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Used-car market hopes amid calls to end limits

By ZHANG DANDAN | China Daily | Updated: 2022-02-14 09:21
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A used-car lot in Dalian, Liaoning province, is filled with a range of vehicles. LIU DEBIN/FOR CHINA DAILY

More than 19 million units of used cars are expected to be sold this year in China, with a new "blue ocean" of consumption emerging, said industry experts.

In late January, the National Development and Reform Commission, together with seven other government departments, issued plans for promoting green consumption. They call for developing used-car distribution, promoting the abolishment of all restrictions on the relocation of used cars, and expanding the circulation of used vehicles.

The issue of restricted relocation has been one of the causes behind the limited circulation of used cars. It refers to the measures taken by some local governments to prevent used cars from other provinces entering into their local markets.

The plans that aim to cancel the restrictions on used-car relocation are seen as a "booster" to the development of the used-vehicle market.

With the use of favorable policies, the used-car market is expected to become a new "blue ocean" for China's car consumption, according to Luo Lei, deputy secretary-general of the China Automobile Dealers Association. Blue ocean is an industry term to describe a new market with little competition or barriers in the way.

Luo predicts that the used-car transaction volume in China will exceed 19 million in 2022, and may even hit 20 million.

Data from business information provider Tianyancha show that China now has more than 600,000 car dealers operating in the used-car business.

Auto companies including Audi, FAW-Volkswagen, Lincoln and Geely have set up independent used-car showrooms.

Last year, a total of 17.59 million used cars were traded in China, up 22.6 percent year-on-year. However, the market of used new energy vehicles is not as optimistic.

"I don't feel steadfast when buying a used NEV, but a new one is more attractive," said a customer surnamed Wang.

The used NEV market is not yet standard and mature, and it is one of the main reasons for the low residual value of used NEVs, according to insiders.

To solve this problem, it is necessary for enterprises to improve the technical performance of power batteries. A complete technical standard and evaluation system is also needed, which will help energize the used NEV market.

At present, domestic NEV makers are attempting to tackle the low residual value rate of their used cars. For example, Nio released a used-car business system, and SAIC set up a used-car certification center to provide a repurchasing business and approve used NEVs for sale.

According to the CADA, the residual value rate of used electric vehicles reached 49.5 percent in January, up from 42.9 percent in December 2021.Meanwhile, the residual value rate of plug-in hybrids hit 61.5 percent, up from 52.1 percent a month earlier.

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