Victims of China's Auto Price War Turn Out to Be Dealers of Almost-New Cars(Yicai) Jan. 12 -- Ripple effects of price wars among Chinese carmakers are making their way to dealers of used cars who report squeezed profits and longer inventory periods.
Dealers of especially almost-new vehicles need to adjust their strategies of purchasing and reselling cars, Yicai learned through interviews with vendors.
Nearly-new cars used to be highly popular among buyers for higher performance and among dealers for better profit margins but the situation has changed, a secondhand car dealer said to Yicai. “The business of quasi-new cars has basically become not profitable and the corresponding inventories are hard to clear.”
Prices of new vehicles have been slashed to stand close to those of almost-new cars or even lower so dealers of secondhand vehicles can do nothing but further trim prices to sell inventory, the source added.
As fresh models got more affordable, old cars were exchanging hands more slowly. Due to the big discounts on novel models, secondhand cars remained without an owner for 50 days on average for several months of last year, and some units were waiting for a buyer for three months, the above-mentioned dealer said. Earlier, it used to take a maximum of one month to sell a used car, the person added.
A key phrase for used car dealers last year was "selling cars at a loss," market insiders said to Yicai, adding that last year's price wars intensified buyers' wait-and-see attitudes, narrowing sellers' profit margins.
The average transaction price for secondhand vehicles in Beijing declined by 13 percent CNY105,000 (USD14,700) last year from a year ago, according to statistics provided by Wang Meng, an expert from the China Automobile Dealers Association. During seven months of that year, year-over-year declines exceeded 10 percent.
Last year, around 18.4 million used cars were sold in China, up by 15 percent from a year earlier, according to data released by the CADA. Meanwhile, the value of such deals rose slower at 11 percent to CNY1.18 trillion (USD165.2 billion).
Editors: Tang Shihua, Emmi Laine
