Serving the World's Largest Emerging Automobile Market
Home > EDITORIAL > Aftermarket heats up as new car market cools

Aftermarket heats up as new car market cools

China’s new vehicle sales have hit a wall but activities in the aftermarket have been growing tremendously, thanks to evolving e-commerce technologies.

On September 15, online C2C used car transaction platform, affiliated with 58ganji, China’s largest online classified ad portal, announced to invest ¥1 billion ($157 million) over the next year to expand services for individuals to buy and sell used cars.’s direct competitor,, had just received an $85 million C-round financing led by Tencent a month earlier., and, China’s three largest B2B online used vehicle auction platforms, each received over $100 million in financing earlier in the year. All three have moved into C2C used car sales.

Moreover, O2O service platforms have emerged to offer such services as car wash, maintenance, quick fix, financing and insurance, service parts, P2P rental/leasing, test driving and ride sharing, etc. Start-up focuses on maintenance and on quick fix.

OEMs such as SAIC Motor, Dongfeng-Nissan and BYD have launched their own aftermarket e-commerce platforms. In addition to and, Alibaba, China’s largest e-commerce company, formed its own automotive business unit earlier this year to offer online sales and services. In August, a group of 40 dealer groups formed to move into e-commerce. Pangda, one of China’s largest dealer groups, began offering its own O2O maintenance service in early September.

Billions of dollars have poured into China’s aftermarket for a simple reason: the huge potential in the growth of China’s aftermarket as the new vehicle market slows down significantly.

China’s automobile parc has reached 163 million by the end of June and will increase at the rate of about 20 million a year for the foreseeable future. The aftermarket is expected to surpass ¥1 trillion in value by 2018 and used car transaction alone is expected to double to 20 million units by 2020 from this year, on par with new vehicle sales. No doubt, the next frontier for investors, dealers and service providers is the aftermarket.

Alibaba predicts that nearly a third of future car buyers will be the post-80s and -90s generation. Much more attuned to mobile smart devices, their choice of how to purchase and service their vehicles will be significantly different, opting for convenience and lower cost.

A key reason why China’s aftermarket is developing so fast in such a short period of time is that there is little government interference. Unlike new vehicle assembly, which is controlled by the government through the Automotive Industry Policy, the market largely determines the allocation of resources in China’s aftermarket.

Open market competition will position China’s aftermarket into a period of “warring states” as more players big and small join the fray. But through such competition, Chinese consumers will benefit from better, improved and more convenient services at a lower cost. 

| | | | | | | | | | | | | |

Leave a Reply