China Unveils New Policies for Auto Distribution and Aftermarket to Boost Full-Lifecycle Consumption of 370 Million Vehicles

As of June 2024, China’s motor vehicle fleet reached 370 million units, with a per-thousand-population ownership rate of approximately 378 vehicles. New vehicle sales have ranked first globally for 17 consecutive years, and the market has entered a phase dominated by existing vehicle stock rather than new purchases. Against this backdrop, on June 23, the Ministry of Commerce, in collaboration with multiple government departments, simultaneously unveiled two policy initiatives: (1) eight ministries designated 40 pilot cities for reforming automobile circulation and consumption; and (2) nine ministries jointly introduced 17 supportive measures targeting six key areas—vehicle modification, RV camping, classic cars, maintenance and insurance, motorsports, and car rental. The 40 pilot cities will implement “one city, one policy” approaches, focusing on five priority directions: optimizing purchase and driving restrictions in major cities to unlock the potential for new energy vehicle (NEV) consumption; eliminating hidden barriers to inter-regional used-car circulation and simplifying transfer procedures; improving incentive mechanisms for phasing out older vehicles and standardizing end-of-life vehicle recycling and battery cascade utilization; promoting integration between automotive consumption and culture, tourism, and sports; and exploring supporting businesses such as intelligent connected vehicles, car rentals, and motorsports. These efforts aim to establish a seamless physical circulation chain—from new vehicles to used cars to scrappage and recycling—enhancing vehicle replacement efficiency and alleviating pressure on new car sales. The concurrently released 17 measures focus on standardizing and developing the automotive aftermarket. Regarding vehicle modification, the policies clarify a compliance checklist and procedures for registration changes, while advancing the establishment of a national standards system. In the RV camping sector, unified registration standards are introduced, land-use approval processes for campsites are simplified, and public parking lots are required to provide essential amenities like water and power hookups. For classic cars, official identification criteria, annual inspection rules, and trading guidelines are being formulated to encourage collecting, exhibitions, and reproduction of spare parts. On maintenance and insurance, the measures promote transparency of technical information and traceability of spare parts, while cracking down on excessive repairs. Motorsports regulations streamline event approvals and foster a multi-tiered competition system to integrate racing with cultural tourism. Car rental enterprises will receive interest subsidies and other support to expand fleets and accelerate vehicle renewal. Together, these two policy packages create a synergistic effect: the circulation pilots address physical mobility challenges across a vehicle’s lifecycle, while the aftermarket measures unlock diverse service values during usage, jointly building a full-cycle consumption ecosystem encompassing “buying, replacing, using, and enjoying” vehicles. The overarching goal is to transform automobiles from one-time transactional goods into continuous sources of consumer value, shifting industry competition logic away from new-vehicle sales volume toward user-centric, lifecycle-based operations. Currently, China’s used-car market remains underdeveloped, with transaction volumes in 2025 still below 70% of new car sales—far lower than the U.S., where used-car transactions exceed new ones by more than a 2:1 ratio. Key obstacles include local de facto restrictions on used-car migration, opaque vehicle condition information, inconsistent inspection standards, and cumbersome transfer procedures. The government hopes that piloting reforms in select cities will generate replicable experience for nationwide rollout, thereby reducing institutional trial-and-error costs. In the aftermarket segment, despite the trillion-yuan opportunity presented by the existing 370-million-vehicle base, current spending remains concentrated on basic maintenance and repair. Personalized and culturally driven demand is constrained by regulatory limitations and industry disorder. The new policies aim to channel consumption toward leisure-oriented and experiential services by standardizing these six specialized sectors, creating new growth avenues for automakers, dealers, and service providers. Policy implementation also brings transformation challenges: small modification shops and independent repair garages face rising compliance costs; dealers must invest in new businesses such as used-car operations, rentals, and modifications; and automakers need to restructure products and supply chains to develop official aftermarket services. Early movers who successfully pioneer viable business models stand to gain significant first-mover advantages. Overall, these dual policy initiatives mark a pivotal shift in China’s automotive consumption paradigm—from “one-off transactions” to “full-lifecycle services.” The core of industry competition is gradually moving away from price wars toward deep, user-focused operational capabilities.