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Chris Dai: Producing used cars can confront overcapacity

Excavating the value in use of new cars can help confront overcapacity in automotive industry, said Chris Dai, chairman and CEO of UXIN (Beijing) Information Technology Co., Ltd., at CBU’s 2014 international conference on April 17. “One of the most important methods of excavating the value in use of new cars is finding ways to produce used cars.”

According to Dai, there are three ways to produce used cars: leasing, government and company vehicles, and staff vehicles. Dealers can sell cars to end users through leasing. OEMs can recycle the cars sold through the three methods after a certain period and then sell them again as used cars. The recycle period and vehicle quantity should be decided by OEM’s inventory.

“OEMs are able to recover nearly 90 percent of MSRP at most through these methods,” said Dai. “This type of distribution process is much more helpful than selling new cars at a discount which will ruin the retail system and brand image of OEMs.”

The process of producing used cars is able to improve utilization of spare capacity, increase street visibility, promote new car sales, save staff benefits and form virtuous cycle of rental and used cars, according to Dai.

“New car consumers who care for car ownership are quite different from used car buyers who focus on car use,” said Dai. “Both new car and certified used car sales keep increasing simultaneously in foreign countries just because of the great difference between the two groups of consumers.”

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