash subsidy of up to 20,000 yuan for replacement. With the suspension of the subsidy, consumers have to bear this part of the cost themselves, which will inevitably lead budget - sensitive consumers to postpone their car - buying plans. In the current consumption environment, I believe that most people are budget - sensitive.

Where will the Chinese auto market go in the future? No one can give a specific answer to this question. But we should be very clear that in history, no industry has grown by relying on external forces to stimulate consumer sentiment. Although car subsidies are good, in the end, automakers have to attract users on their own.

02

Policy Withdrawal, the Auto Market Reaches a Turning Point

In fact, before Jiangsu, many places such as Hubei, Hunan, Anhui, and Guangzhou have successively suspended the application for car replacement subsidies. Some regions have changed from “unconditional application” to “coupon - grabbing mode” and strictly restricted the license - plate registration locations of new cars. Some places even terminated the subsidy activities that were originally planned to last until the end of the year in the second quarter due to the rapid consumption of funds.

The threshold for car purchase subsidies has been significantly raised, and the uncertainty of future policies has increased. Obviously, the window for consumers to buy cars at a discount has been narrowing. When Jiangsu made the same decision, one thing became even clearer: the withdrawal of policies will not only have an immediate impact on the market, but the scope of the impact will be unprecedented.

Affected by the policy adjustment, car dealers will have a harder time; with sales being affected, automakers will be hesitant about the promotion of subsequent products; and suppliers bound to automakers will be on tenterhooks in the context of automakers' tight funds.

Now, this situation can make everyone in the industry nervous. If the tightening of the new energy vehicle purchase tax exemption policy is added later, to be honest, it's hard to imagine how those enterprises that have always relied on external support will survive.

Of course, just like the market situation after the cancellation of national - level policies such as the “car - going - to - the - countryside” and the halving of purchase tax, the decline or adjustment of subsidy policies is ultimately a key step in promoting the transformation of the automotive industry from “policy - driven” to “market - driven” and “experience - driven”.

Looking at it positively, this is a new starting point for forcing automakers to build core competitiveness. After saying goodbye to subsidies, automakers can no longer simply rely on price advantages and must focus on the product strength itself.

On the other hand, it will always accelerate the survival of the fittest in the industry. Leading automakers have more advantages in technology, capital, and the supply chain and can better adapt to the subsidy - free environment. While tail - end enterprises that rely heavily on subsidies may face the risk of being eliminated by the market, which will contribute to industry integration and healthy development.

It's undeniable that the suspension of car replacement subsidies will bring pain to the market in the short term, but in the long run, it's an inevitable path for the industry to mature. Currently, since the subsidies will be distributed in an orderly manner in batches in the fourth quarter, it means that the policy is not a “one - size - fits - all” withdrawal but has entered an optimization and adjustment stage that pays more attention to precision and efficiency to prevent the chaos of subsidy - fraud such as “zero - kilometer used cars” that occurred in the previous policy implementation.

As onlookers, we sincerely hope that the healthy development of the future auto market will rely more on automakers' technological innovation, product experience improvement, and a fair market competition environment. As for consumers, when all the glitz fades away, car - buying decisions may need to comprehensively consider the long - term value of products, rather than just short - term price discounts and subsidies.

This article is from the WeChat official account “Automobile Commune” (ID: iAUTO2010). Author: Cao Jiadong, Editor: He Zengrong. Republished by 36Kr with permission.