Chinese School - Used car sales set to accelerate

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BIZCHINA / Center

Used car sales set to accelerate

(Xinhua)
Updated: 2007-08-12 09:35

After many years of boosting new car sales figures, China's motorists are
increasingly wanting to upgrade, bolstering its fledgling used car sector.

Second-hand car sales totaled 2.7 million in 2006, according to the
Ministry of Commerce, less than half that of the new car sales. Compared
with developed countries, where used car sales are double or triple new
car sales, China's used car market has a huge potential.

A survey by Sinotrust, a leading consulting company, shows China's new
car owners keep their vehicles an average of 6.5 years, while 71.2
percent choose to purchase a new car after three to five years.

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In Beijing, 170,000 used cars were sold in the first half and the ratio
of used to new car sales reached 0.85:1, while two years ago, it was only
0.54:1, a CADA official said.

Xu Dong, deputy general manager of a Guangdong-based dealer, said used
car sales would accelerate as 4S (franchise dealers in "sales, spare
parts,service and surveys") and overseas used car dealers entered the
market.

Li Xiaokuan, deputy director of market administration of the State
Administration for Industry and Commerce, suggested manufacturers pay
more attention to used cars sales. "Trade-ins could not only open up a
new profit area, but also enhance their new cars sales."

He said China's used car sales rules had no restrictions on 4S dealers
selling second-hand cars, and they should include the used car trade-in
in their main business scope.

However the sector still faced problems, including dealer reliability,
asymmetric information, lack of industrial standards, and contract
problems.

Li said the industry and commerce administrative system had begun on
monitoring dealers' credit worthiness. They would publicize the credit
information, and restrict dealers business scope if they were found to
have credit problems.

(For more biz stories, please visit Industry Updates)

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