China's used car market grows as values and demand rise

China's used car market has been growing steadily and is expected to reach 16 million units in 2021. A chip shortage reducing the flow of new vehicles off production lines has added value to the used car market.

The latest statistics from the China Automobile Dealers Association show that a total of 1.5 million used cars were sold in August, up 12.08 percent year-on-year and 2.69 percent month-on-month. The transaction amount reached 97.11 billion yuan ($15.08 billion).

Sales in the first eight months stood at 11.39 million, an increase of 40.38 percent compared to the same period last year, and 22.84 percent compared with 2019.

Elsewhere, the association said that heavy rains in Zhengzhou of Henan province in August damaged a large number of vehicles, that contributed to market insufficiency. As the damaged vehicles are gradually repaired, local consumer demand will be satisfied.

Xiao Zhengsan, secretary-general of the association, forecast that the used car market will continue to grow and exceed 16 million units for this year, with growth of more than 12 percent year-on-year. The year's total sales are expected to exceed that of 2019, when the market had not been affected by the COVID-19 pandemic.

The global chip shortage has also affected the supply of used cars and led to a rise in values, a survey of CADA shows. However, Xiao said that the chip shortage affected the used car market less than the new vehicle market. And with policy support, the market is growing steadily.

In other news, the Ministry of Industry and Information Technology announced last month that it will issue real-name registration of Internet of Vehicle cards before, during and after used car purchases. The registration is expected to be completed by the end of September next year.

It will provide greater convenience for the identification of used car information, CADA said.

In addition, the Ministry of Commerce has accelerated the development of the used car market by lifting restrictions on cross-region transfers, facilitating trading, promoting information sharing and innovating circulation modes.

From September 1,218 cities have allowed used car transactions to be registered at the seller's location, rather than having to travel to the original buyer's city as in the past.

Demand for used cars will become one of the main driving forces for the automobile market in China. The ministry will work with relevant departments to improve policies for used car circulation, continue to unleash the potential of used car consumption, and make efforts to promote the export of used cars, a spokesperson of the ministry said last month.