For the first time ever, older cars are selling better than new ones in China
Used car sales in China have been growing faster than new car sales and some observers are predicting that by 2020 used cars will account for half of all auto sales.
Why the sudden upsurge in used cars? The main reason is availability of stock – until a few years ago the Chinese motor industry was simply too young to have enough older vehicles.
According to Mr Alan Wang, the International Representative of the China Automobiles Dealers Association (CADA), the rapid growth in the new car market over the last 10 years has meant that owners are now trading out of their old cars. Prior to this there were very few second hand vehicles available. Furthermore, Mr Wang expects used car sales to increase by 20 per cent in the next financial year.
What type of car does the typical Chinese used car buyer look for?
‘It depends on the buyer’s budget, but generally speaking Chinese love to buy large sedans and SUVs, and mostly locally built foreign brands such as Volkswagen and BMW.’
Chinese used car buyers also prefer their cars to be grey or black with lighter or brighter coloured cars generally taking longer to sell according to one used car dealer quoted in a recent online article on used cars.
While used cars are not considered an expensive investment, first car buyers generally prefer to buy new cars. In megacities like Beijing and Shanghai, there’s a general preference to use finance companies to fund new vehicle purchases.
Unlike Australia where most used car buyers visit a dealership or buy privately, our Chinese counterparts shop at mega-dealerships or multi-story auto malls, and according to Mr Wang: ‘Nowadays, they can also buy a used car from an online auction platform.’
Accompanying this phenomenal growth in used car sales is the rise in Certified Used Car programs offered by dealerships. CADA has recently developed a national standard for the testing of used cars which it is rolling out nationally.
A recent report stated that half of Ford’s 500 dealerships have been approved to sell ‘certified’ used cars that come with warranties. The company has also opened a number of dealerships selling only second hand vehicles.
With a used car market anticipating sales of 20 million vehicles over the next five years things are certainly looking positive for used car buyers and used car sellers in the world’s largest car market.