Chinese Car Buyers Shifting from New Cars to Used Cars

Used car sales are projected to overtake new car sales in China by 2020.

byDave Bartosiak|
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While some automakers like Cadillac are flat out killing it in China right now, some are struggling. New passenger-car sales rose just 1.9% in the first 11 months of 2017. That lags even the broad global average of 2.7% growth. Some believe that it’s the recent surge in used car buying that’s causing the slow numbers.

According to Fox Business, the novelty of car ownership for China’s new middle class is beginning to wear off. As a result, you’re starting to see dealerships in China apply the US model of having new and used cars on the lot at the same time. For example, all 1,600 GM dealerships now sell used cars and 80% of Ford’s 800 Chinese dealerships are doing the same.

It’s a change in behavior for the Chinese consumer. Here in the US, used car sales outnumber new car sales more than two to one. In China, it’s the opposite with more than two new cars sold for every used car. That’s changing each year and the China Automobile Dealers Association thinks that used car sales will overtake new car sales by 2020.

New car inventory waits in China, Getty

It makes sense that the Chinese market would begin to mature over time. Initially, there would be a very low supply of used cars because they first would have to be purchased as new cars, then sold by their initial owners. Once people started figuring out that a used car in good shape looks just as good on the street as a new car, their purchasing behavior would also begin to change.

The showroom manager at the Yiechetang used-car center in Ningbo, a city just outside of the wealthy Shanghai and Hangzhou markets said that Chinese buyers have figured out that "nobody on the street would ever know the car was bought second-hand.” Small, unaffiliated lots like Yichetang account for 80% of the used-car sales in China today. However, the competition is beginning to heat up as big investors are entering the fray.

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