Used car mar­ket cruises ahead as lim­i­ta­tions lifted

China Daily (Hong Kong) - - MOTORING - LI FUSHENG

The used car sec­tor is speed­ing along the fast lane in China, as hur­dles that af­fect its de­vel­op­ment are dis­ap­pear­ing one by one, ac­cord­ing to in­dus­try in­sid­ers.

Statis­tics from the China Au­to­mo­bile Deal­ers As­so­ci­a­tion show that just un­der 1 mil­lion used cars were sold in May, a 19 per­cent in­crease yearon-year.

The per­for­mance brought over­all car sales in the first five months to 4.8 mil­lion ve­hi­cles, up 20.7 per­cent from the same pe­riod last year.

T h e C A DA e x p e c t s t h e growth rate to hover around 20 per­cent, with sales to reach 12 mil­lion ve­hi­cles this year. China saw 10.39 mil­lion used cars sold last year, a 10.41 per­cent growth year-on-year.

Shen Jin­jun, pres­i­dent of the CADA, said one driv­ing force be­hind this growth is fa­vor­able poli­cies.

“By the end of Fe­bruar y, lo­cal author­i­ties in 135 cities had re­moved trade bar­ri­ers on used cars and the re­sults are start­ing to show,” said Shen at the 2017 China Used Car A s s e m b l y h e l d i n Wu h a n , Hubei prov­ince.

A s u r v e y b y Yo u x i n , a n on­line car dealer, shows that over 60 per­cent of po­ten­tial buy­ers in smaller cities would like to choose cars out­side their cities be­cause of the lim­ited choice avail­able at home.

Shen said the lack of in­form a t i o n t r a n s p a r e n c y, f o r which the used car sec­tor was no­to­ri­ous, is also im­prov­ing.

“I once rec­om­mended my friends to buy used cars but they would not be­cause they could not get real in­for­ma­tion about the cars’ con­di­tions.”

Now things are dif­fer­ent, said Shen. Start­ing from 2015, his or­ga­ni­za­tion has been pro­mot­ing used car cer­ti­fi­ca­tion by third par­ties to change the sit­u­a­tion.

“Cred­i­bil­ity is the most im­por­tant fac­tor for the used car sec­tor to see sus­tain­able de­vel­op­ment,” said Shen.

Many brick-and-mor­tar mar­kets and in­ter­net com­pa­nies are mak­ing their own ef­forts too.

T he Shang­hai Used Car Trade Cen­ter is home to about 100 car deal­ers. To at­tract cus­tomers, the cen­ter has in­tro­duced its own qual­ity sys­tem with the help of third-party qual­ity assess­ment or­ga­ni­za­tions.

“Each day, the cars are ex­am­ined be­fore they are ad­mit­ted into the cen­ter and the in­for­ma­tion is made pub­lic on our web­site,” said Cai Zhong­min, gen­eral man­ager of the cen­ter, adding that some 2,000 used cars are dis­played on­line.

Youxin is do­ing a sim­i­lar job but on a much larger scale. Dai Kun, CEO of the in­ter­net com­pany, said it is ver­i­fy­ing in­for­ma­tion about some 300,000 used cars a month.

The rise of car eval­u­a­tion com­pa­nies is help­ing cus­tomers to know whether used cars are fairly priced, due largely

Cred­i­bil­ity is the most im­por­tant fac­tor for the used car sec­tor to see sus­tain­able de­vel­op­ment.” Shen Jin­jun, pres­i­dent of the China Au­to­mo­bile Deal­ers As­so­ci­a­tion

to their vast amounts of data.

Just typ­ing some pa­ram­e­ters — in­clud­ing the ve­hi­cle’s mar­que, model, age and place of reg­is­tra­tion — into apps such as Che300, will pro­vide a ball­park price. The web­site now re­ceives about 3 mil­lion vis­its a day.

Xu Wei, CEO of Che300, said he is plan­ning to of­fer a func­tion that will help vis­i­tors to find what cars they need by ask­ing them sev­eral ques­tions.

“The main func­tion of big data is the abil­ity to find out what you want based on in­for­ma­tion you pro­vide.”

Luo Lei, deputy sec­re­tary­gen­eral of the CADA , said the mar­ket it­self is be­com­ing more ma­ture.

He said China has 200 mil­lion cars on its roads, which means abun­dant sup­plies. He added that on av­er­age pas­sen­ger cars in the coun­try are four and half years old, which hap­pens to fall into the age range of most pop­u­lar used cars in China: three to six years.

Quot­ing Price­wa­ter­house­Coop­ers es­ti­mates, Luo said used car sales are ex­pected to hit 20 mil­lion ve­hi­cles in 2020, dou­bling the 2016 level.

Luo said the mar­ket po­ten­tial has at­tracted some 1,500 par­tic­i­pants in this year’s China Used Car Assem­bly, al­most dou­ble the num­ber of peo­ple at the 2015 event.

Xiao Zhengsan, the CADA’s sec­re­tar y-gen­eral, be­lieves that the boom­ing used car sec­tor can also help to stim­u­late new car sales, which have been slow­ing down in the Chi­nese mar­ket, as peo­ple will be able to buy new cars af­ter they sell their used ones.

Statis­tics from the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers show that pas­sen­ger car sales to­taled 9.42 mil­lion in the first five months of the year, edg­ing up 1.5 per­cent year-on-year.

In the same pe­riod, used car sales surged 20 per­cent yearon-year.

“When it was a seller’s mar­ket, new car sales stim­u­lated used car sales, but it is now a buyer’s mar­ket, so used car sales could in turn boost new car sales.

“We now have some 200 mil­lion cars on the road. If used cars don’t sell, we are not go­ing to see rises in new cars. They are very closely re­lated.”

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