Over the past two years, the home appliance "trade-in" market has finally witnessed a surge in activity in 2024, driven by a collaborative effort among the government, enterprises, and retailers. It's been noted in the home appliance industry that an increasing number of companies and retailers are opting for subsidies for trade-ins instead of traditional direct price reductions, aiming to both attract customers and maintain market stability.
Since the beginning of 2024, numerous home appliance companies and retailers have suddenly realized that the "trade-in" policy, which has been implemented for over two years, has never been as lively and attention-grabbing in first-tier markets as it is today, with such high levels of participation from manufacturers.
The most significant change is the emergence of a series of surprising developments in the trade-in policy for home appliances this year, compared to the past two years when the implementation of the policy was characterized by slogans but lacked enthusiasm and participation:
Firstly, in terms of subsidy intensity, there's a significant shift towards a unified effort, driven by a combination of "government subsidies, corporate concessions, and retailer subsidies." In the past, subsidies from enterprises and retailers, beyond those provided by the government, were relatively small and lacked enthusiasm. However, this year, the trade-in market is experiencing a new wave of sustained impact due to the combined efforts of all three parties.
It's been disclosed within the home appliance industry that this three-party collaboration involves subsidies from the government at 10%, subsidies from enterprises at 10%, and subsidies from retailers at 10%, meaning that the total subsidy for trade-ins this round is at least 30%. Considering the continued concessions from some manufacturers, subsidies could reach up to around 40%. Clearly, this will quickly mobilize and stimulate numerous potential buyers for a period of time, ultimately boosting consumer purchasing power in the home appliance market in the second quarter of this year.
Secondly, in terms of user experience, more and more users are experiencing genuine benefits and concessions in the market. Since both home appliance companies and retailers are genuinely offering concessions this time for trading in old appliances for new ones, coupled with the subsidies from the government's consumer vouchers, the combined concessions in the trade-in market have become even more impactful and influential for users.
The promotion and advertising on major retail platforms such as JD.com, Tmall, and Suning, along with the deployment and promotion by major companies such as Haier, Midea, Gree, Hisense, AUX, Galanz, Fotile, and Boss, have contributed to a concentrated period of ignition in markets across the country from late March to early April. Unlike the focus of major manufacturers on channel stocking from February to March, the emphasis has shifted to retail shipments in first-tier markets after March.
Thirdly, in terms of business strategy, major home appliance manufacturers have all shifted from direct price reductions and price wars to "trade-in subsidies" this year. Particularly, they've adopted a tiered subsidy system based on product pricing, with subsidy amounts ranging from 50 CNY to 2000 CNY. It can be said that the focus of all major manufacturers in the first-tier market is now on concessions and promotion in the trade-in market.
Currently, major home appliance manufacturers such as Haier, Midea, and Gree have not initiated a new round of price wars in the first-tier market but have increased the intensity of trade-in subsidies. The core logic behind this approach is to avoid direct price reductions, which would disrupt the pricing structure of home appliance companies. Instead, through phased trade-in subsidies, they aim to provide real benefits and concessions to genuine appliance buyers. This is the right approach.
Fourthly, in terms of trade-in operations, after two years of trial and adjustment, many home appliance manufacturers have collaborated to complete the integration of "delivering new, dismantling old, and installation," addressing issues such as the simplicity of new installations and the hassle of old dismantling that users faced during the trade-in process in the past. Additionally, they've tackled pain points like "old appliances being undervalued," ensuring that trade-in subsidy products and services are delivered efficiently to maximize operational efficiency.
With the fervor surrounding the trade-in of home appliances intensifying in the market, it's expected to spur more manufacturers to devote more time and effort to improving the efficiency of old appliance recycling, enhancing the technical performance and user experience of new appliances, and encouraging more users to proactively replace old appliances with better ones.
As the saying goes, "Many hands make light work." The home appliance industry believes that the ongoing escalation in the intensity, enthusiasm, and attitude towards the trade-in of home appliances from the government, enterprises, and retailers will continue. Especially in most cities nationwide, either subsidies for home appliance trade-ins are being rolled out directly, providing fiscal subsidies, or large amounts of home appliance consumption vouchers are being issued to activate the most powerful support and guidance for home appliance manufacturers.
Next, it remains to be seen how numerous home appliance manufacturers will enhance their competitiveness in the first-tier market, improve their execution capabilities, and seize opportunities for implementation.
