China’s National Development and Reform Commission and Ministry of Finance announced that trade-in subsidies for passenger vehicles will continue through 2026, with implementation details adjusted from the 2025 program. Rather than fixed amounts, subsidies will now be calculated as a percentage of the vehicle’s purchase price, while overall caps remain unchanged.
Under the revised scheme, individual consumers who scrap their existing passenger vehicles and acquire either a new energy passenger vehicle or a gasoline model with an engine displacement of 2.0 liters or less will qualify for a scrapping subsidy. For new energy vehicles, the subsidy equals 12% of the purchase price, capped at RMB 20,000. For gasoline models up to 2.0 liters, the rate is 10%, capped at RMB 15,000.
| Comparison item | 2025 scheme | 2026 scheme | What changes |
|---|---|---|---|
| How the subsidy is calculated | Single fixed payment | Share of vehicle price, limited by a cap | Moves from flat payments to price-based percentages |
| Scrapping → NEV | Fixed 20,000 yuan (≈ 2,800 USD) | 12% of purchase price, max. 20,000 yuan | Same ceiling, now linked to vehicle price |
| Scrapping → ICE vehicle | Fixed 15,000 yuan (≈ 2,100 USD) | 10% of purchase price, max. 15,000 yuan | Same ceiling, now linked to vehicle price |
| Trade-in → NEV | Up to 15,000 yuan (≈ 2,100 USD) | 8% of purchase price, max. 15,000 yuan | Same ceiling, now linked to vehicle price |
| Trade-in → ICE vehicle | Up to 13,000 yuan (≈ 1,800 USD) | 6% of purchase price, max. 13,000 yuan | Same ceiling, now linked to vehicle price |
Consumers transferring a passenger vehicle registered in their name toward the purchase of a qualifying replacement vehicle will be eligible for a trade-in subsidy. This subsidy amounts to 8% of the purchase price for new energy vehicles (capped at RMB 15,000) and 6% for gasoline vehicles with engines up to 2.0 liters (capped at RMB 13,000).
These measures form part of China’s broader consumer goods replacement initiative. According to state broadcaster CCTV, the government has allocated RMB 62.5 billion in special funds—raised via ultra-long-term government bonds—to support the 2026 program. The funding will cover sectors including automobiles, home appliances, and digital products.
During 2025, trade-in subsidies played a key role in bolstering auto consumption. However, starting in September, fiscal constraints led some local governments to suspend the program, and by mid-November most cities had halted subsidies altogether. The China Passenger Car Association (CPCA) reported that these adjustments dampened consumer sentiment and weighed on November auto sales. On November 25, management at a leading EV maker noted in its quarterly earnings call that the suspension of trade-in subsidies had negatively affected sales of its mass-market sub-brand.
Looking ahead, the CPCA projects that December retail deliveries of new energy vehicles will reach a record 1.38 million units, while overall passenger car retail sales are expected to total about 2.3 million units—a 12.7% decline year-on-year.
Source: CnevPost
