(Yicai) Dec. 4 -- China’s automotive market is expected to struggle at the end of the year, despite it being a traditional peak sales season, as the country prepares to phase out its supporting policies, with their coverage narrowing and effect fading.

“November and December are quite cold,” Zhu Jiangming, founder and chief executive officer of Chinese new energy vehicle startup Leapmotor, recently told the media in response to inquiries about year-end sales predictions.

China’s trade-in subsidy program will expire at the end of the year. Moreover, the country’s decade-long policy of fully exempting NEV buyers from the vehicle purchase tax will shift to a new model of offering only a 50 percent reduction from the beginning of next year.

“This will affect the whole auto industry,” William Li, founder and CEO of Nio, said during the Chinese electric carmaker’s latest earnings conference call. “This year, we may not see the year-end sales boom as usual.”

China’s auto industry already experienced some bumps in November. For example, sales of Leapmotor inched up only 0.1 percent from October, while those of Nio and rival Xpeng Motors fell 10 percent and 13 percent, respectively.

However, industry bodies still believe that sales may remain relatively stable this month.

The car trade-in program has created a considerable advance consumption effect in the auto industry, so some potential buyers are now adopting a wait-and-see attitude, as the subsidies diminish, Cui Dongshu, secretary general of the China Passenger Car Association, told Yicai. Despite that, the market will likely achieve a steady performance this month, he predicted.

Consumers may rush to buy electric vehicles this month, as China’s NEV tax exemption policy will be halved from next month, the China Automobile Dealers Association noted. But after the fourth-quarter surge, next year’s first-quarter sales may return to seasonal lows, the CADA added.

China doubled its trade-in subsidy policy for consumer goods this year from last year, allocating funds from the sale of CNY300 billion (USD42.4 billion) of ultra-long special treasury bonds to support the initiative and equipment upgrades. The last batch of CNY69 billion (USD9.5 billion) for the fourth quarter is being distributed now.

All provincial-level regions have already adjusted their trade-in schemes, according to the latest report from the CPCA. For example, Hubei province adjusted its car trade-in eligibility voucher distribution method, and Shanghai switched to a ‘registration plus lottery’ system from a ‘first-come, first-served’ approach.

In the first 11 months of the year, more than 11.2 million cars were traded in, accounting for over one-third of China’s total auto sales, according to the latest data from the Ministry of Commerce.

China’s auto sales jumped 12 percent to 27.69 million units in the first 10 months of the year from a year earlier, according to the latest data from the China Association of Automobile Manufacturers.

Total auto sales are expected to exceed 34 million units this year, with NEV sales likely reaching 16 million units, Chen Xu, deputy secretary general of the CAAM, said at an industry forum on Nov. 28.

Editor: Futura Costaglione