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Used-car sales remain lukewarm despite high hopes

By Li Fusheng (China Daily) Updated: 2016-10-24 10:27

Second-hand car sales in China will grow to hit 10 million units this year, but the eagerly awaited "rush" will not happen any time soon, said an official at the China Automobile Dealers Association on Thursday.

Shen Rong, a deputy secretary-general of the association, said he had expected the sales surge when the State Council introduced a series of stimulus policies in March.

The eight-article guideline includes a requirement that local governments lift any limits on inflows of second-hand vehicles from other regions by the end of May 2016.

"People in the sector were excited when the policies were released, but the market did not improve as expected," he said at a press conference at the Beijing Asian Games Village Auto Trade Market Center.

Statistics show 6.5 million used cars were sold in China in the first eight months of the year, up 6.53 percent year-on-year. While this is a decent figure, it is much lower than the association's estimate of 11 million units for the year, made when the favorable policies were released in March.

Shen said he had not expected that many cities would postpone the policies, especially the one about removing the ban on selling non-local cars.

The ban has curbed the free flow of used cars, resulting in insufficient supplies, he said.

The influx of new cars into the market and their discounted prices are killing the appeal of used cars.

About 24 million new cars were sold in China last year, a similar number is entering the market this year, and automakers are doing everything they can to stay competitive.

Manufacturers are cutting prices so much that the cost of a used car can seem excessive to potential buyers.

According to the association, used cars now cost 30 percent less than a new one, but in developed markets such as the United States it is about 50 percent.

What aggravates the bleak outlook is that the capital market is losing its enthusiasm and patience in the used-car market.

A report by China Securities shows $2 billion was invested in the sector in 2014 and 2015, but Shen says there has been little investment this year.

"They have entered a stage of watching and waiting," said Shen.

Websites specializing in used cars advertised heavily last year, but their performance has been poor.

Data from the association shows 23,800 used cars were sold via major online platforms in August, accounting for 2.77 percent of total sales in the month.

The National Business Daily newspaper reported that online auto trader Guazi planned to spend 1 billion yuan ($150 million) on advertising this year, but it has revised the plan to focus on sales.

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