The results of the CGE model show that the policy has a positive direct impact to the overall economy with high GDP growth and mild inflation. The indirect impact of the policy is unclear whether it provides positive or negative impact to the economy and income distribution. It depends largely on the change of household expenditure composition. Under the scenario with the household expenditure composition that leads to an increasing GDP, the indirect impact of the first-car tax rebate policy will benefit the economic growth and income distribution.