China's used car market shifts into gear to enter the fast lane

Sales roar into overdrive as industry observers say glittering future beckons.

China's used car market is hitting the high road to accelerated expansion－with a promising future in innovation boosting its overall outlook, according to industry insiders.

Statistics from the China Automobile Dealers Association, released last week, show that 1.2 million used cars were sold in May, up 21.02 percent from the same period last year.

The performance brought used car sales in the first five months to 5.54 million vehicles, a 15.44 percent increase year-on-year, which was better than expected, said Ministry of Commerce official Hu Jianping, who was speaking last week at the 2018 China Used Car Assembly event held in Dalian, Liaoning province.

The dealer's body expects that sales of used cars will reach 15 million vehicles this year, while 12.4 million were sold in 2017, up 19.33 percent year-on-year. Overall sales hit 809.2 billion yuan ($122.2 billion) last year, marking a growth of 34 percent.

CADA President Shen Jinjun said that compared with the United States, there is still huge potential in China's used car sector, which looks set to attract more and more investors to enter the market.

He said China has an estimated 220 million cars on the roads, which means there is an abundant supply of cars.

He added that China's current volume of used car sales was much less than the mature US market, where it is about 40 million.

Shen called for further policy support and urged the sector to prepare itself to seize the opportunity for further development.

"We suggest changes to the way value-added tax is levied on used car transactions," Shen said.

He said the current arrangement, where tax is calculated and imposed on the total amount, should be changed to a levy on the difference between a car's pre-tax price and its cost to the dealer.

He said that it would optimize the business environment and be of great benefit to used car dealers.

Shen also urged the sector to expand the supply of inventory through innovation, such as expanding car leasing, and improving the efficiency of the used car business.

"We need to not only provide quality cars with real information, but also provide quality aftersales service. Credibility is the most important factor for the used car sector to develop further," he added.

Many used car companies also put forward their own ideas about the development of the industry.

Zhang Xu'an, chief executive officer of online dealer Yixin Group, said that the used car market is now a buyer's market and it should grasp the opportunity to expand into new energy vehicles.

Zhang added that online trading platforms were providing more and more information for consumers and that the transparency would in turn boost the used car trade.

Wang Ping, vice-president of CARS, a major online dealer, said that used car traders should make good used of big data and provide one-stop services including selling, renting and repairs－offering better services and competitiveness, meeting the needs of customers through a complete service cycle.

Luo Lei, deputy secretary-general of CADA, said the movement of used cars across the country was speeding up, as restrictions were relaxed.

He said the average age of passenger cars in the country was increasing slightly, and the main reason for that was the abolition of restrictions on reregistering used cars bought in other cities. People in small cities were willing to buy quality used cars in first-tier cities, he said.

Luo added that used car sales were expected to surge from a total of 15 million vehicles this year to 30 million units in 2025. CADA statistics showed that sales of used passenger cars totaled 4.18 million in the first five months of the year, which accounted for the bulk of total car sales, edging up 15.36 percent year-on-year.