http://usa.chinadaily.com.cn/epaper/2014-12/19/content_19126341.htm
Five years on from the mainland auto boom, the time is ripe for an explosion in used car sales, industry experts say. Yang Ziman reports.
Used cars look set to be the new growth engine for the national automobile industry, with total sales volume on the mainland tipped to surpass 9 million by the end of the year.
Shen Rong, vice-chairman of the China Automobile Dealers Association, noted that the era of fast growth in the new-car sector is now at an end. In the next few years, annual sales of second-hand cars will grow by double digits.
In the first 10 months, the sales volume for used cars hit 4.9 million units - up 16.8 percent over the same period last year. Their total value amounted to 294.5 billion yuan ($47.6 billion) - up 27.1 percent year-on-year. "County and township-level areas hold great potential for sales of used cars," said Shen. "Many people in these less developed regions, because of their limited financial means, tend to purchase a used car as a transitional automobile before they are able to buy a brand new one."
Used cars get into gear
Lin Zhe, CEO of Kaixin Second-Hand Cars - a Shanghai-based company that helps people sell their used cars - said demand in the second-hand car market is outstripping supply, which is the biggest difference between China and a mature second-hand car market like that of the US.
According to the China Automobile Dealers Association, the sales volume of new cars in China was 22 million units last year, while the figure for pre-owned cars stood at only 5.2 million. The ratio for new and used cars sold was 1:0.24.
"In the US, the sales volume of second-hand cars is three times that of new cars," said Lin. "There's great room for growth in the Chinese market."
China's car parc - the number of cars and other vehicles in use in a region or market - was close to 140 million by the end of 2013. In overseas markets, the transaction volume of second-hand cars is 20 percent of the car parc. In China, this proportion is merely 4 percent, Lin noted.
"The O2O (online to offline) market is beginning to take shape," he said. "As new as these online platforms are at present, they are catching up with conventional dealers quickly." "The O2O model is able to reduce intermediary fees, mostly commissions to used car agencies," said Yang Haoyong, chief executive officer of Ganji.com. "The second-hand car market is expected to surge. The year 2010 was a boom year for the Chinese automobile industry. Consequently, 2015 will be an explosion year for used cars, since the average frequency for people to update their cars is every five to six years," Yang forecast.
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