A new wave of positive news has swept through the automotive sector with the official release of a policy notice jointly issued by the National Development and Reform Commission and the Ministry of Finance. This document, titled "Notice on the Implementation of Large-Scale Equipment Renewal and Consumer Goods Trade-In Policy in 2026," clearly delineates the scope of support, subsidy standards, and operational requirements for the "Two New" policies in 2026. According to the detailed implementation rules for the 2026 auto trade-in subsidies, the national subsidy program will continue to provide substantial support for both vehicle scrappage and vehicle replacement.
Specifically, regarding support for vehicle scrappage and renewal, individual consumers who scrap a passenger vehicle registered under their name and subsequently purchase a new energy passenger vehicle listed in the "Catalogue of NEV Models Exempt from Vehicle Purchase Tax" or a fuel-powered passenger vehicle with an engine displacement of 2.0 liters or below will be eligible for a scrappage renewal subsidy. The subsidy amounts to 12% of the new vehicle's price for a new energy passenger car (capped at 20,000 yuan) and 10% for a fuel-powered passenger car with a 2.0L or smaller engine (capped at 15,000 yuan).
For vehicle replacement support, individual consumers who transfer the registration of a passenger vehicle registered under their name and purchase a qualifying new energy or sub-2.0L fuel-powered passenger vehicle will receive a replacement subsidy. This subsidy is set at 8% of the new vehicle price for a new energy model (capped at 15,000 yuan) and 6% for a qualifying fuel-powered model (capped at 13,000 yuan).
To ensure a smooth and orderly policy transition and to meet peak consumption demand during holidays like New Year's Day and the Spring Festival, the National Development and Reform Commission has already allocated the first batch of 2026 funds, totaling 62.5 billion yuan from ultra-long-term special treasury bonds, to local governments to support the consumer goods trade-in initiative. Data from the Ministry of Commerce shows that from January to November of this year, the trade-in program for consumer goods has driven sales of related goods exceeding 2.5 trillion yuan, benefiting over 360 million people. Notably, more than 11.2 million vehicles were traded in, accounting for over one-third of total vehicle sales during the period.
CITIC Securities released a research report stating that the continuation of the auto trade-in policy into 2026 suggests investors should focus on globally competitive Chinese enterprises and fully embrace new industry trends. Investment targets that may outperform in the first half of 2026 include leading passenger and commercial vehicle manufacturers that benefit from sustained positive export momentum and possess significant profit elasticity from overseas operations. As China's automotive market continues to expand, the global market share of Chinese automakers has repeatedly hit new highs.
Data indicates that from January to November 2025, passenger vehicle production and sales reached 27.388 million and 27.256 million units respectively, representing year-on-year growth of 12% and 11.5%. Among the world's top 10 automakers this year, three Chinese companies showed strong share growth: BYD reached 6th place globally, Geely 8th, and Chery 10th. The shift towards electrification has also contributed to the gradual decline of some international automakers. Apart from temporary strength in the US market and positive factors in markets like India for Suzuki, other international brands have experienced substantial and broad-based market share declines.
Cui Dongshu, Secretary General of the China Passenger Car Association, pointed out that the policy direction for 2026 continues the基调 of 2025, featuring more proactive fiscal policy and appropriately accommodative monetary policy. Coupled with the early implementation of national subsidies, the effect is expected to be prominent, forecasting a positive year-start growth for the auto market in January. He believes that during the extended period before the Spring Festival, the subsidy policy will provide a significant boost to market growth, laying a foundation for 2026 auto market performance exceeding expectations. It is estimated that the auto market in the first quarter of 2026 could achieve year-on-year parity, with new energy vehicle sales potentially seeing a slight increase of around 5%.
Currently, the domestic market is at a critical juncture with national standard updates. The new standards are promoting industry standardization, accelerating the consolidation of smaller brands, while leading companies dominate the market with their scale and technological advantages, driving product upgrades towards intelligence and premiumization. Founder Securities published a report noting that the Central Economic Work Conference and the Ministry of Finance have clarified the optimization of the "Two New" policies, with many regions selecting platform enterprises for the trade-in program. Positive signals continue to be released from the policy side; following the release of compliance guidelines for pricing behavior in the auto industry by the State Administration for Market Regulation, industry price competition has moderated, and the competitive environment continues to improve.
Simultaneously, some cities have begun deploying work related to the new national subsidies. The industry is expected to see catalysts from the landing of detailed policy rules and supplementary support, highlighting the bottom-fishing allocation value of leading automakers. Attention should be paid to subsequent catalysts from policy-driven prosperity. Related concept stocks include BYD COMPANY (01211): NEV production for the first 11 months reached approximately 4.1176 million units, up 7.29% year-on-year; sales were approximately 4.182 million units, up 11.3% year-on-year. GEELY AUTO (00175): Total vehicle sales for the first 11 months were 2.7878 million units, a 42% increase year-on-year. Total vehicle sales in November were 310,400 units, an increase of approximately 24% compared to the same period last year. NIO-SW (09866): Deliveries for the first 11 months reached 277,900 vehicles, up 45.6% year-on-year; November deliveries were 36,300 vehicles, up 76.3% year-on-year. XPENG-W (09868): Cumulative deliveries for the first 11 months reached 391,900 vehicles, a 156% increase year-on-year. November deliveries were 36,700 vehicles, up 19% year-on-year.
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