Beijing offers incentives to scrap high-emission vehicles

31 March 2020

The city authorities in Beijing, China's capital, have announced fresh policies in an attempt to boost new car sales. The scheme is primarily designed to reduce the number of high-emissions vehicles in the city by offering incentives to owners who scrap these old models or transfer their vehicles' registration to other cities. Both passenger vehicles and commercial vehicles are eligible for incentives under the programme. The exact subsidy that applies depends on the size of the vehicle. The maximum amount an owner who scraps their old model can receive is CNY10,000 (USD14,100) for a small passenger vehicle before 31 December 2020. Between 1 January and 31 December 2021, the maximum amount for the scrapping of a small passenger vehicle is reduced to CNY8,000. For those who transfer registration of a high-emission vehicle out of Beijing, up to CNY5,000 will be granted for a small passenger vehicle between 1 April and 31 December 2020. The city authorities said the term 'high-emission vehicle' refers to gasoline (petrol)-engine models registered in Beijing that meet the China 3 emission standards and 'small passenger vehicle' refers to vehicles with a body length of less than 6 metres and carrying 9 passengers or less.

Significance: The incentive programme announced by Beijing will not directly provide subsidies to consumers who purchase a new vehicle; instead, it encourages existing owners to scrap high-emission vehicles or transfer the vehicle's registration to other cities, which normally can be achieved by selling the vehicle in the second-hand vehicle market to a buyer in another city. The scheme will put relatively less strain on Beijing's traffic conditions as it does not directly relax the city's cap on new vehicle registrations. Under this scheme, most passenger vehicle models are categorised as 'small vehicles'. The subsidy of CNY10,000 for owners scrapping their old models certainly looks attractive.