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Business / Industry Watch

2nd-hand car trade slows but market set to boom

By Li Fangfang (China Daily) Updated: 2013-01-05 10:22

The year-on-year growth of China's second-hand car trade slowed in the first 11 months to 11.71 percent from the more than 20 percent seen at the beginning of 2012, making the full-year target of 5 million units impossible to achieve, industry insiders said.

However, Shen Rong, deputy secretary-general of the China Automobile Dealers Association, said that despite the lackluster figures in 2012, he believes that the second-hand vehicle market is set to boom in 2013.

"It's almost impossible for China to achieve its target of trading 5 million second-hand vehicles in 2012, as monthly sales have been stagnant since May," said Shen.

"The stagnant market, as well as the heavy price cuts dealers made to promote brand-new vehicles, caused a price war in the second-hand car market."

Backed by a surge in sales at the beginning of 2012, total second-hand vehicle sales in the first 11 months increased 11.71 percent to 4.31 million units, and trade revenue increased 28.71 percent from a year earlier to 232.47 billion yuan ($36.89 billion).

In November, 436,400 second-hand cars were traded in China, 11.51 percent more than in October. However, total trade revenue was down 4.17 percent from the previous month to 22.89 billion yuan.

"The downtrend of second-hand vehicle sales in the second half was similar to the one seen in the new-vehicle market, which is entering a restructuring period," said Shen.

He said that in the second-hand market, sports-utility vehicles had the fastest year-on-year growth of 41.32 percent from January to November, with total sales of 98,000 units, worth 17.91 billion yuan.

"These figures indicate that the demand for second-hand vehicles is also being upgraded along with the trend seen in the new-vehicle segment, which is a signal of the takeoff of the sector," Shen said.

He added that the fact that more financial institutions are showing an interest in the second-hand vehicle business is also helping the sector develop.

More significantly, second-hand cars less than 3 years old saw a market share increase from 18.74 percent in 2011 to 21.79 percent in 2012.

"This will change the original 'old and worn' image of second-hand vehicles, which will definitely drive second-hand vehicle sales," said Shen.

He added that the rapid development of the second-hand business of inland markets in Northwest China and Southwest China also indicates the potential of the sector in the coming year.

The northwest market had the highest month-on-month growth of 38.2 percent in November.

"This year should be a turning point for the second-hand market in China. A mature second-hand market is necessary and essential to support China's new-vehicle sales and the market's long-term development," said Shen.

lifangfang@chinadaily.com.cn

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