2026 new policy: From Blanket Approach to Targeted Efficiency, Unlocking a New Consumer Landscape

The 2026 Spring Festival auto market carried an extra warmth of "policy red envelopes." While people were busy preparing New Year goods and navigating the Spring Festival travel rush, the Ministry of Commerce and seven other departments rolled out detailed car trade-in subsidy rules two months early, quietly igniting consumer enthusiasm. Unlike the universal subsidy approach of 2025, this year's policy is marked by an "early start, reduced average, and enhanced precision." In regions like Shanghai and Jiangxi, maximum subsidies of up to 20,000 yuan, combined with automakers' New Year discounts, prompted many families to prioritize "getting a new car" on their Spring Festival to-do lists. This convergence of policy and holiday spending not only gave the Spring Festival auto market a "strong start" but also sustained momentum after the holiday. New energy and premium models emerged as the biggest winners, while county-level markets became the new blue ocean for growth.

Early Launch + Tailored Approach: Fueling the Spring Festival Spending Boom

The most noticeable changes in the 2026 car trade-in policy are its "early launch and detailed categorization." As early as December 30, 2025, the full policy was officially released, taking full effect on January 1, 2026—a full three months earlier than in 2025, perfectly timed to cover the Spring Festival car-buying peak. For consumers, this means they can confidently purchase a car without waiting for policy implementation. Orders placed during the holiday are still eligible for subsidies, a point the Ministry of Commerce explicitly clarified, reassuring those who were on the fence. Compared to 2025, the biggest change this year is the shift from fixed subsidies to a percentage based on the new car's selling price. Although the average subsidy has decreased by 30%, its targeting has greatly improved, ensuring that "good steel is used on the blade's edge."

The core policy framework continues the dual-track system of "scrappage renewal" and "replacement renewal," but the subsidy method has shifted from fixed amounts in 2025 to a percentage based on the new car's selling price. Specifically, models with an invoice price exceeding 188,000 yuan are eligible for a 15,000 yuan replacement subsidy. For scrapping eligible old vehicles and replacing them with new energy passenger cars, the subsidy is 12% of the selling price, up to a maximum of 20,000 yuan. For replacement renewal, the subsidy is 8%, up to 15,000 yuan. Fuel vehicle subsidies are capped at 2.0 liters or less, clearly favoring green and low-carbon models.

Regional variations within the national framework have further refined policy precision. Shanghai, a major auto consumer province, imposed strict timelines for scrapped vehicles: gasoline vehicles registered before June 30, 2013, and diesel vehicles registered before June 30, 2015, qualify for maximum subsidies, precisely targeting high-emission older cars. In contrast, central and western provinces like Jiangxi and Hunan focused on activating lower-tier markets. They simplified the application process for rural consumers and supported used car dealerships in townships to handle paperwork, ensuring that even remote car owners can conveniently access policy benefits.

However, there are details to note in policy implementation. For example, the old vehicle must have been registered in the applicant's name before January 8, 2025. The invoice for the new car and the place of registration must be in the same province, and each person is eligible for only one subsidy—scrapping and replacement subsidies cannot be combined. Some regions operate on a "first-come, first-served" basis. In places like Xuzhou, Jiangsu, subsidy funds were exhausted early. Industry insiders advise acting quickly to secure funds while they last and processes are smooth, as year-end backlogs are common. They also caution against repeating last year's subsidy gaps.

In response to issues in 2025, such as uneven subsidy distribution and fraudulent claims, the 2026 policy strengthens oversight. By using big data to cross-check vehicle information and implementing real-name authentication, the policy ensures fund security, allowing consumers with genuine replacement needs to benefit. The policy's activation effect is evident. According to Ministry of Commerce data, as of February 19, the national car trade-in program reached 612,000 vehicles, driving new car sales revenue exceeding 100.5 billion yuan. During the Spring Festival holiday, daily NEV sales peaked at 36,000 units, a 150% increase from the same period in 2025, with trade-in orders accounting for over 65%.

Subsidy Synergy with Automakers Drives Post-Holiday Market Divergence

Faced with the early rollout of subsidy policies, automakers wasted no time in adjusting their New Year promotion strategies, forming a "four-dimensional synergy" of policy subsidies, corporate discounts, financial support, and service upgrades. This kept the Spring Festival auto market heating up wave after wave—and the momentum didn't fade after the holiday. Instead, it gave rise to structural divergence in the market.

During the Spring Festival, both domestic premium NEV brands and joint venture luxury brands employed a combination of "maximum subsidies + cash discounts" to maximize policy benefits. Harmony Intelligent Mobility Alliance offered cash discounts and smart driving package incentives for the AITO M9, alongside trade-in subsidies, prompting many consumers to place orders. Traditional luxury brands also lowered their profiles. The BMW 7 Series saw a total price reduction of up to 270,000 yuan, the Mercedes-Benz E-Class offered discounts exceeding 130,000 yuan, and the Audi A7L had discounts close to 190,000 yuan, making subsidy policies a key tool for inventory clearance. Domestic brands better understood the needs of county-level markets. BYD, Geely, and Changan offered "maximum subsidies + 10,000–20,000 yuan cash discounts" for their main models priced between 100,000 and 150,000 yuan, with additional trade-in subsidies for existing owners, effectively stimulating replacement demand among current users. Chery's New Year promotion covered both fuel and electric vehicles across multiple models, using substantial discounts to attract consumers.

Beyond direct price cuts, automakers are also focusing on financial support and service enhancements. IM introduced a "seven-year zero-interest, three-year zero-interest" financing plan to ease consumers' financial burden. Many car companies partnered with used car platforms to offer "residual value guarantee services," allowing consumers to offset the cost of a new car with the trade-in value of their old vehicle, creating a seamless "old car disposal + new car purchase" experience. Lynk & Co offered Lynk & Co 08 owners an additional 5,000 yuan subsidy for trading in for a new model, along with a free upgrade to the latest OTA system to boost customer loyalty through enhanced services. Joint venture brands like Volkswagen and Toyota increased subsidies by 20% for fuel vehicle owners trading in for their NEV models, aiming to leverage existing customers to bridge gaps in the NEV market.

Unlike previous years, the post-Spring Festival auto market did not enter a "cooling-off period." Instead, it exhibited a clear structural divergence. In first-tier cities, the market maintained its momentum for "premium upgrades," with many consumers finalizing car-buying decisions made during the holiday. Orders for domestic premium NEVs traded in from traditional fuel luxury cars continued to rise. A sales manager at a premium NEV brand in Beijing noted that their store saw a slight increase in orders during the first week after the holiday compared to before the Spring Festival, with many customers participating in trade-in programs. Meanwhile, second- and third-tier cities and county-level markets became the "main battleground" for NEV adoption. Models priced between 100,000 and 150,000 yuan remained the top sellers. Subsidy policies addressed budget constraints, while the expansion of charging infrastructure alleviated range anxiety, steadily increasing NEV penetration in county-level markets.

Behind this divergence lies an upgrade in consumption patterns driven by both policy and market forces. Data from the China Automobile Dealers Association shows that although the dealer inventory alert index remained above the boom-or-bust line in February, it dropped by 3.2 percentage points month-over-month, indicating that strong sales during the Spring Festival holiday effectively eased inventory pressure. To sustain this momentum, automakers have rolled out post-holiday incentives. For instance, Tesla China extended its "seven-year ultra-low interest" auto loan program, while ONVO introduced a new round of purchase incentives on March 1, adding full coverage of purchase tax on top of its seven-year ultra-low interest financing plan. For battery rental purchases, the purchase tax is fully subsidized. SAIC-GM Buick launched a "10 Billion Red Envelope" New Year promotion, with direct price cuts on multiple models and a deposit expansion offer—1,000 yuan down payment counts as 5,000 yuan—available via Tmall or Douyin orders. BYD continued its replacement subsidies, keeping consumer enthusiasm for car purchases alive.

In long term, the 2026 trade-in policy is steadily boosting the penetration rate of new energy vehicles. The China Association of Automobile Manufacturers predicts that the penetration rate will exceed 55% this year, marking an increase of more than five percentage points from 2025. The "precision targeting" of policies lays the groundwork for future adjustments. After 2027, subsidies may become more focused on models with extended range, high intelligence, and low energy consumption, though market-driven demand will ultimately take the lead.

As the number of older fuel vehicles continues to decline, the numbers of new energy vehicles have grown significantly. The supporting ecosystem—spanning charging, maintenance, and used cars—is becoming increasingly robust, creating a virtuous cycle where market demand fuels industry growth, and industry advancements, in turn, stimulate market demand. By 2028, the penetration rate of new energy vehicles is expected to surpass 65%. Long-term policies will encourage automakers to increase R&D investment in high-end and intelligent technologies. Domestic premium NEV brands are poised to outperform traditional luxury brands in core technologies, while the used NEV transaction system will be refined to address the issue of low residual value, ushering the industry into a new phase of high-quality development.