Chinese Auto Market Declines; Expert Calls for Car Purchases to be Deductible from Personal Income Tax
As China's auto market suffers a significant sales decline in the first quarter, an expert is proposing long-term policies to stimulate demand, such as allowing car purchase costs to be deducted from personal income tax and pre-tax deductions for auto loan interest. This aims to move away from reliance on short-term subsidies.
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- 📰 Published: April 12, 2026 at 19:00
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According to Sina Finance, the 'High-Level Forum on the Development of Smart Electric Vehicles' was held in Beijing from the 11th to the 12th, where Cui Dongshu made the above appeal in his speech.
The China Association of Automobile Manufacturers announced on the 10th that in the first quarter, mainland China's auto production was 7.039 million units, a year-on-year decrease of 6.9%; auto sales were 7.048 million units, a year-on-year decrease of 5.6%.
The China Automobile Dealers Association's Auto Market Research Branch (CPCA) announced on the 9th that retail sales of passenger cars (saloons) in the first quarter were 4.226 million units, a 17.4% decline from the same period last year, with sales plummeting by 890,000 units.
Cui Dongshu pointed out that although China's population is facing a downward trend, the number of drivers in China is growing at a rate of 20 million per year, so automobiles are still the core driving force of consumption growth with great potential. Moreover, consumption is now characterized by middle-aged and elderly people. Therefore, promoting car purchases among China's middle-aged and elderly is an important direction for the development of the auto industry.
He said that future policies should provide more support for stable growth, and should not rely solely on short-term policies, but need the support of long-term policies. For example, giving 200 billion for the (subsidy for car trade-in) this year, 300 billion last year, 150 billion next year, and maybe nothing after that. Such short-term policies can hardly support the long-term stable development of the industry.
Cui Dongshu stated that long-term policies need certain support, such as including car purchase expenses in the special deduction for personal income tax, and pre-tax deduction of interest on car consumption credit. These are two relatively critical long-term measures.
He said that including car purchase expenses in the special deduction for personal income tax, for example, for high-income groups, may deduct 30% of the personal income tax. If they buy a luxury car worth RMB 1 million (about NT$4.65 million), they can save tens of thousands of yuan in taxes, which may shorten the car replacement cycle from 7 years to 5 years, pulling forward car consumption.
Cui Dongshu said that pre-tax deduction of interest on car consumption credit is also very necessary. It is now increasingly difficult for banks to make a profit margin on mortgages, and they need to expand their business through car consumption loans, which can also reduce the burden on consumers and boost car consumption.
Cui Dongshu also proposed that in the future, a bottom-line support policy linked to trade-ins should be given to multi-child families, supporting car purchase subsidies for multi-child families, especially for large cars and high-end models, which have high prices and a strong effect on boosting consumption, and should be given more support.
He pointed out that the main force of car purchase in China is the S generation (born after 1980) and older middle-aged and elderly people; especially the rural middle-aged and elderly group, their main pressure for car purchase is the lack of a driver's license, which leads them to buy low-speed electric vehicles, bringing more unsafe driving hazards to society.
'So we believe that driver's license restrictions should be relaxed to provide more suitable driver's license policies for small and micro cars for the middle-aged and elderly, which will have a huge role in promoting rural and middle-aged and elderly car consumption.' Cui Dongshu said that China needs to promote the popularization of cars in remote areas, especially promoting car purchases by the middle-aged and elderly.
Cui Dongshu's call, made at a time when China's car market is in a downturn, became a hot topic on Chinese social media today, gaining the support of many netizens and raising expectations for more car discount policies from the authorities. (Editor: Yang Sheng-ju / Hsu Chung-che) 1150412
The China Association of Automobile Manufacturers announced on the 10th that in the first quarter, mainland China's auto production was 7.039 million units, a year-on-year decrease of 6.9%; auto sales were 7.048 million units, a year-on-year decrease of 5.6%.
The China Automobile Dealers Association's Auto Market Research Branch (CPCA) announced on the 9th that retail sales of passenger cars (saloons) in the first quarter were 4.226 million units, a 17.4% decline from the same period last year, with sales plummeting by 890,000 units.
Cui Dongshu pointed out that although China's population is facing a downward trend, the number of drivers in China is growing at a rate of 20 million per year, so automobiles are still the core driving force of consumption growth with great potential. Moreover, consumption is now characterized by middle-aged and elderly people. Therefore, promoting car purchases among China's middle-aged and elderly is an important direction for the development of the auto industry.
He said that future policies should provide more support for stable growth, and should not rely solely on short-term policies, but need the support of long-term policies. For example, giving 200 billion for the (subsidy for car trade-in) this year, 300 billion last year, 150 billion next year, and maybe nothing after that. Such short-term policies can hardly support the long-term stable development of the industry.
Cui Dongshu stated that long-term policies need certain support, such as including car purchase expenses in the special deduction for personal income tax, and pre-tax deduction of interest on car consumption credit. These are two relatively critical long-term measures.
He said that including car purchase expenses in the special deduction for personal income tax, for example, for high-income groups, may deduct 30% of the personal income tax. If they buy a luxury car worth RMB 1 million (about NT$4.65 million), they can save tens of thousands of yuan in taxes, which may shorten the car replacement cycle from 7 years to 5 years, pulling forward car consumption.
Cui Dongshu said that pre-tax deduction of interest on car consumption credit is also very necessary. It is now increasingly difficult for banks to make a profit margin on mortgages, and they need to expand their business through car consumption loans, which can also reduce the burden on consumers and boost car consumption.
Cui Dongshu also proposed that in the future, a bottom-line support policy linked to trade-ins should be given to multi-child families, supporting car purchase subsidies for multi-child families, especially for large cars and high-end models, which have high prices and a strong effect on boosting consumption, and should be given more support.
He pointed out that the main force of car purchase in China is the S generation (born after 1980) and older middle-aged and elderly people; especially the rural middle-aged and elderly group, their main pressure for car purchase is the lack of a driver's license, which leads them to buy low-speed electric vehicles, bringing more unsafe driving hazards to society.
'So we believe that driver's license restrictions should be relaxed to provide more suitable driver's license policies for small and micro cars for the middle-aged and elderly, which will have a huge role in promoting rural and middle-aged and elderly car consumption.' Cui Dongshu said that China needs to promote the popularization of cars in remote areas, especially promoting car purchases by the middle-aged and elderly.
Cui Dongshu's call, made at a time when China's car market is in a downturn, became a hot topic on Chinese social media today, gaining the support of many netizens and raising expectations for more car discount policies from the authorities. (Editor: Yang Sheng-ju / Hsu Chung-che) 1150412