"The subsidy will increase from RMB 1 billion to RMB 5 billion, which is definitely a big plus!" After the first announcement, Dong Zean, head of sales at GAC Hino, couldn't help but express his excitement: "We've been waiting for months for this."
According to a decision made by the State Council's executive meeting, commercial vehicle owners who have already obtained their original vehicle scrapping certificate can now receive a subsidy not exceeding the purchase tax of the same type of vehicle when replacing it.
In the first four months of this year, the commercial vehicle segment saw a rapid growth in the auto market, and the new measures are expected to provide a significant boost. However, some car companies are calling for clearer details on the subsidy program and simplified procedures to make policies like "renewal of old" and "cars to the countryside" more effective.
The increased subsidies are expected to quickly stimulate sales. This year, the central government has raised the retirement subsidy for old cars from 1 billion yuan to 5 billion yuan. The "replacement from old to new" initiative will also expand the scope of the subsidy, offering additional support for medium, light, and micro-duty trucks, as well as certain mid-sized passenger vehicles that meet specific service life requirements. Vehicles that are scrapped early or fail to meet national emission standards can be replaced with new ones, with subsidies generally not exceeding the purchase tax of the same type of vehicle.
Dong Zean believes that this time, the higher subsidy level will attract many consumers to trade in their old vehicles, leading to a quick boost in commercial vehicle sales. Local dealers have also expressed plans to take advantage of the policy and intensify marketing efforts in the coming period.
However, some industry experts argue that supporting rules still need improvement. Jia Xinguang, a car analyst, pointed out that previous government efforts in old car retirement policies were insufficient. With around 26 million commercial vehicles on China’s roads and only about 300,000–500,000 scrapped annually, the scrap rate is just 2%. This means millions of outdated vehicles remain on the road. Increasing the intensity of scrapping could significantly benefit energy conservation, environmental protection, and transportation efficiency.
Car companies hope that the subsidy process becomes more consumer-friendly. One company representative suggested that the subsidy should be applied directly during the purchase process, similar to how passenger car purchase tax relief is handled.
This marks the third time the government has supported commercial vehicle sales, following the "Cars Go to the Countryside" campaign in March and the Treasury Department’s increased support for old car retirement subsidies in April.
Notably, the government has even focused more on commercial vehicles than on passenger cars. Analysts believe this is due to the sluggish performance of the commercial vehicle market. While passenger car sales hit record highs in the first four months of the year, commercial vehicle sales have been declining. According to data from the China Association of Automobile Manufacturers, truck production and sales rose by 17.11% and 11.99% respectively in January–April 2009, while semi-trailer tractor sales dropped by 73.51% and 69.21%. Non-integrated passenger vehicles also saw significant declines.
With greater support from this round of policies, Jia Xinguang believes commercial vehicle sales will see a substantial rebound.
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