WUHAN, Hubei – China’s used vehicle market is moving into the fast lane, according to Shen Jinjun, president of China Automobile Dealers Association (CADA).
Shen made the comments in his opening speech at the 2017 China Used Car Assembly organized by CADA in Wuhan on July 5 and offered three underlying reasons behind his prediction.
“The used vehicle market is ready to take off because the country now has a high automobile parc, a much-improved policy environment and the right market conditions,” said Shen.
The latest data from CADA shows that China’s used vehicle transaction volume in the first five months reached 4.8 million units, up 21 percent year-on-year, far outpacing growth of new vehicle sales during the same period. That, according to Shen, shows the vitality of the used vehicle market despite weakening new vehicle sales.
Policy environment improving
China has already become the world’s largest new vehicle market and second only to the U.S. in terms of automobile parc, and the market is clearly exhibiting first-time purchases plus trade-ins for new vehicles that are characteristics of a mature market, according to Shen.
“At present, the circulation of used vehicles is not only an important pillar for the sustainable development of the auto industry, but also closely related to the national strategy of transforming the development model of the national economy, and a key measure to help realize supply-side structural reform,” said Shen. “The General Office of the State Council issued the Opinions on Promoting Convenient Transaction of Used Vehicles on March 25, which provided a guide map for the circulation of used vehicles in eight aspects. This is a policy breakthrough for used vehicle circulation at a national level.”
Shen emphasized that since all of his association members were most concerned with the lifting of restrictions on inter-region circulation of used vehicles, CADA worked with member companies and collected relevant information and materials which were submitted to the Ministry of Commerce and Ministry of Environmental Protection, and urged local governments to cancel restrictions on inter-region circulation of used vehicles.
“According to our findings, as of mid-June, 13 provinces covering 135 cities have released official documents canceling restrictions on the circulation of used vehicles,” said Shen.
The other policy reform that CADA has helped to lobby is a VAT levied based on the difference in value of the used vehicles, which Shen predicted will be put into effect soon.
CADA is also in the course of pushing for the establishment of a used vehicle temporary property registration system.
Right conditions for fast development
The fact that China’s annual used vehicle transaction volume (at just over 10 million units in 2016) accounted for only one-twentieth of its automobile parc last year means that it is ready to explode, according to Shen.
“If the exhalation rate of the automobile parc reaches international standards, China’s used vehicle transaction volume will double,” said Shen.
The aforementioned improvement in policy environment as well as consumers’ changing attitudes toward purchase of used vehicles are bringing vitality to the used vehicle market, according to Shen.
The overall market environment has also improved thanks to joint efforts from different stakeholders of the entire industry.
Integrity is the soul for the sustainable development of the used vehicle market
“The problem of integrity has always been a sore point to the development of the used vehicle market and is also the most important internal factor hindering its development,” noted Shen. “A flood of capital has poured into the used vehicle market in the areas of e-commerce, franchised operations, third-party appraisal, information services, financing and insurance extension, which has resulted in a leap-forward for the market. The used vehicle market is also cutthroat and we have been encouraging and advocating fair and orderly competition all the time.”
Shen hoped that everyone operating in the used vehicle industry should abide by the rule of fair competition, consciously safeguard industry interests, share resources and contribute to the common development of the whole industry.