As China’s economy and society continue to evolve, with residents’ living standards steadily improving, the automotive sector is witnessing fresh trends in circulation and consumption. The automotive aftermarket, centered on vehicle usage, is poised for significant expansion.

With over 370 million vehicles on China’s roads and the average vehicle age now exceeding seven years, tapping into the automotive aftermarket—a new frontier for enhancing people’s livelihoods and stimulating consumption—has become a critical focus. This is essential for ensuring smooth domestic circulation and fostering new growth drivers.

Recently, nine government departments, including the Ministry of Commerce, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Transport, the Ministry of Culture and Tourism, the General Administration of Customs, the State Administration for Market Regulation, the National Financial Regulatory Administration, and the General Administration of Sport, jointly released the Notice on Several Measures to Foster and Expand Automotive Aftermarket Consumption (hereinafter referred to as the Notice). The Notice details 17 specific measures across six key areas: vehicle modifications, RV camping, classic cars, maintenance and insurance, auto racing, and car rentals. On the same day, the Ministry of Commerce and seven other departments unveiled a list of 40 pilot cities for automotive circulation and consumption reform. These cities will address unjustified restrictions in automotive circulation and consumption based on their unique industrial strengths, market conditions, resource endowments, geographic locations, and functional roles, fostering innovative automotive consumption scenarios, business models, and formats while promoting the integrated development of commerce, tourism, culture, sports, and health.

“As China’s economy and society progress, with residents’ living standards continually rising, new trends and shifts are emerging in automotive circulation and consumption. Vehicles are rapidly transforming from mere transportation tools into ‘intelligent mobile living spaces,’ and the automotive aftermarket, centered on vehicle usage, holds immense growth potential,” remarked Sheng Qiuping, then-Vice Minister of Commerce, at a State Council Information Office press conference on June 23. He explained that the Notice was issued to implement the CPC Central Committee and State Council’s strategy to vigorously boost consumption and accelerate the cultivation of new growth drivers in service consumption. It also aligns with market trends, combining policy support with reform and innovation to further stimulate consumption.

“Selling cars” is no longer the endpoint

The automotive industry is a strategic and pillar sector of China’s national economy, playing a vital role in expanding consumption, stabilizing investment, and improving people’s livelihoods. According to Sheng Qiuping, automotive retail sales account for approximately 10% of total retail sales of consumer goods, while the automotive industry contributes about 6% of manufacturing investment, and automotive and parts exports make up roughly 6% of total goods trade exports. To date, China’s automobile ownership has reached 370 million vehicles, with car sales ranking first globally for 17 consecutive years, solidifying China’s position as a true automotive powerhouse. In recent years, China has not only become the world’s largest automotive consumer market but has also led in new energy vehicle (NEV) production and sales, automotive exports, and global sales by Chinese automakers. Cars have become a hotspot in the consumer market, a focus for foreign investment, and a highlight in foreign trade.

However, this underscores the urgency and necessity of establishing and improving a domestic automotive aftermarket system. Cui Dongshu, Secretary-General of the China Passenger Car Association, noted that passenger vehicle consumption will face significant pressure in 2026, with diminishing marginal effects of short-term subsidy policies. Meanwhile, China’s automotive market is accelerating its transition from an “incremental era” to a “stock era,” with explosive growth expected in demand for “car usage” services such as maintenance, modifications, rentals, and used car transactions.

“The essence of this policy is to unblock all links in automotive production, circulation, services, and consumption through full-chain reforms, balancing stock revitalization with new business format cultivation. It represents a systemic exploration to shift the automotive industry from incremental stimulus to sustainable, high-quality development,” Cui said. He highlighted a fundamental policy shift—from “stimulating car purchases” to “servicing car usage” and from short-term subsidies to long-term institutional support. This is not merely a policy adjustment but a systemic transformation from ideology to institutions and from short-term to long-term approaches.

Sheng Qiuping stated that the Notice’s measures focus on three aspects. First, it combines unified deployment with pilot initiatives. At the national level, specialized policies address issues such as inadequate management systems, incomplete standard frameworks, and insufficient high-quality supply in the automotive aftermarket. Additionally, pilot reforms in automotive circulation and consumption are being conducted through a “merit-based selection” approach, with 40 pilot cities chosen nationwide to support local innovations in automotive aftermarkets, new car sales, used car circulation, and end-of-life vehicle recycling. These cities will address shortcomings and bottlenecks through localized reforms, forming distinctive pilot outcomes.

Second, it emphasizes both stock revitalization and incremental optimization. On one hand, pilot cities are encouraged to leverage existing facilities like automakers, auto markets, racing tracks, and cultural parks to create innovative automotive consumption scenarios, business formats, and models, improving resource efficiency. For example, international consumer center cities like Shanghai and Tianjin are utilizing global racing tracks to host renowned auto races and promote integrated consumption events spanning commerce, tourism, culture, sports, and health. On the other hand, pilot cities such as Hangzhou and Shenzhen are exploring optimized car purchase quota systems to meet latent demand. They are also leveraging free trade zones and comprehensive bonded zones to explore activities like bonded car modifications, “bonded + exhibition” models for classic cars, and car rentals, expanding and optimizing niche industries. For instance, Xiong’an New Area, prioritizing the relocation of non-capital functions from Beijing, is innovating car rental services by supporting relocated enterprises in bulk purchasing new vehicles for employee leasing, meeting commuting needs across the Beijing-Tianjin-Hebei region.

Third, it balances “effective regulation” with “dynamic vitality.” The Notice deepens the shift from purchase management to usage management in automotive consumption. In areas like used car transactions, RV camping, and pickup truck access to urban areas, restrictions will be relaxed while complementary regulatory frameworks are refined. For “effective regulation,” national-level policies clarify management systems and development directions. For example, to balance development and safety, the Notice introduces tiered and categorized management for car modifications, supporting standardized and orderly growth in the modification industry. For “dynamic vitality,” the policy grants local governments autonomy to innovate within authorized limits or local jurisdictions. For instance, pilot cities are supported in simplifying RV campground land approval processes to reduce administrative costs and explore replicable experiences.

Installing “traffic lights” in “gray zones”

For a long time, many niche segments within the automotive aftermarket have seen rapid growth in consumer demand but lagging institutional support, creating “gray zones” where strong consumption willingness collides with ambiguous compliance boundaries. One key significance of the Notice is its refusal to ignore these regulatory blind spots. Instead, it adopts a “tiered, categorized, and conditionally liberalized” approach to establish institutional safeguards for new business formats, transforming “blockades” into “facilitation” and enabling orderly release of consumption potential under institutional protection.

Car modifications have long existed in a legal gray area in China. On one hand, personalized consumption demands—such as vinyl wraps, wheel upgrades, and performance tuning—are booming, with more owners seeking “exclusivity” and uniqueness for their vehicles. On the other hand, institutional barriers persist, including unclear compliance boundaries, inconsistent vehicle inspection standards, and lack of insurance coverage for modifications. Addressing this pain point, the Notice explicitly proposes “establishing a sound car modification management system,” introducing tiered and categorized management for modifications, defining a list of permissible modification projects, and refining requirements for vehicle inspections and registration changes. It also accelerates the formulation of standards for modification parts and technologies and explores an accreditation system for automotive modification components.

“This means car modifications will transition from a long-standing ‘gray zone’ to a standardized and law-based development path,” industry analysts noted. Previously, the scarcity of compliant modification channels stifled market vitality. Now, policies are laying institutional tracks for this niche market, shifting from “what modifications are legal” to “how modifications meet standards.”

Similarly, the Notice addresses consumer pain points in RV camping, another “gray zone.” It tackles three major challenges—road access, parking, and infrastructure—by supporting localized optimizations of RV traffic management policies and simplifying land approval processes for RV campgrounds. For parking, cities are encouraged to set dedicated spots for motorhomes and trailers when building or renovating public parking lots. For infrastructure, the policy promotes the construction of high-standard, multifunctional RV campgrounds along scenic routes and in suburban areas, complete with maintenance, utilities, medical rescue, dining, and accommodation services.

Meanwhile, traditionally “unregulated” areas like classic cars now receive institutional support for the first time. The Notice proposes developing accreditation rules and operational guidelines based on the General Requirements for Traditional Classic Cars (GB/T 45194-2024), supporting pilot cities in exploring trade, circulation, exhibitions, and conditional road use for classic cars. Li Xinyin, General Manager of Shanghai Jiading International Racing Services Co., Ltd., told media that classic cars previously faced “four prohibitions”: no imports, no road use, no licensing, and no trading. The Notice not only positively impacts classic cars but also drives development across their entire ecosystem, including trading, maintenance, and racing events.

Helping “soft power” catch up with “hard power”

The industry widely acknowledges that China’s automotive “hard power” has significantly strengthened, but “soft power”—such as auto racing and automotive culture—remains underdeveloped. In contrast, Europe and the United States have established systematic automotive racing and cultural ecosystems, featuring vast weekend club racing networks, enthusiast communities, and high karting participation rates, forming a complete “professional-amateur-youth” pyramid. However, few Chinese cities truly embody automotive culture, with racing long perceived as a niche, high-cost, high-risk sport.

Auto racing is one of the most emphasized areas in the policy. The Notice proposes building a multi-tiered racing system, including promoting renowned races, expanding professional events, and popularizing experiential races. It leverages China’s NEV industry advantages to cultivate competitive NEV racing brands and strengthens intellectual property protection. Pilot cities are supported in introducing international races tailored to local conditions, streamlining race vehicle import/export processes, and enhancing localized operations and innovation. The policy also calls for creating national-level motorsport venues and strengthening comprehensive support in facilities, technical services, and event operations.

In terms of management, the Notice requires optimizing event service mechanisms, publishing racing event guidelines, improving safety standards, and standardizing procedures. It encourages mass sports events and supports local exhibition races. Cities are urged to include racing event services in “one-stop” approval processes to streamline organization. To foster new motorsport consumption scenarios, the policy promotes localized development of rally, off-road, endurance, karting, and track races, creating public-oriented experiential events. It integrates motorsports with local resources to design “race-themed travel” routes, enriching consumption scenarios.

Industry experts believe the Notice will redirect racing enthusiasm from streets to tracks, using national policies and local venues to meet young people’s automotive cultural needs through frequent, low-cost track events. This innovates consumption scenarios while curbing street racing chaos.

Notably, the Notice emphasizes strengthening talent development for motorsports, supporting universities and vocational schools in launching automotive sports programs to train drivers, technicians, coaches, referees, and event operators. It proposes a national racing talent registry and evaluation system to align education and employment, providing talent support for racing development.

At present, China's motorsport and racing talent development is in a "policy-driven acceleration phase." There is a preliminary framework in place, but significant gaps persist. While Chinese drivers are starting to make their mark on the international stage, there remains a shortage of supporting professionals such as engineers, technicians, and strategists. Across the country, there are only 21 operational racetracks, and the development of professional drivers heavily relies on investments from affluent families, lacking a well-established youth training system. The emphasis on talent cultivation in the Notice indicates that professional development in racing, modifications, and related fields will gradually benefit from a systematic supply of talent, providing institutional support for the automotive industry's "soft power" to keep pace with its "hard power."

The automotive aftermarket, which revolves around car usage, is a trillion-yuan industry. According to international agencies, the global automotive aftermarket has surpassed $1 trillion, with the Asia-Pacific region projected to become the largest regional market this year. Earlier this year, Cui Dongshu predicted that China's automotive full-chain consumption market will exceed 10 trillion yuan in the next 5–10 years, with used cars, aftermarket services, and NEV (New Energy Vehicle) support services serving as key growth drivers.

Meanwhile, China's automotive consumption market is undergoing a profound transformation, shifting from "basic transportation needs" to "diversified mobility" and from "promoting purchases" to "promoting usage." The Notice addresses the diverse consumption demands of existing car owners while laying institutional foundations for a mature automotive culture in China. With the introduction of modification lists, RV parking spots, classic car identities, and racing stages, China's automotive landscape is moving towards a more vibrant and orderly future.

Image: Sourced from the Internet

Article: Auto Review

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