The Standard of Car Renewal Increases Commercial Vehicles Still Cold

On the last day of 2009, the Ministry of Commerce and the Ministry of Finance jointly sent a New Year gift to the commercial vehicle industry and jointly announced in the two departments the “Circular on Adjusting the Subsidy Standards for Vehicle Replacement” (hereinafter referred to as the “Notice”). The allowance standard for the scrapping of old cars, "yellow car" and redemption of new cars in advance will be adjusted from 3,000 to 6,000 yuan to 5,000 to 18,000 yuan. Compared with the 2009 subsidy standard, the standards for heavy truck and big passenger subsidy have increased the most. They have all been raised from the original standard of 6,000 yuan to 18,000 yuan. The subsidy amount of light trucks and light passengers accounted for a higher percentage of the vehicle price, benefiting the most.

After the news was released, it was widely discussed and basically affirmed by the media that the substantial increase in subsidy standards had a positive effect on enhancing consumer enthusiasm for “renewal of old”.

Since the "replacement for old" policy was introduced in 2009, the limelight has almost been overshadowed by the "half of purchase tax" and "car to the countryside." There has been no disagreement in the ongoing debate over the implementation of the “replacement of old-for-new” trade-offs. The most objectionable issue is the lack of supervision by the relevant departments on the scrapped vehicles and the “yellow-marked vehicles” on the road. A bus company official once commented sharply: “If you want the 'new trade' to really drive the market, the relevant departments will first say how many 'yellow cars' are on the road and the number of vehicles to be scrapped.”

The reason why this adjustment is concerned is related to one detail. In the month preceding the issuance of the "Notice," the Ministry of Commerce, the Ministry of Public Security, the Ministry of Environmental Protection, the Ministry of Transport, and the five ministries and commissions of the State Administration for Industry and Commerce jointly issued the "Notice on Strengthening the Supervision and Administration of End-of-Life Vehicles" to strengthen the scrapped cars. Supervision and management of the work carried out a comprehensive deployment. This reshapes the confidence of many people in the industry. “It can be seen that this year the government department is envi- ronmental and does indeed want to push this work forward. The sincerity of the government has strengthened our confidence.” Shen Yonghong, general manager of Shanghai Liandong Motor Sales Co., Ltd., said: “Although the amount of subsidies is still high and low, Controversy and policy enforcement environment are still lacking, but the increase in the subsidy amount of 'new trade for new' can at least positively stimulate the auto market. In the past, users were more willing to discount the vehicle to the used car market, but the policy would encourage Some users who are inclined to buy used cars will consider buying new cars directly. At the same time as stimulating the new car market, the purchase price of second-hand cars will also drop, prompting some owners to choose 'new trades'.'

The improvement of subsidies and the attitude of the government will also play a role in driving the scrapping of vehicles by enterprises and institutions ahead of schedule. There is a bus industry insiders predict that after the increase in the amount of subsidies, the stimulating effect on the bus and bus market should be more obvious than the passenger transport market.

All parties have reservations

Although policy adjustments have been initially recognized by the industry, the actual stimulating effect of the policy on the market is still in place. All parties still have reservations about this.

Regarding the bleakness of last year’s “renewal of old”, Shen Yonghong believed that there was a close relationship with rigid demand. "Last year, Shanghai was affected by the financial crisis. Many users' vehicles were parked and they still talked about buying new cars. Many people sold old cars, rented cars and transported them, and the 'new trade' policy was naturally not a big market." If the car can run, the owner will not easily scrap the vehicle. This is also a major difficulty encountered in the policy of “renewal of old”.

Shen Yonghong said: "Even if there is a demand for car users, most of them will use the old car plus the new car, and will not scrap the old car. In 2009, the 'new for trade' subsidy is similar to the direct sale of scrap metal, and users have no interest in driving If you do not want to leave old cars, most users will also choose to buy vehicles that are nearing retirement and 'yellow cars' in the form of used cars in rural areas." In many villages, "yellow car" and scrap The vehicle can be driven without paying any fees, the price is low, and it is welcomed by the market. The used car market therefore benefits.

Based on the above reasons, in 2010, Shen Yonghong was not optimistic about its direct promotion of the market. “Scalpers are reluctant to change trains, and there is not much demand for vehicle conversion. There is too little rigid demand. Shanghai has restrictions on trucks entering Central, and many of the city’s transport fleets are government-funded, such as 'vegetable basket' projects financed by subsidies. Transport teams, because of their charity, have limited profits and are not willing to expand their scale."

The "new trade-in" for passenger cars also faces a similar situation with trucks. In general, a bus can be used for about 4 years before it can be profitable. After the vehicle can run for 6 months, it will earn 6 months more money. The owner will not take the initiative to send the car to scrap. Although this year's subsidy has improved, the price of a new car is still relatively low compared to the high price of a new car. The above-mentioned people in the industry bluntly stated: “The bus sales are fierce and the bargaining power of large passenger transport companies is strong. In addition, many passenger cars and direct sales vehicles are the mainstay. Many group customers and bus companies already have agreements for discounted repurchases. Not much space."

Another situation is unfavorable to this year's policy. Although the “new-for-new” subsidy in 2009 was not worthwhile, many group users still actively participated on the basis of their own brand image. In 2009, customers of Beijing Haoyunxin Automobile Sales Co., Ltd. included large enterprises such as Sinotrans and Coca-Cola to participate in the trade-in replacement. “This type of user has no need for car change in 2010. For most retail investors, it lacks interest-driven. Therefore, this year’s policy stimulus may not be particularly satisfactory.” Hao Guiying, General Manager of Beijing Haoyunxin Automobile Sales Co., Ltd. Indicated.

Can learn from foreign initiatives

In fact, in 2009, Britain, the United States, Germany, Italy, and other countries all introduced policies that resembled trade-in, and achieved a very good market response. France’s Minister of Economic Promotion Dwegian once said: “In the first 10 months of 2009, the French household car market increased by 4.2% year-on-year, which was mainly due to the “new trade” subsidy policy for cars.” The UK’s “trade-for-new” policy is also correct. Domestic car sales have had an immediate effect. Only two weeks after the start of implementation, 35,000 new cars were sold through the plan, and one-fifth of new car buyers participated in the plan. In the first month after its implementation, the decline in the sales of British automobiles has been significantly curbed.

Why is the situation in foreign countries so exciting? Judging from the “ newness ” subsidy, the US subsidizes US$4,000 for each vehicle, which accounts for nearly 30% of the new low-end car prices; the average domestic subsidy is 5,000 yuan, accounting for around 6% of the mid- to low-range car prices, which makes consumption. There is a huge difference in acceptance. In this regard, Shen Yonghong said: "With light trucks and China Cards as an example, I think at least subsidy should be mentioned for more than 20,000 yuan before they can really play a stimulating role."

And other countries are not just funded by the government. The United Kingdom has adopted the reciprocal investment from the government and enterprises to jointly stimulate the market. For each vehicle, the government subsidizes 1,000 pounds, and the participating car manufacturers need to subsidize at least 1,000 pounds. Many people in the industry believe that such a model can also be tried in China. Hao Guiying believes: "To make 'old for new' really play a role, but also need to pay attention to the company, funding cooperation with the government to promote 'old for new', this is the vehicle company to achieve sales and brand image of the double harvest opportunities."

The simplification of procedures for scrapping subsidies is also a common expectation of distributors and enterprises. "Last year was too much trouble. Users also had to apply for various certifications and delay them from making money. This year also hopes that the relevant procedures and procedures can be simplified. Only in this way can the policy activate the market to a greater extent," said the industry insider.

Commercial car news reporters also found in the survey that the implementation of the old-for-new policy in 2009 was not effective, which also partially affected the policy sentiment this year. Insiders even told reporters that they no longer care about such policies. Last year, the Minister of Economic Promotion of France personally handed out the “TM” bonus for the 500,000th car to a car buyer. The relevant department of our country only hangs the “Notice” on the government website and lacks more forms to promote it.

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