Used Car Consumption Potential Accelerates: Tax Reduction Extended, Exports May Fully Liberalize

China's used car market is seeing accelerating consumption potential as multiple government departments release supportive policies. The Ministry of Commerce's Foreign Trade Department recently sought public comments on the "Announcement on Matters Related to Used Car Exports (Draft for Comment)," widely viewed as a precursor to the full liberalization of used car exports after four years of pilot programs.

Previously, the Ministry of Finance and State Taxation Administration confirmed that the reduced 0.5% value-added tax rate for used car dealers would be extended to December 31, 2027.

Xie Xiaowen, an expert committee member of the New Technology Branch of the China Communications and Transportation Association, stated: "National policies promoting used car consumption reflect the market's enormous potential and development space. The used car market not only addresses transportation needs but also promotes the circular development of the automotive industry. Current challenges in the industry include information asymmetry, lack of transaction transparency, and unreliable vehicle conditions. These policies can drive industry transformation and improve standardization and service quality."

Zhang Yongwei, Vice Chairman and Secretary-General of the China EV100, stated: "In the circulation process, used car sales will become mainstream alongside new car sales. Following international patterns, used car transactions may exceed 15 million units by 2030, rivaling new car scale. The ecosystem around used cars — certification, valuation, warehousing, logistics, finance, and recycling — will grow increasingly large."

The China Automobile Dealers Association expects national used car transactions to reach 18 million units this year, with a transaction value of 1.2 trillion yuan.

Policy Tailwinds: "Limit Relocation" Eased, Tax Reduction Extended

As "limit relocation" and "cross-regional registration" policies ease, a unified national used car market is accelerating. In April this year, the Ministry of Public Security introduced new policies allowing one-document processing for vehicle transfer registration and vehicle access. In June, the State Council executive meeting emphasized fully eliminating used car limit relocation policies and deploying a unified national market.

On September 1, the Ministry of Industry and Information Technology, the Ministry of Finance, and five other departments released the "Automotive Industry Stabilization Work Plan (2023-2024)," which, in addition to setting new car sales targets, explicitly required promoting the scrapping, renewal, and consumption of old vehicles and used cars.

New Energy Used Car Market Warming Up

The enthusiasm of the new car market is also spreading to the used car sector. China Automobile Dealers Association data shows that new energy used car transactions reached 839,000 units in the first half of the year, up 22% year-on-year, accounting for 8.6% of total used car transactions — equivalent to nearly 9 out of every 100 used cars sold being new energy vehicles.

Lan Jikang, an individual used car dealer in Datong, shared: "This year, new energy used cars basically have no inventory. The mainstream transaction price is around 100,000 yuan, which balances range and configuration, offering the best value for money."

Retention value was once the biggest deterrent for new energy used cars, but this barrier is being crossed. A China Automobile Dealers Association report shows that in the first half of 2026, the three-year average retention rate for fuel vehicles was 46.07%, while for new energy vehicles it was 44.8% — the gap has narrowed to less than two percentage points.

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