Text | Xu Cheng
Yesterday, the China Automobile Dealers Association announced the annual used car trading volume in 2021. From January to December 2021, a total of 17.5851 million used cars were traded, an increase of 22.62% year-on-year, and the transaction amount was 1,131.692 billion yuan, an increase of 27.32% year-on-year.
At the same time, the China Association of Automobile Manufacturers also released the latest automobile production and sales data on the same day: in 2021, China's automobile production and sales were 26.082 million units and 26.275 million vehicles, an increase of 3.4% and 3.8% year-on-year, ending the three consecutive years of decline since 2018.
We see that the growth rate of used cars in 2021 is much higher than that of new cars.
Looking back over the past 10 years, new car sales have grown from 18.51 million units in 2011 to 26.27 million units in 2021, with a total growth rate of 41.52% and a compound growth rate of 3.56% in 10 years.
The volume of used car transactions increased from 4.33 million units in 2011 to 17.5851 million units in 2021, with a total growth rate of 306.12% and a compound growth rate of 15.04% in 10 years (according to the statistical caliber of used car transactions of the China Automobile Dealers Association).
If estimated according to the current compound growth rate, in another 4 years, the volume of used car transactions in 2025 will exceed new car sales and exceed 30 million units.
In the next few years, it is still unknown whether new car sales can maintain the existing compound growth rate, but the second-hand car transaction volume is more certain to maintain or even exceed the existing compound growth rate.
So why is used car growth stronger than new cars? There are four main reasons:
First, the policy support for used cars is higher than that of new cars.
From the 2016 government work report proposing to activate the second-hand car market, to the promotion of second-hand car transaction registration across provinces in 2021, the second-hand car policy has been frequently issued during the six-year period, from lifting restrictions to reducing taxes, from promoting exports to simplifying the transaction process, and there have been no less than a dozen second-hand car-related policies in the past few years.
A series of favorable policies are to promote the free circulation of used cars in accordance with market laws, transform the strong potential energy accumulated in the second-hand car market into the huge momentum of second-hand car circulation, fully release the potential of the second-hand car market, and then drive the sales of new cars and drive the development of maintenance, insurance and other related service industries.
In recent years, the support policies for new cars are mainly inclined to new energy vehicles, from car purchase subsidies to purchase tax reductions, from double credits to new energy vehicles going to the countryside, and the support policies for new energy vehicles are far more than traditional fuel vehicles.
Although there have been fuel vehicle purchase tax reductions in previous years, the policy at that time was limited to October 1, 2015 to December 31, 2017, and only in the past two years or so, the preferential policy of halving the vehicle purchase tax was implemented for the purchase of passenger cars with a displacement of 1.6 liters and below, and then the vehicle purchase tax at the statutory rate of 10% was reinstated from January 1, 2018.
According to the current development direction, the possibility of the subsequent purchase tax reduction policy for fuel vehicles is extremely small.
In addition, in cities with limited purchases, such as Beijing, from 2018 to the present, the number of new energy indicators has exceeded the fuel vehicle indicators every year.
Second, the ownership base is large, and the growth momentum of used cars is sustainable
The latest statistics of the Ministry of Public Security show that the number of motor vehicles in the country will reach 395 million in 2021, of which 302 million are cars, and the huge number of cars is the basis for future second-hand car transactions, that is, the vast majority of existing vehicles will be traded at least once as second-hand cars in the future.
According to the 4 to 6 years of regular car use cycle of car users, the new cars purchased in 2016 have entered an active period of car replacement, and the domestic new car sales in 2016-2018 have exceeded 28 million for three consecutive years, and under the influence of special circumstances, the second-hand car transaction in 2022-2024 will also be a new active period.
By the end of 2021, the number of new energy vehicles in the country reached 7.84 million, accounting for 2.6% of the total number of vehicles, an increase of 59.25% year-on-year. Although the proportion of the base is still low, new energy vehicles are usually shorter than traditional fuel vehicles due to the rapid updating of technologies such as batteries and car machines, which also accelerates the transaction of second-hand cars to a certain extent.
In addition, the number of car transfer registrations is also continuing to grow. According to data from the Ministry of Public Security, the ratio of second-hand car transfer registration and new car registration in the past five years has risen from 0.67 to 1.11, surpassing the number of new car registrations, which shows that the second-hand car trading market has become increasingly active under the active promotion of policies such as canceling the "relocation restriction" of second-hand cars and the registration of second-hand car off-site transactions.
Third, the higher volume of used car transactions than new cars is a characteristic of mature markets
Looking overseas, whether it is the United States or Europe, the trading volume of used cars in the mature automobile market is much higher than that of new cars.
According to Cox statistics, in 2020, the U.S. used car sales of 34.1 million units; the U.S. NADA data shows that in 2020, the U.S. new car sales of 14.46 million units, the actual sales ratio of used cars to new cars in the United States is 2.4:1, while NADA predicts that this ratio will continue in 2021.
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Comparison of new car used car sales in Germany in the past 10 years
Data from the German DAT shows that in 2020, Germany sold 2.92 million new cars and traded 7.02 million used cars. In the comparison of used cars and new cars in the past 10 years, the sales ratio of used cars and new cars is close to 2:1.
According to the comparison of domestic used car and new car data, during the three-year period from 2019 to 2021, the ratio of domestic used car transaction volume to new car sales was 0.58:1, 0.57:1 and 0.67:1, respectively, which showed an increasing trend (the proportion affected by the epidemic in 2020 was the same as that of the previous year, but it did not affect the overall trend).
The above data fully shows that the domestic automobile market is gradually maturing, and the transaction volume of second-hand cars is bound to exceed the sales volume of new cars.
Fourth, the mainstream format of the force of second-hand cars
As the industry knows, the mainstream model of automobile sales is the authorized operation represented by the 4S store format, and the number of domestic 4S stores currently exceeds 28,000. Now is a good time for dealer groups to enter the used car business.
According to statistics, after 2017, the increase in the purchase ratio has reached 60%, and a large number of new car sales are achieved through exchange. If dealer groups do not replace used cars, new car sales will also be affected.
In addition, for authorized dealers, as the profit of new cars gradually declines, the used car business has become a new profit growth point. In particular, the retail business of used cars has almost become one of the most promising businesses for dealer groups in the future. We also see that dealer groups represented by Yongda, Weijia, Hezhong, Yongtong, Yuantong, etc. are developing their used car retail business, and more and more dealer groups are also entering or will soon enter the second-hand car retail.
Compared with the car dealers who simply do used cars, whether it is the source of the car or the capital, the dealer group has a natural advantage, if you can make good use of the advantages and establish a reasonable mechanism, the prospects of the used car business are undoubtedly good.
According to the data from the "2021 China Auto Dealer Group Used Car Business Analysis Report", the number of used car sales units of 100 dealer groups in 2020 was 1.35 million times, and the growth rate of used cars of dealer groups in 2020 compared with 2019 was 10.4%, and the development of used car sales units was stable and has been on an upward trend. Used car sales of the 100 dealer group accounted for 9.40% of the entire used car market in 2020, an increase of 12.0% year-on-year.
From 2017 to 2020, the ratio of the old to the new of the top 100 dealer groups increased from 13.07% in 2017 to 18.35% in 2020, showing a continuous upward trend.
Due to the relatively late start of the used car retail business of the domestic dealer group and the small business volume base, there is huge room for growth. As authorized dealers, the mainstream format, began to lay out the used car business, the domestic used car transaction has added a steady stream of growth momentum.
WeChat public number: used car wisdom Pan Pan (id: carman228)
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