China Used Car Market Performance and Outlook to 2027-COVID-19 Impact Assessment

China Used Car Market Performance and Outlook to 2027-COVID-19 Impact Assessment

Executive Summary

Economy of China: China was the only major economy to grow in 2020, although at its slowest pace in decades, with a 2.3% growth. According to the National Statistics Bureau, the country's GDP increased by 6.5% in the fourth quarter of 2020, outpacing the 6% growth rate seen at the end of 2019, before the coronavirus gained strength. Moreover, During the first half of 2021, Chinese economy grew by 12.7% following a strong rebound in the first half of 2021.

Impact of COVID-19 over China Used Car Market: The COVID-19 pandemic affected both the general demand and supply globally. Particularly, China was forced to temporarily slow down the demand for old and new vehicles amid the pandemic. Furthermore, the global economic slowdown has affected consumer spending across countries, and China has not been an exception. This has led to a decrease in sales of cars. However, with the fear of rising infection rate and for adhering to social distancing norms, people have started avoiding public transport and preferring personal vehicles, thereby causing a shift in preference from cabs and public transport to own cars, further bolstering the demand for new or used cars. Additionally, a large section of people is planning to buy cars after the settling down of the virus and easing of mobility restrictions.

Preference for Personal Mobility: Preference for personal mobility among the people in China has increased substantially with the outbreak of the COVID-19 pandemic. People are refraining from public transportation and shared mobility options to follow social distancing norms, and are preferring personal vehicles. However, with employment uncertainty, pay cuts, and job losses amid the pandemic, new cars are becoming increasingly unfordable for the middle-income consumers, and a feasible and balanced solution are second-hand cars.

Internet Penetration: China has come a long way in terms of smartphone and internet penetration and the use of e-commerce sites/applications. In January 2021, there were 939.8 million internet users in China. This figure increased by 10% or 85 million between 2020 and 2021. Internet penetration in China was registered at 65.2% in the same month. The used car retailers are thereby leveraging this development in technology and getting more organized by using digitalization to make market offerings attractive. Facilities in the form of a large number of photos and videos of the cars on online platforms and convenient online finance services for used cars in the country are attracting more customers into buying these cars.

Positioning of Used Cars in China Automobile Industry Performance

China is one of the world's largest auto marketplaces, producing more than half of all automobiles worldwide. China is both the world's largest used car market and the world's largest automobile producer. Used cars are sold in China are mainly by organized dealerships, unorganized, independent dealerships, and internet sites like Guazi.com, Uxin Group (xin.com), Renreche (renrenche.com), Souche.com, and others. Among South Central China, Northern China, Southwest China, North-East China, and Northwest China, East China currently dominates the used automobile market. With various rules and regulations that encouraged China's use of the vehicle market, China has expedited the expansion of the automobile industry at a quick speed and achieved exceptional output.

Current Situation: The used vehicle market in China is still significantly less than the market for new cars and light trucks. In May 2019, China's Ministry of Commerce launched a pilot programme allowing enterprises in Guangdong province in South China and nine domestic cities, including Shanghai and Beijing, to export used vehicles.

Government Initiatives: Administering Automobile Sales, Registering used cars sold beyond provinces and city borders, modifying laws governing the recycling of wrecked automobiles, and supporting the so-called parallel imports pilot programme are all policies promoted by China's Ministry of E-Commerce. In order to keep high-end car prices down, these policies permitted certain unlicensed dealers to sell imported cars.

Scope of the Study

The following synopsis is based on the report China Used Car Market- COVID-19 Impact and Outlook to 2027 published by Makreo Research and Consulting. The report delves deeply into various parameters such as market size, segmentation, value chain analysis, and industry cause and effect analysis. The study includes market dynamics that provide an understanding of industry opportunities, driving forces, major challenges impeding growth, and an analysis of future opportunities that may help market players capitalise on untapped business potential in the specific geography.

Key Questions Answered

How China used car market has fared in the past and what is the present scenario?

What are the key variables impacting the China Used car industry growth covering both micro level and macro level assessment?

How China economy is performing after the virus outburst?

Where China is placed in global trade and also discuss the present state of used car trade market?

How China automobile industry is performing despite of global economy slump?

Was COVID-19 an opportunity for the China used car industry or a threat?

What are the key segments of used car market in China?

Which Vehicle type is gaining demand in China used car market?

Who are the leading players in the market and what is the investment scenario?