Chinese Regions Dial Back Car Subsidies as Funds Dry Up
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Multiple provinces in China are reining in vehicle trade-in subsidies, dealing a blow to auto sales and casting doubt on the durability of the national stimulus program.
On Sept. 4, the Department of Commerce in Hubei province said it was cutting auto trade-in incentives to two levels — 3,000 yuan ($411) and 5,000 yuan — from a previous range of 7,000 to 15,000 yuan. The application process has also become more complex. Starting Sept. 5, buyers must obtain an eligibility voucher before purchasing a new car. The provincial platform releases a limited number of vouchers daily, with volume adjusted according to fund usage. The tighter policy has led some sales staff to suggest buyers seek subsidies in neighboring provinces instead.
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- Multiple Chinese provinces are reducing or complicating access to vehicle trade-in subsidies, impacting auto sales and dealer foot traffic.
- After rapid depletion of subsidy funds, over 20% of local governments tightened policies; the CADA reported more than 75% of dealerships saw significant drops in sales.
- The national initiative, launched in April 2024 and extended through 2025, generated over 920 billion yuan in sales, but faces diminishing returns despite increased government spending.
- China Automobile Dealers Association
- The China Automobile Dealers Association (CADA) observed that 20% of local governments tightened their subsidy policies after the latest release of central government trade-in funds. A CADA survey revealed that over 75% of dealerships reported a significant drop in foot traffic and sales, with nearly 30% experiencing sales declines exceeding 15%. Wang Du, CADA's vice president, noted the diminishing returns of government subsidies on auto sales.
- April 2024：
- The national vehicle trade-in initiative (including scrappage and replacement subsidies) was launched in China.
- By the first half of 2025：
- Some provinces exhausted their entire vehicle trade-in subsidy quota for the whole year of 2025 and suspended their programs.
- Late July 2025：
- The central government released the latest batch of trade-in funds; subsequently, 20% of local governments tightened their subsidy policies.
- September 2, 2025：
- Chongqing’s municipal commerce bureau announced an additional 100 million yuan for its auto trade-in program, along with new limitations on the budget and changes to subsidy models.
- September 4, 2025：
- The Department of Commerce in Hubei province announced a cut in auto trade-in incentives and changes to the application process.
- Starting September 5, 2025：
- In Hubei, buyers must obtain an eligibility voucher before purchasing a new car under the new trade-in subsidy policy.
- As of 2025：
- The national vehicle trade-in initiative is set to expire unless extended.
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