China to Pay Consumers Up to Nearly $1,400 to Replace Old Cars

By Jiahui Huang

China plans to give car owners up to nearly $1,400 to replace their old cars with new ones, a move to boost slowing demand in the world's largest electric-vehicle market.

Consumers who replace their cars with electric or hybrid vehicles can in some cases receive government subsides of up to 10,000 yuan ($1,381) through the end of this year, China's Ministry of Commerce and other departments said in a joint statement Friday. People trading in older cars for traditional cars with engines sizes of 2.0 liters and below are eligible for CNY7,000.

China's policymakers are trying to boost consumption amid subdued domestic demand in the world's second largest economy. Estimated passenger car retail sales dropped 1.5% on year in April, swinging from a growth of 6.2% last month, China Passenger Car Association data showed Thursday.

Beijing launched a similar trade-in program to boost domestic consumption in 2009 and 2010.

Deutsche Bank analysts wrote in a recent note that they expect the trade-in subsidy program will benefit lower-priced vehicles the most, such as BYD's.

"The equipment upgrade and trade-in of consumer goods are not a panacea for solving China's structural problems," OCBC Greater China economist Tommy Xie wrote in a note. He added that it may serve as a short-term solution that could buy China more time to rebalance its economy.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

April 26, 2024 06:04 ET (10:04 GMT)

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