- More than 4 million people have applied for trade-in subsidies in China this year.
- The Chinese government has committed to funding the program throughout 2025.
- Some businesses are selling new cars as ‘zero-mileage used cars’ to get the subsidies.
China’s car market has been riding high, fueled by generous government subsidies. Dealers are taking advantage of this in numerous ways, including some less scrupulous ones selling zero-mileage cars as “used” to pocket trade-in subsidies meant to help consumers. Now, at least six cities and municipalities have hit the brakes on these subsidies, meaning local buyers will soon face higher costs when driving off with a new car.
The pause comes on the heels of concerns over the long-term fallout from the ongoing automotive price war sweeping through the nation.
Read: The Company That Started The EV Price War Now Says It’s Gone Too Far
In cities like Zhengzhou and Luoyang, local governments have announced a break in the program, citing the depletion of the initial round of funding from Beijing. Other cities, including Xinjiang, Chongqing, and Shenyang, to name a few, have hopped on the bandwagon, suspending a subsidy initiative that was originally meant to stimulate consumer spending during China’s ongoing economic struggles.
Reuters reports that subsidies like those in effect for the auto industry, as well as electronics and home appliances, contributed to a 6.4% growth in local retail sales for May. What’s more, data from the Ministry of Commerce reveals that through the first five months of this year, there have been more than 4 million applications for car trade-in subsidies.
Some Are Taking Advantage Of The Subsidies
While the subsidies help make cars more affordable, the program is being abused. For example, there’s a growing trend of new cars being heavily discounted and sold as “zero-mileage used cars” to quickly shift inventory. Additionally, many dealers are describing new cars as used vehicles that can be traded in, making them eligible for the subsidies.
Local reports state that these practices are one of the reasons why the subsidies have been used up quicker than expected, prompting suspensions.
The country’s National Development and Reform Commission and Ministry of Finance say the subsidy program will continue throughout this year, although it’s not known when more funds will be released by Beijing.
