Used cars, new blue ocean.

Entering 2022, the used car industry has welcomed another major positive.

On January 21, the National Development and Reform Commission and seven other departments issued the Implementation Plan for Promoting Green Consumption (hereinafter referred to as the "Plan"). The "Plan" requires that we actively develop the second-hand car distribution business, promote the implementation of the policy of comprehensively canceling the relocation of second-hand cars, and further expand the circulation of second-hand cars.

"With the landing and implementation of various favorable policies, especially the 'blocking points' such as tax reductions and restriction policies, the second-hand car market is expected to become a new blue ocean for China's automobile consumption." Luo Lei, deputy secretary-general of the China Automobile Dealers Association, expects that the volume of used car transactions on the mainland will exceed 19 million in 2022, and will launch an impact on 20 million vehicles.

First, the market environment continues to improve

According to data released by the Ministry of Public Security, by the end of 2021, the number of motor vehicles in the mainland will reach 395 million, of which 302 million will be cars. In the context of the global economic slowdown and the slow growth of the automotive industry, how to revitalize the huge automobile stock market has become a must-answer question in front of many parties, and driving the consumption of the second-hand car market is undoubtedly the best answer to this problem.

In recent years, the scale of transactions in the used car industry has continued to grow. In 2021, 17.585 million used car units were traded on the mainland, an increase of 22.6% year-on-year. However, compared with the second-hand car trading volume in the developed country's automobile market, which is about twice the transaction volume of new cars, the mainland second-hand car market still has a lot of room for development.

The problem of relocation restrictions has always been a blockage problem that has led to limited circulation vitality in the second-hand car market. The so-called relocation restriction refers to the fact that some places have adopted measures such as restricting environmental protection standards and restricting years for second-hand motor vehicles in other provinces or cities to avoid a large number of vehicles from other places from flowing into the local market. Since 2016, the state has issued three orders and five declarations not to set a threshold for the entry of second-hand cars. In 2021, the restriction on relocation will be abolished, the electronic transfer of foreign nationality, and the sales value-added tax will be reduced... The circulation facilitation policy issued by multiple departments has made the second-hand car industry "spring breeze continuously".

The "Plan" proposes to completely cancel the relocation policy of second-hand cars, which is regarded by the industry as a "cardiotonic agent" to promote the development of second-hand cars. Wang Bin, deputy director of the Department of Market Operation and Consumption Promotion of the Ministry of Commerce, said that "revitalizing the second-hand car trade can not only drive the consumption of new cars, but also promote the cascade utilization of vehicles and improve the efficiency of resource utilization."

With the gradual relaxation of the relocation policy, the consumption potential of second-hand cars will be further released. Shen Jinjun, president of the China Automobile Circulation Association, revealed at the 2021 China Automobile Circulation Industry Development Forum held recently that at present, the relevant departments are studying and formulating to optimize the transfer registration of second-hand cars, standardize the management of second-hand car sales, vigorously develop the second-hand car distribution business, and fully open up the blockages and pain points of the second-hand car market. Driving sustainable development of the entire automotive market.

Policy promotion and market dividends have made more merchants optimistic about the second-hand car market. At the end of 2021, Yihi Car Rental announced the launch of second-hand car retail business, and vehicles in offline stores can be rented and sold. According to the data of Tianyancha, there are more than 600,000 car dealers in the mainland whose business scope includes second-hand cars, and among the second-hand car-related enterprises that are in business, existing, moving in and out, 22% of the enterprises are established within 1 year, and more than half of the relevant enterprises are established between 1 year and 5 years.

Now, some better car brands can already reach a 2:1 booth ratio of new cars and used cars in the store. Audi, FAW-Volkswagen, Lincoln, Geely and other brands have successively established independent second-hand car showrooms, and more brands will follow up in the future.

Second, online sales are gradually becoming a climate

Affected by the new crown pneumonia epidemic, the business operation of used car offline stores has generally become more difficult. However, the "post-90s" Kang Yue, who is doing second-hand car business in Changping, Beijing, relies on online drainage, and the transaction volume of offline stores does not decrease but increases. The blogger, who has 1.817 million fans on Weibo, revealed that after taking a good video at night and sending it online, there will be customers to talk about the price immediately, and after the price is finalized, the next day you can call the logistics to ship the goods.

Just like Kang Yue, due to changes in customer consumption habits, car dealers in the used car industry are actively seeking changes. The mainland used car industry is ushering in a period of historical opportunity to win the trust of consumers, and the used car industry will evolve from a traditional transaction-based model to a modern model based on integrated services. The new e-commerce model of used cars has achieved more and better supply of vehicle sources, higher turnover efficiency and more comprehensive user protection.

From the perspective of the international market, the trend of second-hand car e-commerce is becoming more and more obvious. Developed second-hand car markets such as Europe and the United States have completed the transformation of e-commerce, and the e-commerce car purchase experience has been widely recognized by users. Since the outbreak of the new crown pneumonia epidemic in 2020, the e-commerce online car purchase model has increasingly become the mainstream of the second-hand car market in Europe and the United States.

The essence of industry upgrading and model iteration is to improve industry efficiency and create user value. The e-commerce model that actively provides users with the ultimate experience is expected to become a popular model in the second-hand car industry.

Third, new energy vehicles have yet to be "started"

In 2021, from the perspective of the full circulation chain of automobiles, the growth of the second-hand car market is significantly better than that of the new car market, but the new energy second-hand car has become an exception. The second-hand car market even circulated a period of smooth-talk, "electric new cars are a treasure, no one in the second-hand car market wants, the battery is too poor and headaches, to change it will have to pay money."

Even in The Huaxiang Used Car Market, the most well-known used motor vehicle trading market in Beijing, it is difficult to see the figure of new energy vehicles, and the price of only a few is "unbearable". When the reporter asked why he did not collect new energy vehicles, Xiao Long, a second-hand car dealer, shook his hand continuously, "Don't mention it, I received a Tesla before, I didn't sell it for two months, and then I lost tens of thousands of dollars before I threw it out."

"Buying second-hand new energy vehicles is not practical, and new cars are more attractive." Mr. Wang, a consumer, told reporters that the new energy vehicles produced in previous years have short mileage, low safety, and the attenuation of the power battery after use is more obvious, and now the new energy has many varieties, long endurance, and more secure quality.

Car dealers do not touch, consumers do not recognize the crux of new energy second-hand cars, mainly in the power battery. Some insiders told reporters that the new energy used car market is immature and non-standardized, which is one of the main reasons for the low retention rate of new energy used cars. To solve this problem, on the one hand, car companies need to improve the technical performance of power batteries, achieve longer use and smaller attenuation, and also need to establish a sound technical standard and evaluation system, which is an important focus to promote the active new energy used car market.

At present, domestic new energy vehicle companies are also making explorations and efforts to solve the problem of value preservation of second-hand cars, such as Weilai Automobile released a second-hand car business system; SAIC Motor has set up a second-hand car certification center to provide used car value repurchase business for car owners, and at the same time select new energy second-hand cars for sale.

Although the new energy used car is really a bit "cold" now, but looking to the future, this field has broad prospects for development. Shen Jinjun believes that on the whole, the production and sales of traditional fuel vehicles have basically peaked, and the future downturn may already be a trend, while new energy vehicles will maintain rapid growth and gradually seize the fuel vehicle market.

Liu Xiaoshi, executive deputy secretary general of the China Electric Vehicle 100 Association, also analyzed that with the increase of electric vehicles, the second-hand trading volume of electric vehicles will also increase significantly, and it is expected to reach 200,000 or even higher in 2025.

The role of the used car market in continuously stimulating the consumption potential of residents is beyond doubt. In 2021, the proportion of used car transactions in the mainland to new car sales reached 0.67, a record high. In the new year, it is worth looking forward to how the entities of the second-hand car industry will share the market growth dividend by improving their management capabilities, operational capabilities and service capabilities.

Source: Economic Daily