Used car sales will be boosted by online evaluation platforms

If you want to buy a used car in China, the biggest problem is not whether you can find one - the country has 194 million cars on its roads - but whether it is fairly priced.

Prices, as well as varying, from car to car, also vary for the same car among different dealers.

This has discouraged many potential buyers, according to Luo Lei, deputy secretary-general of the China Automobile Dealers Association. Estimates put the number of dealerships in the country at 100,000.

However, the rise of car evaluation companies is helping to change this situation with their vast databases. Potential buyers can consider a ballpark price if they simply type some parameters - including the vehicle's marque, model, age and place of registration - into apps such as Jinzhengu.

Sheng Qiujian, chief data officer of the Kelley Blue Book-backed startup, said it has statistics for around 46,000 models on China's roads with information provided by multiple sources, including carmakers, dealer groups and insurance companies.

"Any person, no matter how experienced he or she is, will not know every detail of all those models," said Sheng.

The company's CEO Zhou Guangyin said it plans to keep the platform free for individuals, as its major customers are businesses, including carmakers who want to learn about their cars' residual value in the market and banks that issue loans to used car buyers.

Jinzhengu now receives about 3.5 million visits a day and another major evaluation company Che300, some 3 million visits.

Luo, a long-time advocate of the used car sector, said this popularity reveals the sector's potential. "After all, where there is demand, there is business," he said.

China sold 10.39 million used cars last year, representing a 10.3 percent growth year-on-year, after some provinces opened their markets to sales of cars across provincial borders.

Luo expects a 20 percent growth this year, with sales rising to 12.5 million vehicles, as more local authorities are expected to remove their bans and car evaluation companies are helping to improve the transparency of vital transaction information.

"If third-party organizations can offer such services and customers do not find it intimidating to learn about car conditions and price negotiations, there will be an opportunity for the sector," he said.

In developed markets such as the United States, used car sales are usually more than double those of new cars, while in China, they were equivalent to only 37 percent of total new car sales last year.

Wan Fujun, an official at the Standardization Administration of China, said the sector will benefit even more if these companies can help to introduce car evaluation standards.

He said China has introduced a reform that gives the market a larger say in drafting the standards, while such standards, if applicable, will be adopted by the authorities.

"But those companies should make public how their evaluation is completed, so that people will know whether the evaluation meets their demands, as standards themselves are open in nature."