Blue Whale News, July 1 (Reporter Li Zhuoling) "The era of second-hand car profiteering has passed. Hao sighed.
At the end of June, in Guangzhou, the red sun was scorching and the heat was very hot. In contrast, the Guangzhou Guangjun second-hand car trading market is quite "cool". Ah Hao has been working here for four or five years, and has experienced the second-hand car industry from the boom in the past to the downturn today. According to him, his store could earn hundreds of thousands of dollars a month at its peak, but now it may not be able to sell a few cars a month.
The situation in Ah Hao's shop is not an isolated case. According to data from the China Automobile Dealers Association, in May this year, the trading volume of the national second-hand car market reached 1.5846 million, a decrease of 5.62% month-on-month, showing the volatility of market transactions and the current situation of weak growth.
According to a set of data released in July last year, 92% of second-hand car dealers have lost money in recent years, and their survival and development have been severely challenged.
The second-hand car market is quite deserted Image source: Photo by Blue Whale News
Under the increasing losses, some small and medium-sized second-hand car dealers chose to close their stores and leave the market silently. For the practitioners who are still at the table, how to climb out of the valley and whether they can wait for the industry to turn around is still waiting for the bullets to fly.
"Selling a car at a loss depends on luck"
Guangjun second-hand car trading market is located in Xinjiao Middle Road, Haizhu District, Guangzhou, and is one of the largest second-hand car trading markets in Guangzhou.
At about 5 p.m. on June 28, Blue Whale News visited and saw that although it was in business hours, the huge market was quite deserted, and only a handful of people came to see the car.
Blue Whale News randomly selected a few stores to inquire about buying a car, and some merchants didn't seem to be interested, just pointed to the listing price on the front windshield of the car, "The price of different cars is different." ”
"In the past, there were a lot of people at this point, but now there is a lot less traffic." Ah Hao told Blue Whale News that the second-hand car market is not good now, taking his store as an example, only a few cars were sold in May, and a little better in June, selling more than a dozen cars, but many cars are basically sold at the same price, and they will not make too much money, and the basic listing price is the cost price, and the rent is not even earned.
Guangjun second-hand car trading market Image source: Photo by Blue Whale News
In Hao's view, the era of profiteering in the second-hand car industry has passed. He recalled that his store used to sell dozens of cars a month during peak periods, and the turnover was relatively strong, and the net profit could be hundreds of thousands. "But now a lot of cars are sold at a loss, and the selling price has fallen again and again, and it has been adjusted again and again."
Behind the decrease in passenger flow, transaction volume, oversupply and profit margins, second-hand car dealers are also facing the risk of extending the inventory turnover period and declining capital turnover rate.
According to data from the Automobile Dealers Association, from January to December 2022, the average inventory cycle of the used car industry is 37-51 days. In the first half of 2023, the average inventory cycle is 48-57 days, and the inventory pressure will further increase in the second half of 2023, with an average inventory cycle of 59-61 days. According to a group of surveys cited by it, 18.5% of second-hand car companies in December last year believed that the operating conditions were "not good", and nearly forty percent of companies said that the capital turnover rate fell by 10%.
"In the past, if you were fast, you could sell the car within a few days of receiving it, but now it takes a month or two, and it depends on luck. We are also cautious about collecting the car, and we dare not collect it indiscriminately, mainly depending on the condition of the car, the price difference space, etc., because the price fluctuation is too big. But the store is still in a state of liquidation, and the collected cars occupy all the parking spaces we rented, and we can't stop. ”
According to Ah Hao, his store is settled in the trading market, and the rent is rented from one parking space to another, and the price of a parking space is more than a few thousand, plus the office, and the rent is tens of thousands of yuan a month. "The rent has been discounted since the beginning of this month, and I have helped to make up for it."
There are stalls that are vacant Image source: Photo by Blue Whale News
Blue Whale News also noticed that some stalls in the trading market were vacant. A number of merchants told Blue Whale News that some stalls may not have been rented out, and some may have left. "There's no way, the market is like this now, it's a little bleaker, and there are quite a few people in the industry who can't do it and choose to leave."
The price war for new cars triggers a domino effect
Losses, bankruptcies, and departures are becoming a true portrayal of some small and medium-sized second-hand car dealers. So, what is the reason behind the difficulty of selling used cars?
A number of practitioners told Blue Whale News that in addition to the impact of the environment, it is mainly affected by the price reduction of the new car market. Under the domino effect caused by the new car price war, the chill is constantly being transmitted to the second-hand car market further downstream.
The Automobile Dealers Association also issued a document on June 11 pointing out that there are two main reasons for the fluctuation of the second-hand car market, one is the strong competition in the new car market, and the other is the fluctuation of the new car price system.
Taking the fluctuation of the new car price system as an example, the fluctuation of the new car price in May this year has led to a further extension of the inventory turnover time of the second-hand car market, and the average inventory cycle is currently 55 days. "The combination of these factors has led to an earlier off-season for the used car market, which traditionally occurs in June, but has now been brought forward to mid-to-late May." The Automobile Dealers Association noted.
"No way, the new car is too volatile." A Hao said that at present, the second-hand car market of oil cars and trams is not very good, and the price of new cars continues to drop, and many people are more willing to buy new cars.
On the new car side, as of the end of June this year, a set of public data shows that since April, more than 40 automakers and a total of 128 car series have adjusted their prices, among which new energy vehicles have become the main force in price reduction, covering pure electric and plug-in hybrid models. According to Cui Dongshu, secretary general of the National Passenger Car Market Information Association, in the first quarter of 2024, the number of price reduction models in the domestic auto market has exceeded 60% in 2023.
Automakers seek change: Exports of used cars soared by 270,000 units from 15,000 units
In the face of such market changes, many second-hand car dealers are also seeking changes and looking for opportunities to survive. A number of merchants in the above-mentioned Guangjun second-hand car trading market told Blue Whale News that they are expanding online sales channels, including using well-known second-hand car platforms to promote and attract customers to the national market.
Guangjun second-hand car trading market Image source: Photo by Blue Whale News
"It's a metamorphosis for the industry." A second-hand car trading platform practitioner told Blue Whale News that the current difficulty is actually a test of the business ability of the business. It is a transition period from the original car source to today's business is king. In the long run, low profits and reduced turnover rate will be the most obvious phenomena at present, but it will also prompt businesses to further improve their business capabilities, optimize product structure, adjust business strategies, and strengthen sales and service capabilities.
In addition, export is also a big outlet for used car dealers. It is reported that since the launch of the second-hand car export pilot in 2019, the mainland's second-hand car exports have grown rapidly, and the annual export volume of used cars has soared from about 15,000 units in 2021 to more than 270,000 units in 2023. Some analysts believe that in the next 3-5 years, the annual export volume of used cars in mainland China is expected to exceed 500,000.
It is worth noting that the policy side is ushering in a favorable situation. In April this year, the Ministry of Commerce and 14 other departments issued a notice on the "Action Plan for Promoting the Trade-in of Consumer Goods".
Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, believes that in terms of improving the second-hand car system, the "Action Plan" proposes two aspects of work.
The first is to promote the transaction of second-hand cars, smooth the circulation of second-hand cars, reduce intermediate costs, disclose non-confidential car data, encourage third-party platforms to provide services, and standardize the development of the second-hand car industry. For new energy second-hand cars, it is proposed to strengthen the evaluation of their batteries and vehicles, promote the construction of new energy second-hand car system, promote the healthy development of the new energy second-hand car industry, and relieve the worries of new energy vehicle consumers;
The second is to support the development and growth of second-hand car business entities and encourage the development of brand second-hand car enterprises. "These two aspects are the core foundation of the development of the second-hand car industry. Only the development of these two aspects can improve the overall development level of the second-hand car industry. ”