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Eight characteristics of China’s used vehicle market in 2017

WUHAN, Hubei – China’s used vehicle market in 2017 has eight key characteristics, according to Xiao Zhengsan, secretary-general of China Automobile Dealers Association (CADA).

Xiao made the comments while presenting the 2017 Analysis Report on the Top 100 of China’s Used Vehicle Market at the 2017 China Used Car Assembly (CUCA) held in Wuhan on July 5.

The report includes operations data in 2016 from 1,068 used vehicle trade marts in 507 cities in 31 provinces submitted by provincial and municipal used vehicle associations.

The eight characteristics are as follows:

Favorable policies drive up demand

Driven by favorable policies such as purchase tax savings for 1.6L and below passenger vehicles and regulations lifting restrictions on inter-region circulation of used vehicles, vehicle transactions have been on the rise. In terms of average compound annual growth rate for the past six years, the used vehicle market has been growing faster than the new vehicle market. The used vehicle market potential will be released in the next few years, and its transaction scale also will maintain a high growth momentum.

Used vehicle market continues to expand

The used vehicle market as a whole tends to scale up largely. The total area of used vehicle trade marts in China in 2106 stood at 22.61 million square meters, up 4.37 percent from 2015. The number of business services companies in the used vehicle space was 44,274, up 10.19 percent.

Top 100 transaction scale and market share rose

The transaction volume of the Top 100 used vehicle trade marts in 2016 reached 4.95 million units, up 16.2 percent, accounting for 47.6 percent of the national used vehicle transaction volume. Transaction value reached ¥318.1 billion, up 9.8 percent with a slight increase of 0.4 percent in share of total industry transaction value.

Passenger vehicle share increasing and getting “younger”

The proportion of passenger vehicles among used vehicle transaction volume of the Top 100 reached 80.9 percent, up 5.6 percentage points. Locally-made vehicles accounted for 83.1 percent, down 1.6 percentage points.

About 64.7 percent of the vehicles transacted were between the ages of 1-6 years.

North and East China account for more than half of all transaction volume

Due to regional economic structures and parc base, East and North China regions combined accounted for more than half (57.7 percent) of the transaction volume of the Top 100. Guangdong, Jiangsu, Shandong and Zhejiang for example far lead other provinces in terms of transaction volume.

More profitable

The overall business revenues of the Top 100 reached ¥3.1 billion in 2016, up 1.44 percent. Operating profit reached ¥640 million, up 16.3 percent, representing a profit margin of 27 percent that is higher than the industry average of 17 percent.

Majority are still brokerage enterprises, demand boosts improved service

Brokerage companies accounted for 94.6 percent of the corporate structural type in the Top 100. Dealer-type companies accounted for 3.7 percent, while appraisal companies accounted for 1.2 percent.

The Top 100 had operating area of 7.115 million square meters, up 7.48 percent, with showroom areas of 469,000 square meters, up 24.4 percent.

More consolidated

A total of 90 companies had annual transaction volumes above 20,000 units and 94 had annual transaction values above ¥100 million, reflecting further concentration of the market.

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