Local Chinese governments are releasing economic stimulus packages to boost consumption, including measures targeted at boosting car sales, as Shanghai gradually emerges from a two-month Covid-19 lockdown. 

Why it matters: The latest government measures, ranging from voucher programs to new quotas, could be a sign of recovery in China’s auto sector, which has seen production halted and raw material prices surged amid a spate of recent Covid-19 outbreaks across the country.

Details: Many Chinese cities have released a host of measures to help boost demand for cars as part of their economic stimulus package. The Shanghai municipal government on May 29 unveiled (in Chinese) 50 stimulus measures, which included giving out 40,000 new car plates and handing out cash incentives for gas car owners trading in for EVs. 

  • Consumers will also receive rebates of RMB 10,000 ($1,503) per car for any trade-in of gasoline vehicles for new electric vehicles (EVs) for the rest of the year, as stated on the notice of the municipal government’s official WeChat account.
  • Cui Dongshu, Secretary General of the China Passenger Car Association, on Monday told Jiemian News (in Chinese) that he expects Shanghai’s stimulus package to increase sales of passenger vehicles by around 150,000 units, of which two-thirds could be new energy vehicles, which includes all-electric vehicles and plug-in hybrids.
  • On Monday, a Nio spokesperson told Chinese media The Paper on Monday that the company expects the stimulus measures to accelerate EV adoption, adding that orders for its models in the city have increased “significantly” in May (our translation).
  • A number of local authorities also released similar cash subsidies for people to buy cars. Shenzhen on Thursday announced (in Chinese) plans to lift its limits on the number of new vehicles allowed on the city’s roads by allocating 20,000 new license plates to quotas and providing incentives of up to RMB 20,000 for new car purchases.
  • Both the central Chinese city of Zhengzhou and Shenyang, the capital city of the northeastern Liaoning province, announced new voucher programs of RMB 100 million to boost vehicle buying earlier this month. Meanwhile, car buyers in the central city of Wuhan could receive a subsidy of RMB 8,000 or RMB 3,000 for each trade-in of new energy vehicles or combustion engine vehicles, respectively.  

Context: China’s central government has pledged to strengthen the current state subsidy to EV makers to encourage auto sales, as the latest wave of Covid-19 cases has disrupted auto parts supply chains and forced carmakers to drop their outlooks for the year.

  • During a State Council executive meeting on May 23, Beijing unveiled dozens of new stimulus measures, including cutting car purchase taxes by RMB 60 billion, in the hope of helping the industry withstand the impact of the pandemic, SCMP reported.
  • China’s auto sales dropped by nearly half to 1.18 million units in April compared to the same time a year earlier, according to official figures. Major automakers such as Tesla were hit hard by supply-chain constraints and a month-long production shutdown.
  • Local EV upstarts Xpeng and Li Auto earlier this month issued a gloomy outlook for the second quarter of this year, after reporting record declines in vehicle deliveries for April.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen