Better used car market may clear way for firsthand sales

Cars await sale at a used car trading market in Dalian, Liaoning province. LIU DEBIN / CHINA DAILY

As sellers find it easier to shift their old models, demand for new vehicles could go up in near future

The momentum of used car sales growth seen last year is becoming even stronger, with experts suggesting the rise will even help to stimulate the somewhat sluggish new car sales in the country.

Statistics from the China Automobile Dealers Association show that 1.08 million used cars were sold in March, a 21.59 percent increase year-on-year.

This best-ever March brought overall car sales in the first quarter to 2.79 million units, up 22.17 percent from the same period last year.

"This was a very good start that has laid a solid foundation for the year," said Xie Yanming, deputy director of the association's used car section.

The CADA expects sales this year to grow at around 20 percent, to reach 12 million vehicles. China sold 10.39 million used cars last year, 10.41 percent growth year-on-year.

Xiao Zhengsan, the association's secretary-general, said one clear driving force behind this growth is that more local authorities have removed trade barriers on used cars.

"They might not have removed them as fast as we expected but the results are starting to show," he said.

Another cause of the rise is that those who bought their cars around the peak years of 2009 and 2010－when sales grew by more than 30 percent year-on-year－are replacing their cars.

Statistics from the association show that nearly 49 percent of used cars sold in the first quarter were three to six years old.

The rapid growth rate of used cars has dwarfed that of new cars in the country.

Statistics from the China Association of Automobile Manufacturers show that China sold 7 million cars in the first quarter, for 7 percent growth year-on-year.

The growth rate fell to 4.6 percent when it came to passenger cars, despite the fact that they accounted for the largest proportion of all new cars sold.

Things are not expected to change for the better soon, as April is traditionally not a busy month, and dealers will feel a lot of pressure in May to make up for the slowed growth in previous months, according to Lang Xuehong, deputy secretary-general of the CADA.

However, Xiao believes that the booming used cars sales could help to stimulate new car consumption as people will buy new cars after they sell used ones.

"When it was a seller's market, new car sales stimulated used car sales, but it is now a buyer's market, so used car sales could in turn boost new car sales.

"We now have some 200 million cars on the road. If used cars don't sell, we are not going to see rises in new cars. They are very closely related."

Despite its boom, the used car sector has a long way to go in China. Some 2.79 million used cars were sold in the first quarter, equivalent to 39 percent of total new car sales in the same period, basically the same level as in last year.

In developed markets such as the United States, such sales are usually more than double those of new cars.