Long text: The retention rate of used cars will usher in an era of change

Seeking truth from facts, pursuing the car trumpet of telling the truth, welcome to pay attention to the cool oil in the car industry

The retention rate is an important reference index for many friends when buying a car.

But

If the retention rate is still too important at this point in 2022, it is likely to be a mistake.

The global automotive market is moving towards the era of power electrification in an all-round way, the acceptance of new energy vehicles is increasing, and the retention rate of second-hand cars will surely usher in an era of major changes.

Retention rates are historical data in nature, not predictions of the future

Most friends for the retention rate of the cognition is like this, just bought a new car in 2022, according to the vehicle retention rate data, it is expected that the future of the car can probably sell the price (the retention rate data in the figure is an estimated reference, does not represent the actual data).

However, in fact, no company that calculates the retention rate can accurately predict the future price of the car, and the retention rate they give is actually a summary of historical data.

At this point in time in 2022, the one-year retention rate you see is the retention rate of people's 2021 cars, the three-year retention rate is the retention rate of people's 2019 cars, the six-year retention rate is the retention rate of people's 2016 cars, as for the retention rate of the 2022 new cars you just bought home, that is the future that has not yet happened.

In the period when there is no major change in automotive technology, there will be some technical differences between the model ages, but it is nothing more than the upgrading of the engine gearbox and often in a five-year and eight-year cycle, which is essentially not much change, so it is not a big problem to take historical data as a reference to predict the future, the 3-year retention rate of the 2019 model is 60%, and the three-year retention rate of the 2022 model can also reach this level, which is predictable.

However, we are now experiencing an era of major changes that have not been seen in a hundred years of automobiles, the full electrification of automobile power has become the trend of the times, and the sales of new energy vehicles in China in 2021 account for nearly 15%, and it is not a suspense to break through 20% in 2022.

In this era of change, it is undoubtedly a mistake to ignore this trend of change and continue to mechanically follow the old methods of assessing the retention rate.

What kind of car has a high retention rate?

Car retention rate is a very complex problem, many times there is no necessary connection between the retention rate and the true objective value of the vehicle, but some other factors other than the objective value have a greater impact.

For example, the retention rate of some cars with financial value depends entirely on the financial benefits obtained by the transaction of the car, compared to the value of the vehicle.

For another example, for car owners, a French three-year car with a good car and a Japanese six-year car with a decent car condition, the same price of course, the newer the better.

However, for the second-hand car dealers who receive the car, the former will definitely be severely priced, and the latter can be discussed at a good price, because for the car dealer, even if the former can earn ten thousand yuan, it is not as good as the latter only earns three thousand yuan, and it is a high profit to collect a French second-hand car, but if it cannot be sold in two months, it is a loss-making transaction for the car dealer.

From the above retention rate table, it is not difficult to conclude that the basis of a high retention rate of a car is that the price of the old model of the car is firm, and some people are willing to sell at the bottom.

As soon as I say it, I understand that if the 2007 model can still be sold at a price, then a new ten-year car, a six-year car, and a three-year car will have price support, and the retention rate will of course look good.

But if the 2007 model is no longer worth much, either insist on driving it or send it to the recycling station, then the ten-year car, the six-year car will be pulled down, and the retention rate cannot be high.

What kind of old car can be priced firmly?

A special case is a special niche car with a certain collection value like Jimney, even if it is more than a decade old, people are willing to take over, which lays the foundation for the myth of Jimney wealth management car.

Another more common is similar to Fit, Highlander, Prado such as a certain sales of value-preserving cars, such as this type of car due to its leather and fuel-saving characteristics, long-term old cars can still sell, layer by layer on the overall retention rate of the model to support.

Of course, we need to correctly understand the meaning of the two words "Pi Shi", for example, when we say a little boy Pi Shi, the meaning is definitely not that this child honestly does not cause trouble and never gets sick, and the same for the car is not bad, mainly means that it is not easy to break even if it is broken, it is not difficult to repair and the cost will not be too high.

Good repair is not expensive, this is a sentence, to meet this requirement there is still a fairly high threshold,

First of all, the technology can not be too complicated, the technical requirements for simple maintenance are not high, and the cost of repairing people is not high. In this regard, the higher the technical content of the car, the more disadvantageous, the simple technology of the car instead of taking advantage.

Secondly, there must be a certain amount of ownership as the basis, so that the market can have the motivation to provide a low-cost supply of repair parts.

The third basic quality must be guaranteed, it is cheap to repair, but no one can stand it for three days and two ends.

Fit, Highlander, Prado and other high retention rate of the car mostly meet this condition, especially in the domestic midwest, whether from the maintenance of technical capabilities and spare parts supply, Toyota series SUVs and off-road vehicles are the best.

Also in the western car, the hanlanda version is certainly not as comfortable as the BBA, if the car is not bad, everyone is willing to drive the BBA, but once there is a problem, the panda version of the highlander will always have a way to earn a bar to take you home (it is indeed not very bad), the BBA often only has to apply for a trailer.

This is the fundamental reason why many old Toyota off-road can still sell at a price, and even the car that is about to be scrapped can be dismantled and sold, and the price of the old car has a bottom, and the natural retention rate will rise.

However, once the price of such models collapses in a certain year, the retention rate system formed over the years will inevitably collapse.

This is also the meaning of another text that I want to express before, domestic SUVs really want to rise, we must first have the ability to defeat Japanese used cars in the western market.

Another factor affecting the retention rate is the firmness of the price of the new car, the retention rate is generally calculated according to the manufacturer's market guidance price, which directly leads to the brand of the new car discount selling in the accounting of the retention rate.

Let's take a simple example,

The guidance price of both cars is 400,000, the original price of A car is sold, and the B car is discounted to 350,000,

One year depreciated A car can be sold for 340,000, and one year depreciated B car can be sold for 300,000,

According to the guidance price to calculate the retention rate, the one-year retention rate of car A is 85%, and the one-year retention rate of car B is 75%.

It seems that the A car retains more value than the B car.

But if we calculate the retention rate according to the actual selling price,

The one-year retention rate of car A is still 85%, and the one-year retention rate of car B is 85.7%.

I didn't expect that the B car was actually a higher retention rate, and if the purchase tax was included, the one-year depreciation loss of the B car was also lower than that of the A car.

This is a problem that cannot be solved by all depreciation rate calculation models, because the manufacturer's guidance price is uniform, but the transaction price will have some differences across the country and even each car owner, which is not suitable for evaluation.

But as a car owner, when considering the retention rate, you must understand the difference between them, and you want to discount the new car cheaply and want the second-hand car retention rate to be high, how can you take advantage of all the good things?

New car discount VS markup (original price) high retention rate, choose one of the two, no problem!

Of course, the impact of new car prices on the retention rate is generally limited to cars within 6 years or even 3 years, and the price influencing factors of old models are the main ones, of course, for luxury brands, whether new cars or second-hand cars will generally have some brand bonus factors.

The era of changes in the retention rate of used cars

After having a clear understanding of the retention rate, and looking at the changes in the current automobile market, it is not difficult to find that the retention rate of second-hand cars will surely usher in an era of great changes.

Rebuilding of brand values

In the eyes of forty or fifty-year-old people, car brands are obvious class differentiation, a small number of super luxury brands, BBA as the representative of luxury brands and Volkswagen Toyota as the representative of the joint venture brand are some faith bonus, in their lifetime to drive a luxury brand car is the dream and pursuit of many people, rich to buy new cars, not too rich to buy used cars, as long as the BBA will always have someone willing to pay money to pay.

But in the era of 2022, all car brands are about to start a process of value reconstruction.

First of all, for many Chinese people, BBA is no longer unattainable, compared with the annual sales of the three brands in the United States and China last year, the three major brands of BBA in China are 2.3 million vehicles, the United States is only 850,000 vehicles, and the number of luxury brand cars in China has reached a fairly high level.

For many people, owning a luxury brand car or having the opportunity to experience a luxury brand car is no longer a luxury and has become within reach. Luxury car dream of this kind of thing, when you can't drive it, your heart must be a cat scratching your heart, and you really drive to know what's going on, and your mentality will be flattened, but it turns out to be so.

Therefore, in the past two years, we suddenly found that Tesla, Weilai, Ideal, Gaohe, these new forces, as well as domestic red flags can play well in the luxury car market, BBA brand and belief bonus is slowly fading.

Sales of the three major domestic luxury brands in 2021

Top 5 luxury brand sales in the United States in 2021

BBA is still like this, other joint venture brands are not to mention, especially the younger generation, when they spend money to buy a car, and then superimpose the impact of the replacement of automobile power electrification technology, as short as four or five years, as long as eight or nine years, the possibility of them choosing a second-hand traditional brand pure fuel vehicle will definitely be lower than our current era, buy less people, the retention rate of second-hand cars can not be as strong as it is now.

In the current era of global economic turmoil, the price of used cars in the United States is not the norm.

The challenges posed by vehicle intelligence

The car is an increasingly electronic, more and more software-oriented product, and software-defined cars have become a reality. This kind of intelligence, electronicization may bring about the shortening of the replacement cycle of the car.

In the era of traditional fuel vehicles, as long as a car can refuel and run, it is not considered to be outdated, at most it is to run slower and consume higher fuel.

But in the era of intelligence, in the era of automatic driving began to evolve slowly, vehicles may not be passively eliminated because they can't run but because their functions can't keep up with the times, such as hardware computing power can't keep up with the deployment of new automatic driving algorithms, no new algorithm functions will lag behind, functions can't keep up with the times, who is willing to take over?

You may wish to refer to other products, as long as there is a major technological upgrade, the older generation of products will soon be worthless and can only be sold as scrap, no matter how expensive it can be sold, how luxurious.

Another impact of automotive technology progress and intelligence is the improvement of maintenance technician requirements, the traditional natural suction will repair a large handful, can repair the turbine less, will repair the hybrid is less, the previous mechanical dashboard drum can be repaired, now the electronic dashboard is estimated to be able to change, the cost difference between replacement and repair can be large.

As analyzed earlier, the maintenance cost of old cars rises, which will hit consumers' enthusiasm for buying second-hand cars, buy a car for thirty or fifty thousand, repair a million pieces of no one can stand, and the reality is that this simple maintenance and cheap model is slowly withdrawing from the market.

The replacement effect of used cars brought by new cars

We are not reasonable in this part, to give a simple example.

If you have tens of thousands of dollars in your hand now, you have just learned this book, and you want to buy yourself a car and experience a car life.

In the previous era of pure fuel vehicles, the budget of tens of thousands of dollars to buy a new car is quite limited, and the quality of the new car at this price point can only be said to be in line with the price level. At this time, the second-hand car will become a relatively suitable choice, and the old Fit experience can surpass the new car at the same price to a certain extent. Buy an old Fit, fuel consumption is not high, casually open to buy vegetables is very good, open two years and then sell may also be able to sell a good price.

But now, thanks to the advent of small electric vehicles, you have one more option, eight or nine years old Fit and a new MINI EV or other electric car. Compared with cheap fuel new cars, electric vehicles are not the same, at least in terms of travel costs, you will definitely start to tangle, Fit and fuel saving that is also 100 kilometers 6 oil, MINI EV is less than 100 kilometers 100 yuan, plus MINI EV new cars also have a warranty period, at this time the choice of balance may not necessarily be the Fit side sinking.

Eight years of Fit is still like this, in two years, when there are more electric vehicles available on the market, everyone's understanding of electric vehicles is more sufficient, do you dare to expect eight years of Fit to open two years can still sell a good price?

This is an era of change, no one dares to guarantee accurate prediction of the future, but this does not prevent us from judging from the basic logic, as long as someone will hesitate between the old Fit and the new MINI EV, it means that the substitution will definitely occur, as long as there is a certain amount of substitution, then the price fundamentals of the old Fit will definitely be affected, and the retention rate will definitely change.

Similarly, other classes of cars, including Japanese SUVs and off-road vehicles that are well-preserved, will face similar problems.

The era of changes in the retention rate of used cars has begun, but when to perceive the change, how long it will take to see the results, no one knows, we can only

Embrace change

The change will surely come, but the process and time of this change is uncertain, maybe it is a gradual change, maybe it happens suddenly at some point in time.

As consumers, what we can do is to see the general trend, there is no need to continue to blindly believe in the current retention rate, as long as the expectations are reduced, what will happen in the future will be easier to accept. But if you have to pay a certain price to buy a car with a high retention rate, then when the future changes come, you may have some regrets in your heart, and that's it.

But as a used car practitioner, this is too important, be sensitive enough to the changes in the market, gradual changes you may still have the opportunity to toss and turn, but once a drastic change occurs, it may be a disaster. In one or two years, the problem is not big, but in three or five years, you must constantly revise your original views on the valuation of used cars, although it is difficult to challenge your own inherent concepts, but only in this way can you survive longer.

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