Vehicle Scrappage Rate refers to the percentage of end-of-life motor vehicles relative to the total vehicle population over a specific period. It serves as a key benchmark for measuring fleet renewal velocity and the circular efficiency of the automotive industry. This metric complements the absolute scrappage volume — the rate reflects the pace of fleet turnover, whereas the volume represents the actual processing capacity and scale. Driven by government subsidies, tightening emission standards, fleet age profiles, and technological advancement, shifts in this rate directly influence resource recovery and create incremental sales opportunities for new cars.
China's vehicle scrappage market has entered an accelerated growth phase. In January 2025 alone, 659,000 end-of-life vehicles were processed nationwide, representing a 50.2% year-on-year increase. Over the first 10 months of 2025, nationwide vehicle scrappage volume reached 8.4 million units, surpassing the full-year 2024 total of 7.9 million units and tripling the volume recorded in 2020. Industry forecasts suggest that based on an average vehicle lifespan of 12 to 15 years, annual vehicle scrappage will jump from 5 million units to 12 million units between 2023 and 2035, with the peak expected around 2030.
The rapid surge in the scrappage rate is primarily propelled by three key factors:
Policy-driven incentives: Vehicle trade-in subsidies have significantly stimulated the scrappage sector. In 2025, the central government allocated RM300,000,000,000 in ultra-long-term special treasury bonds to support consumer trade-in programmes, doubling the 2024 funding scale. In early 2026, within just a single month, over 335,000 scrappage and replacement subsidy applications were submitted nationwide, driving more than RM53,700,000,000 in new car sales.
Tightening emission standards: Following the full nationwide implementation of China 6b emission standards, multiple municipal authorities have enforced road restrictions on vehicles rated China 3 and below. Estimates indicate that as of late 2024, approximately 12 million China 4 vehicles met scrappage criteria, while roughly 7 million China 3 vehicles remained unreplaced on the road, totalling nearly 19 million units.
Aging fleet reaching end-of-life: Passenger cars purchased en masse under the 2008–2015 purchase tax exemption scheme have now reached their retirement window. With component degradation rates exceeding 40%, ongoing maintenance and repair costs are quickly approaching or overtaking their residual market value.
Vehicle scrappage recovery displays a distinct regional concentration. Six major provinces and municipalities — Shandong, Zhejiang, Guangdong, Henan, Jiangsu, and Chongqing — account for 42% of the nation's cross-regional recovery volume. High vehicle ownership and mature recycling ecosystems have turned these developed regions into primary hubs for cross-regional vehicle decommissioning. As of end-October 2025, licensed vehicle dismantling and recycling enterprises nationwide grew to 1,947, up 10.8% year-on-year, with a combined annual dismantling capacity of around 25 million units. However, capacity utilisation stood at only around 40%, highlighting an ongoing structural challenge of "excess capacity with low utilisation".
The scrappage rate is projected to climb steadily over the next decade. New Energy Vehicles (NEVs) have now entered a phase of large-scale decommissioning — in 2025, NEV scrappage volume surged by 50.5% year-on-year, significantly outperforming the broader industry average. Projections indicate that annual vehicle scrappage will breach the 10-million-unit mark around 2030, reshaping new car replacement demand, used car inventory supply, and the recycled raw materials market. In parallel, critical supply chain sectors such as traction battery recycling and dismantled material recovery will become vital pillars supporting sustainable automotive industry growth.
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