Over 8 million units! Is the car replacement market this big this year?


Hao Weili


8.2 million cars!


Ubs analysis shows that the domestic auto market sales will still grow by 4% this year, the increase is mainly from the replacement of scrapped models.


Measured by a 15-year scrap cycle, 2008 to 2010 was a period of rapid growth in China's auto market, with annual sales of passenger cars soaring to 12 million units. According to estimates, the market demand brought by the scrapping and replacement of this batch of old cars will reach 8.2 million.


In the car market, where there is no most volume and only more volume, the battle for sales continues to escalate, and the sales of each car are particularly precious. The big cake of 8.2 million cars is placed in front of the car people, some people grab the Hu order to eat, some people recommend friends to share the cake, in the end how to eat the big cake of car replacement?


■ More than 8.2 million


There is no industry more than the automotive market, and one of the root causes is that the volume of the automobile market is large enough.


At a regular State Council policy briefing held by The State Council Information Office not long ago, Zhao Chenxin, deputy director of the National Development and Reform Commission, said that China is a big country in the preservation of machinery and equipment and durable consumer goods. According to the calculation of relevant institutions, the number of cars exceeds 300 million, and the annual demand for automobiles and household appliances in China is more than one trillion yuan.


The policy helps to make the car replacement market lively.


Recently, the Ministry of Commerce and 14 other departments jointly issued the Action Plan to promote the exchange of old consumer goods for new ones. On April 12, the Ministry of Commerce issued the Notice on the Implementation of Replacing old Consumer Goods with New Ones, proposing that the central finance and local governments coordinate to arrange funds to support the renewal of automobile scrapping, and encourage qualified localities to support the replacement and renewal of automobiles.


Cui Dongshu, secretary-general of the Federation, believes that the policy direction is clear and has seized the new trend of scrapping in the market. According to the Ministry of Public Security, 34.8 million newly registered motor vehicles and 24.56 million newly registered vehicles will be registered in 2023, a year-on-year increase of 6%. By the end of December 2023, the number of motor vehicles in the country reached 440 million, of which 336 million were automobiles, accounting for 77% of the total motor vehicles.


Cui Dongshu thus estimates that the net increase of vehicle scrapping in 2023 will be 7.56 million vehicles, an increase of 32%, and the overall growth of scrapping is relatively fast, which is also a new trend after the epidemic. Considering that the new scrapping and renewal policy is supported by the state financially, the scrapping base is growing rapidly, and there will be a great breakthrough in scrapping and renewal. "It is expected that by 2024, the number of scrapped cars in the country will reach nearly 10 million, and some owners will replace their new cars, which will have an obvious effect on the auto market."


Lang Xuehong, deputy secretary-general of the China Automobile Circulation Association, also pointed out that the current subsidies and specific programs of the central government have not yet been introduced, whether it is financial support for a total amount of money spent, or as long as the qualified bicycles can get subsidies, because the policy details are not clear, so the overall purchase scale is difficult to predict. "Even if the policy is clear, the replacement market is complicated. For example, I scrapped a car under my name, but my family bought a new car, and it is difficult to calculate the replacement of a family unit with existing data."


However, Lang Xuehong said that according to the data disclosed by a large sample of survey institutions, the purchase of about 45% of new car sales, according to the domestic new car sales of about 22 million data, the purchase of about 10 million.


■ The replacement ratio of new energy vehicles may exceed 50%



After more than ten years, the relevant programs for replacing old consumer goods with new ones have been updated, and "replacing old cars with new ones" has also been placed in an important position.


Compared with the previous policy of replacing old with new subsidies from the central government, the outstanding feature of this round of old with new policies is that the central and local finances work together. It includes reducing the down payment ratio of auto loans, phasing out old cars that meet mandatory scrapping standards in accordance with laws and regulations, guiding enterprises to improve the level of recycling services, facilitating car owners to hand over their cars, promoting door-to-door car collection service models, implementing facilitation measures such as "reverse billing" off-site transaction registration for used car sales, and breaking all kinds of hidden obstacles. It fully reflects the unified and coordinated efforts of industrial, fiscal, financial, investment, land use and employment policies.


Guangzhou, Shanghai, Shenzhen, Chongqing, Nanjing, Suzhou, Jinan and other places have responded positively and successively introduced the policy of exchanging old for new. The subsidy effect of real money is direct, and some areas can enjoy a replacement subsidy of up to 30,000 yuan per car; The convenience of purchase and use is also very attractive, and some areas provide car purchase concessions in the form of further relaxing the restrictions on car license indicators and giving away charging piles, further stimulating the purchase market.


Lang Xuehong pointed out that the exchange market usually points to consumption upgrades, such as fuel vehicles to buy fuel vehicles, usually choose a higher price or grade model. But the fuel vehicle replacement of new energy vehicles, the situation will be more complicated, "there are many new energy vehicle companies reflected that their 200,000 yuan level of new energy vehicle purchase users, converted from the traditional market BBA owners."


Recently, the topic of "buying fuel vehicles officially became a minority" once rushed to the top of the Baidu hot search list. The latest data of the car market released by the Passenger Car Market Joint branch of the China Automobile Circulation Association from April 1 to 14: Both the wholesale and retail penetration rate of China's new energy vehicles exceeded 50%, which is the first time that the penetration rate of new energy passenger vehicles exceeded 50%, reaching this historic node, 11 years earlier than the original 2035.


Lang Xuehong believes that 50% of the achievement is related to factors such as the price reduction of new energy vehicle companies in the short term. Although the penetration rate of new energy vehicles may not reach 50% after the data for the whole month of April, it also releases a signal: the penetration rate of new energy vehicles is not far from 50%. It is expected that the proportion of new energy vehicles in the replacement of vehicles will be basically consistent with the penetration rate of new energy vehicles in the entire market.


■ The used car and scrap recycling market is wet


In the "old for new" action, car companies compete to launch preferential packages. Dozens of auto brands, including Chery Group, Geely Automobile, FAW Toyota, Xiaopeng, FAW Volkswagen, Great Wall Motor, BYD, Beijing Hyundai, GAC, Lantu Automobile, etc., have launched a subsidy policy for old and new, exclusive preferential activities cover a variety of models such as cars, SUVs and MPV, and some car companies have the highest subsidy for a single bike as high as 50,000 yuan. Interest-free loans can save 100,000 yuan, and large-scale promotion will continue to push the "old for new" to a climax.


Lang Xuehong also believes that at present, car companies should take advantage of the attention of the whole society for the "old for new" policy, and take advantage of the trend to introduce policies to encourage scrap renewal and old for new to attract consumers' attention. "You can see that many car companies have already introduced relevant measures, and the real money and silver subsidies are unprecedented."


In fact, a new wave of trade-in is not only driving the new car consumption market, but also directly driving the used car and scrap recycling market.


Lang Xuehong pointed out that there is also no shortage of "old for old" consumers in the exchange market, such as young people who have just entered society, small and medium-sized micro business owners, etc., they are more in pursuit of cost-effective models, a few years of car age used cars can also meet their needs, which will undoubtedly drive the active used car market.


Compared with the "old for new", Cui Dongshu believes that "scrap renewal" can fundamentally promote the growth of car sales, improve the use of vehicles, and reduce environmental pollution.


The "Action Plan to promote the replacement of old consumer goods" clearly states that by 2025, the elimination of passenger cars with national III and below emission standards will be accelerated, the recycling volume of scrapped cars will increase by 50% compared with last year, and by 2027, the recycling volume of scrapped cars will double compared with last year, and the trading volume of used cars will increase by 45%.


Cui Dongshu predicted that nearly 10 million vehicles are expected to be scrapped in 2024 and 15 million in 2027. Used car transactions will exceed 20 million in 2024 and reach 27 million in 2027. "We look forward to the implementation rules for subsequent scrapped and updated vehicles, and further clarify the requirements for scrapped vehicles, the range of subsidized models, and the amount of subsidies, and look forward to more real gold and silver subsidies to promote scrapped renewal and old for new."


Originally published by China Automotive News, April 24, 2024