Vehicle sales boom spawns China's used car market
With new models outselling old by three to one, potential for affordable ownership is rising fast
As car enthusiasts converge on the annual Guangzhou car show, few have anything except a shiny new set of wheels in mind. But the explosive growth that has transformed the mainland into the world's largest car market is also giving life to a new industry: used cars.
The second-hand market is already taking off, with sales growth last year outpacing that for new vehicles. By volume it is still dwarfed by new cars, which outsold used vehicles three to one. In countries such as the United States, that ratio is reversed, highlighting the second-hand market's vast potential to make car ownership affordable for millions more Chinese.
The challenge on the mainland is to develop a modern market for second-hand cars. The business is dominated by thousands of small trading companies that operate out of big trading halls or open-air markets on city outskirts. Vehicles are sold tax-free and ownership can be transferred in a day but quality and fair pricing can be uncertain. By some estimates, four in five used car transactions take place at such markets.
For foreign carmakers, "the used car business in China is very different to anything that you would recognise in the Western world", said Marin Burela, president of Changan Ford, the US firm's mainland joint venture.
Global carmakers have been slow to add used car sales at mainland dealerships but are now racing to expand into the business, which will diversify their revenue and help build brand loyalty.
Last year on the mainland, used car sales rose 11 per cent to 4.8 million vehicles, while new car sales rose 7 per cent to 15.5 million.
