China’s 2026 Auto Trade-In Subsidy: Aiming at the NEV Replacement Cycle

China’s 2026 national auto trade-in subsidy program has been finalized. The eligibility window for scrappage replacements has been widened again, bringing more early NEV owners into scope.

On Dec. 31, China’s Ministry of Commerce and other departments released the implementation rules for the 2026 auto trade-in subsidy program. Compared with 2025, the scope of support for scrappage-based replacements has been expanded further.

The registration cutoffs for eligible scrapped vehicles have also been relaxed: gasoline passenger cars must have been registered before Jun. 30, 2013; diesel and other fuel types before Jun. 30, 2015; and NEV passenger cars before Dec. 31, 2019.

This effectively pulls in a new group of early NEV owners who are closer to a natural replacement cycle. It also signals a shift in policy emphasis—from clearing out older ICE vehicles toward accelerating the replacement of existing NEV stock.

Subsidies are still calculated as a percentage of the new-car purchase price, with caps in place. For scrappage replacements, support tops out at RMB 20K; for trade-in replacements, the cap is RMB 15K. The rules also set a timeline for review and payout: for eligible applications, funds should in principle be disbursed within 30 working days.

Notably, the policy landed right at the end of December—essentially a stabilizer for consumers who were still hesitating.

CPCA data offers some context: from Dec. 1–21, nationwide passenger-vehicle retail sales reached 1.30M units, down 19% year-on-year but up 5% versus the same period a month earlier. Wholesale shipments were 1.302M units, down 23% year-on-year and down 13% versus the same period last month. The numbers didn’t fall off a cliff, but by China market standards, December’s softness clearly tracks with concerns about incentives tapering.

Over the past two years, China has leaned on its auto trade-in program as a key lever to support domestic demand—and the policy push has only intensified. Xinhua reported that funding for the “Two New” program in 2025 rose to RMB 500B, including RMB 300B earmarked for consumer trade-ins, up RMB 150B from the previous year. In 2024, authorities also allocated RMB 150B in ultra-long special treasury bonds specifically to support consumer trade-ins.

The demand-side response has been equally direct. The Ministry of Commerce said that from January to November 2025, the trade-in program drove more than RMB 2.5T in related goods sales, benefiting over 360M participations, with over 11.2M vehicle replacements.

That’s why the 2026 program matters. In the near term, it can help convert last-minute fence-sitters into actual purchases. Over the longer run, it’s another step in pushing China’s auto market from pure incremental growth toward a more stock-driven replacement cycle.