BEIJING – China’s used car e-commerce has entered into a so-called “2.0” era, according to a report released by market research firm TNS Sinotrust on November 27.
The report, titled Research on China’s Used-Car E-Commerce Development, concludes that thanks to the influence of “Internet+” over the last couple of years, the sudden emergence of used car e-commerce has overcome many drawbacks of traditional used car commerce, such as small scale of operation, low transaction volume and uneven workforce competency. Convenient and efficient as it is, the Internet offers various platforms for used car transaction and has given birth to diversified business models such as B2B auction (cheyipai.com and youxinpai.com), C2B auction (cheyipai.com and kx.cn), B2B virtual market (souche.com), B2C marketplace (youche.com and carking001.com), B2C inbound marketing (xin.com), C2C consignment (zhuo.com) and C2C virtual consignment (guazi.com and renrenche.com).
TNS Sinotrust defines “used car e-commerce 2.0” as an era when the Internet covers the entire used car market and various used car e-commerce providers are well received by capital markets with innovative business models that form different used car e-commerce platforms which provides services along the C2B2C value chain including transaction service, information service and appraisal service.
In 2015, China’s used car market has been well developed with innovations springing up on the Internet. Under such circumstances, TNS Sinotrust analyzed the market structure, the business models and the development tendency of used car e-commerce in order to provide information for e-commerce service providers and OEMs. The research, which lasted from September to October this year, covered mainstream used car e-commerce providers in China.
While solving the common problems in transaction, the Internet also reaches the operations management of used car dealers, which the traditional enterprise management system fails to cover. For instance, souche.com, a used car transaction service provider, provides free DMS (dealer management system) for used car dealers to meet their operational needs and to promote transactions.
Based on the data collected from enterprise interviews and open channels, the 2B auction model of cheyipai.com and youxinpai.com still hangs on to its lead with transaction volumes at around 85,000 units in Q3 2015. The 2B virtual market model of souche.com also made progress in the same period by concluding transactions of around 70,000 units. Xin.com, guazi.com and renrenche.com also had their first try on 2C clients with a transaction volume of around 10,000 units.
The report believes that used car e-commerce tackles drawbacks of the traditional industry in five major ways:
First, e-commerce platforms can pool car sources scattered around every corner of the country and ensure that there are enough car sources for dealers;
Second, e-commerce platforms help promote the transparency of vehicle conditions by adopting professional testing devices and fixed indices such as the Internet and big data to conduct automatic evaluation of data transmission and to avoid manual evaluation and asymmetric price information;
Third, e-commerce platforms help promote the transparency of vehicle prices. The B2B auction model, in which those who offer the highest prices get the cars, steers the price of used cars towards a more reasonable track. The C2C platforms enable sellers to make offers and get directly in touch with buyers;
Fourth, online trading platforms break the geographical limit and smooth the communication channels by reducing intermediate links;
Fifth, used car e-commerce contributes to constructing a sound used car service system by integrating resources via the Internet and cooperating with financial, insurance and maintenance suppliers.
Huang Wei, deputy research director of TNS Sinotrust, noted that compared with new car e-commerce providers, used car e-commerce providers have probed further in the field of e-commerce. “Currently, the used car e-commerce arena is vigorous with diversified business models and continuous innovations,” said Huang.
“China will eventually become the largest used car market in the world. For those who take the lead in investment and timely resolution of all current problems, this market will bring boundless business opportunities,” said Sheng Zherong, managing director of Asia Pacific for TNS Automotive Research.