The 2016 China Used Car Assembly (CUCA), organized by China Automobile Dealers Association (CADA), was held on July 3-5 in Chongqing. More than 200 corporate representatives and reporters attended the event as CADA officials, executives from used car dealers, e-commerce providers and financial services institutions shared their perspectives and opinions on the state of China’s used car market and its future development.
Shen Jinjun, president of CADA, said in his opening speech that currently China’s used car market is facing three major challenges: market environment, credibility and integrity and evolutionary change. The market is in need of fair trade among both businesses and end consumers to move forward. “Credibility and integrity should become a second nature in this field where, we build our businesses based on honesty and always keep promises we’ve made to our customers,” said Shen. “The government has introduced measures to help move the market forward, but more regulations and standards need to be established in order to make this market more professional.”
Also, at this digital age, more and more internet companies had joined forces with used car dealers. Such changes would in many ways push the market to evolve and various business models would need to be introduced. All in all, the used car market, according to Shen, is still in its youth stage and requires help from all stakeholders to grow properly.
During the conference, many ideas and methods were shared by executives from used car dealers and financial services institutions. Four themes were frequently mentioned and debated: credibility & integrity, policy & regulation, financial involvement and internet + business model.
Almost all of the speakers talked about policies & regulations, more specifically, the newly issued eight regulations to improve the operation of the used car market. Shen pointed out, although the regulations had come out in March, the market had not benefited from them, mainly because many local governments misunderstood the regulations with environmental protection laws, which led to their hesitation in removing restrictions against used car circulation to and from their cities from other regions. That in part has stalled what otherwise would have been a healthier market growth.
According to CADA data, China’s used car transactions in the first five months of the year reached 3.96 million units, up only 4.89 percent year-on-year. By the start of the CUCA, a total of eight provinces and 114 cities had removed restrictions of inter-city circulation of used cars, less than half of the 299 cities that CADA is monitoring in used vehicle transaction.
Ma Xiaowei, CEO of iautos.cn, indicated during a panel discussion that although many cities have removed restrictions against intercity or inter-province used car circulation, there are still too many cities holding their ground, which could be considered local protectionism, as well as a form of monopoly. She urged CADA to take appropriate actions and the press to voice their demand to the relevant authorities.
Chris Dai, CEO of xin.com, called for stakeholders and competitors to raise money for lawsuits against local governments which insisted on not removing the restrictions. He promised to donate ¥1 million for such lawsuits.
Shen Rong, deputy secretary general of CADA in charge of the used car sector, pointed out that the country’s used car market was built on an unprofessional ground, in turn making consumers doubt the quality of used cars circulating in the market and the integrity of the dealers, which made it hard for the market to grow healthily, even with policy support.
How can the industry reestablish the image of the used car market? Complete openness, said Li Haichao, chairman and CEO of carking001.com, a B2C used car transaction platform built on offline “super markets.” He explained that the more you try to hide the flaw, the shadier you appear to be and the more customers you lose. Being honest with the customers will only help dealers build integrity, and made positive image for the companies. Dai added that to an individual, integrity could relate to your sense of morality, but to a company, it would relate to your financial reward. That would take patience and huge effort to achieve.
Another heated topic at the conference was financial service, more specifically, financial leasing services entering the used car market. Normally when it comes to financial service, people would think about leasing or loans, but right now there is more meaning to it. Zhang Xu’an, CEO of daikuan.com, shared his idea of used car financial service in the new digital age. He indicated that the O2O model is fitted for the future market, however, at the current stage, there are so many business models at play, and resources are scattered, which makes it hard for the market to work properly. What this market desperately needs are financial services companies with abundant capital, low cost and effective to come in and connect with dealers, providing them with efficient and high quality financial services, in turn, assembling the resources as well as helping the dealers rebuild their images, and reestablish confidence and trust from consumers. Zhang had expressed his optimism towards the future development of the market, and the company’s determination on being the connector to the market, customers and investors. By contributing at least ¥10 billion into new and used car inventory financing in the next 12 months, daikuan.com would set up an example for making the market move forward.
Internet companies entering the used car field is another very significant topic. E-commerce joining force with used car dealers helped diversify business models, with xin.com, cheyipai.com as prime examples. With their high tech support and big data compilation, the dealers became more proactive and efficient, while consumers were given a wider platform to be able to find suitable cars faster and more conveniently. In the meantime, e-commerce platforms also made the whole transaction process much more transparent for consumers, making a better image and helping customers to build their trust upon the business while doing so. It is no doubt that the future for e-commerce would become wider, but certain laws and regulations regarding business processes and product quality would have to apply, in order to make e-commerce in the used car market more professionalized.
All in all, CUCA 2016 gave a good platform for all stakeholders in the used car sector to share their ideas and opinions and set their minds for the future. As was all agreed, China’s used car market is huge and full of potential, but it is still immature compared to that in the developed countries and it would take huge efforts from all stakeholders to “assemble” resources and put them to good use for the healthy development of the market.