Morgan Stanley released a research report that indicates that the mainland will raise the scrappage subsidy standard for passenger vehicles, and individuals who scrap National III and below emission standard fuel passenger vehicles or new energy passenger vehicles registered before a certain date will receive subsidies when purchasing new energy passenger vehicles or automobiles with an engine displacement of 2 liters or less that are included in the Catalogue of New Energy Automobile Models Eligible for Exemption from Vehicle Purchase Tax. The subsidy standard will increase to RMB 0.02 million for the purchase of new energy passenger vehicles and to RMB 0.015 million for the purchase of automobiles with an engine displacement of 2 liters or less.

Credit Suisse believes that the upgraded replacement plan has implemented the government's commitment to stimulating demand for automobiles, but it also highlights the challenges facing the domestic consumer market and the ineffectiveness of previous stimulus measures. The bank believes that a stable inventory of car models and stimulus measures should boost Q4 car sales growth, but may raise concerns about cannibalization of car sales in 2025.