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At least six cities and municipalities across China have suspended trade-in subsidies for car buyers in June, according to Reuters’ review of government announcements, which could slow new car sales in the world’s second-biggest economy.
Notices from governments in Zhengzhou and Luoyang blamed the subsidy pause on the first round of funding allocated by Beijing for the programme running out, while Shenyang and Chongqing said the suspension was due to adjustments to improve capital efficiency.
Dealers and traders have been buying new cars in bulk, registering them to qualify for rebates, and then reselling them as used vehicles without ever being driven— a practice that, according to local media such as Dahe Daily, has increased fiscal strain and triggered investigations by authorities.
Regulators are studying ways to prevent such practices and ensure proper fiscal allocations before continuing to support auto consumption.
By the end of May, there had been more than 4.12 million applications for the vehicle trade-in subsidy, according to the Ministry of Commerce.
In other news, Chinese authorities summoned major electric vehicle manufacturers, including BYD, urging them to self-regulate as the ongoing price war escalates.
List of Chinese EV makers include: BYD (OTCPK:BYDDF) (OTCPK:BYDDY), Nio (NYSE:NIO), Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV), Xiaomi (OTCPK:XIACF) (OTCPK:XIACY), Geely (OTCPK:GELYF) (OTCPK:GELYY).