The price of new cars has "fallen", and the second-hand car industry is "not full"! More than ninety percent of car dealers are losing money, and the opportunity to pick up leaks is coming?
Every reporter: Sun Tongtong Every editor: Sun Lei
At the beginning of 2024, the "price war" in the domestic auto market shows no signs of stopping. According to public information, since January 1, 7 car companies, including Tesla, have officially announced that they will lower the prices of their models or launch promotional policies for limited-time cash discounts.
The industry generally believes that the "price war" will not end in 2024, and the knockout round will continue. Under the impact of the continuous "price war" in the new car market, the heat of the second-hand car market has also been affected, the overall price has generally fallen, and the profits of second-hand car dealers have been squeezed.
A few days ago, the reporter of "Daily Economic News" found that the current second-hand car transaction is relatively cold, and the price is also generally affected by the impact of the "price war" of new cars. As soon as they entered the parking lot of the center, a number of second-hand car dealers came to inquire if they were interested in buying or selling second-hand cars, and they vied to say that their prices were "absolutely cost-effective". Inside the trading center, the flow of people is small, and many salespeople use their leisure time to live broadcast on online platforms such as Douyin and Xiaohongshu to attract traffic.
The value retention rate has generally declined, and more than ninety percent of second-hand car dealers have lost money
The reporter noticed that although the overall popularity of the Shanghai second-hand car trading center market is cold, the flow of people in the luxury car area, including Mercedes-Benz, BMW, Audi, Porsche and other brands, is relatively large.
"The price of new cars has been greatly reduced, and there are almost no brands that have a high value retention rate. In the past, we sold Lexus and Toyota, and these Japanese cars were very valuable, and a two-year-old car could even sell a new car at the price, but now it can't be done. A second-hand car owner told reporters.
Image source: Photo by reporter Sun Tongtong
According to the survey, in 2023, affected by the "price war" of new cars, the value retention rate of second-hand cars will decline as a whole, and all levels of models will show a rapid depreciation trend. Among them, the value retention rate of medium and large SUVs and MPV models has declined significantly. According to the data, in December 2023, the value retention rate of medium and large SUVs was 70.1%, down 5 percentage points year-on-year, and the value retention rate of MPV models was 64%, down 4.8 percentage points year-on-year.
In terms of transaction volume, data from the China Automobile Dealers Association shows that in November 2023, the trading volume of the national second-hand car market was 1.6515 million units, a year-on-year increase of 29.18%, and in January ~ November 2023, the trading volume of the national second-hand car market was 16.7523 million units, a year-on-year increase of 14.65%.
Although the growth rate of the second-hand car market is not low in terms of transaction volume, the market prosperity and car dealers' profits are not satisfactory. According to the data, the used car manager index in December 2023 was 44.1%, a slight increase from the previous month, but it was still below the boom and bust line, and the performance of the used car market was average. In fact, in the past two years, only in September 2022, the used car manager index was above the boom and bust line, and the rest of the months were below the boom and bust line.
In addition, judging from the data of the Guazi second-hand car platform, the price of used cars will fall in 2023, and the average transaction price will decrease by 6.5% year-on-year.
"Business is getting harder and harder, profits are decreasing, a car can't make much money, and some have to sell it at a loss. Last year, the price of new cars fell very sharply, and it also had a great impact on the price of second-hand cars. Not long after someone collects the car, the price of the new car is reduced by tens of thousands, which is lower than the price of the car, so how can they be sold? A second-hand car salesman told reporters.
According to another survey by the China Automobile Dealers Association, 92% of second-hand car dealers have lost money in recent years, and the survival and development of second-hand car practitioners have been severely challenged.
The average inventory turnaround period is more than 60 days
The extended inventory cycle also reflects the weakness of the used car market, which also affects the profitability of used car dealers. The data shows that from 2022 to the end of 2023, the average inventory turnover period of used cars has increased from 37 days to 61 days.
Tian Tian, deputy secretary-general of the China Automobile Dealers Association, said that in the context of the "price war" in the auto market, the price of new cars is basically adjusted once every 15 days, which means that the new car market has experienced four price adjustments during the 60-day inventory period of second-hand cars. "The general gross profit of second-hand car dealers is about 5~8 points, and the gross profit of second-hand car dealers loses 2 points for each new car price adjustment, and the second-hand cars that fail to complete the turnover within 60 days are likely to face losses. Tian Tian said.
"The price reduction of new cars will first stimulate the demand for car replacement, resulting in an increase in the supply of second-hand cars; on the other hand, the preferential price of new cars will attract some people who are originally ready to buy second-hand cars, resulting in a decrease in the demand for second-hand cars; the two will deepen the contradiction between supply and demand in the second-hand car market. The most intuitive performance in the short term is that there are more cars on the melon seed platform and the price is more affordable. This is a good thing for used car consumers, but it is also a challenge for merchants. The relevant person in charge of Guazi second-hand car told reporters that in the long run, this will also accelerate the market reshuffle and be conducive to the healthy development of the industry. After all, the factor that determines the quality of the second-hand car market is not only the price, but also the powerful merchants will iterate themselves, and the platform will also increase innovation in experience, value-added services, warranty, vehicle quality assurance, etc., to jointly create a win-win situation for buyers, platforms and merchants.
Image source: Photo by reporter Sun Tongtong
The industry generally believes that the "price war" in the new car market will continue to increase in 2024, and the industry will enter a stage of accelerated reshuffle. In this context, the profit margins of second-hand car dealers are constantly being squeezed, and the challenges should not be underestimated.
"In the current environment, used car dealers can compensate for the reduced profit margins with faster turnover. In addition to actively embracing e-commerce, in the long-term operation, big data can also be used to predict future market trends in order to prepare in advance, in addition, big data can also help second-hand car dealers improve operational efficiency. For example, by analyzing customers' car buying behaviors and preferences, used car dealers can more accurately target customers, thereby improving sales efficiency. The relevant person in charge of the above-mentioned melon seed second-hand car told reporters.
New energy used cars are expected to become a new fulcrum
According to a survey by the China Automobile Dealers Association, at the end of 2023, new energy vehicles will become the protagonist of the "price war", but due to the inactive second-hand car market and low transaction volume, the impact of new energy vehicle price reductions on the second-hand car market is very small. New energy vehicle owners also generally have an attitude of reluctance to sell, and the price has not dropped significantly.
In fact, the reporter learned in the above-mentioned second-hand car trading market that some new energy models have also been slightly reduced, for example, the 2020 NIO ES8 with an odometer of 10,000 kilometers is currently priced at 220,000 yuan, and the 2023 NIO ES8 with a mileage of 10,000 kilometers is priced at 300,000 yuan. According to the owner of the car dealer, after a slight price reduction, the inventory of more than a dozen vehicles has been digested and only 3 vehicles remain.
Image source: Photo by reporter Sun Tongtong
Although the popularity of new energy vehicles in the second-hand car market is still low, the penetration rate is on the rise. According to the new energy used car transaction data released by the China Automobile Dealers Association, as of the end of November 2023, the penetration rate of new energy used vehicles continued to climb to 5.2% from 3.8% at the beginning of 2023.
Guazi second-hand car big data also shows that since 2023, the proportion of new energy second-hand cars in online second-hand car transactions has exceeded 10% for 4 consecutive months. From the perspective of annual transactions, the new energy transaction volume of the Guazi second-hand car platform in 2023 will increase by 122.3% year-on-year, and among the top 10 hot-selling models on the platform in terms of overall sales, there are three new energy models on the list, namely BYD Tang, BYD Qin PLUS, and BYD PLUS, all of which are plug-in hybrid models.
"It is expected that in 2024, the penetration rate of new energy vehicles in the second-hand car market will further increase. In addition, the price reduction of new cars has led to a decline in the price of used cars, and there will be many opportunities for used cars to 'pick up leaks'. Many models are in abundant supply, and car dealers are fiercely competing with each other, so the prices of these models have been reduced to a reasonable range after full negotiation, and they have excellent cost performance, so you can try to pay attention. The relevant person in charge of the above-mentioned melon seed second-hand car said.
Li Xin, deputy secretary-general of the China Automobile Dealers Association, believes that the current new energy second-hand car is in the early stage of market development, the scale is not large, the model category is not rich enough, and the price still fluctuates greatly, but in the long run, the upside and market prospects of new energy second-hand cars are very considerable.
National Business Daily