China Pushes Spending from Cars, 40 Cities to Test
China is preparing 40 pilot cities to encourage automotive consumption. The government wants spending to come not only from the sale of new cars, but also from used cars, modifications, rentals, racing, camping tours, to after-sales services.
Launching a report by China Daily Wednesday, June 24, this program aims to remove restrictions that are considered unnatural and open up new consumption spaces that combine trade, tourism, culture, and sports.
Participating cities, including Beijing and Shanghai, will carry out reforms according to the characteristics of their respective industries, market conditions, resources, and regional functions. The focus includes car modifications, used vehicle circulation, recreational vehicle camping, racing events, car rental services, and recycling of unusable vehicles.
Deputy Minister of Trade of China Sheng Qiuping said the number of vehicles in China has reached 370 million units. The country's car sales have also ranked first in the world for 17 consecutive years.
Sheng said cars are now shifting from being just a means of transportation to becoming intelligent mobile living spaces. This change, according to him, opens up great opportunities in the automotive aftermarket.
The after-sales market is a business after the car is sold. Its contents include spare parts, maintenance, repairs, accessories, automotive services, to vehicle-based camping activities.
According to Sheng, seven-year-old or older passenger cars now account for more than 50 percent of the total vehicles in China. This age is usually the point when cars start to require major repairs, component replacement, and more serious system checks.
iResearch's report estimates China's automotive aftermarket market reached 1.7 trillion yuan, or about 250 billion US dollars, last year.
This boost comes at a time when Chinese automotive consumption is weakening. Automotive retail sales fell 16.1 percent year-on-year in May. The decline widened 0.8 percentage points from April and was the deepest among major retail categories.
Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, said the weakening occurred when the tax incentives for new energy vehicles began to be reduced. At the same time, demand was attracted earlier by the exchange program last year, while household sentiment was still weak.
China's National Bureau of Statistics recorded a decline in the automotive sector, bringing total retail sales of consumer goods back into the negative zone for the first time since December 2022. The figure fell 0.6 percent year-on-year to 4.1 trillion yuan.
Chinese car manufacturers are also moving through technology and services. At the end of May, BYD became the world's first major car manufacturer to compensate users for direct losses due to accidents when using an urban navigation driving assistance system.
The Shenzhen-based manufacturer said users of the God's Eye A, God's Eye B, and God's Eye 5.0 systems are protected for one year, as long as the urban navigation function is used according to the system rules.
The compensation includes repair costs, damage to third-party property, and liability for injuries. BYD says the program is free, unlimited in compensation, and does not affect the user's insurance premiums later.
Nio took a different path. On June 18, the company launched an update to its world-model-based intelligent driving system for more than 700,000 vehicle owners. Cars sold four years ago can also get a free update.
The program is part of China's efforts to expand automotive consumption as new car sales weaken. The government and manufacturers are now pushing the aftermarket, digital services, and driving experience as new sources of spending.