16 October 2018

New-car curbs could jumpstart used-car trade

It’s been a good year for China’s car dealers. Demand for Japanese vehicles has recovered sharply and customer confidence in locally built cars is back up, lifting growth in sales of new cars to 13.5 percent in the first 10 months. The full-year figure is expected to come in at somewhere between 13 percent and 15 percent but uncertainties next year could put a brake on the industry.

That’s because of the prospect of more cities putting caps on new-car sales to stall growth in exhaust emissions, the main culprit behind China’s worsening air pollution. Tianjin, Shenzhen, Qingdao, Hangzhou, Chengdu, Shijiazhuang, Chongqing and Wuhan are considering joining Beijing, Shanghai and Guangzhou in capping new-car growth as part of efforts to clear the air and unknot traffic.

Based on previous experience, limiting purchases of new cars could cut sales by a quarter in those cities, the China Securities Journal reported. That explains why some dealers expect growth in the overall car market to slow to single digits.

That said, the restrictions could spell opportunities for car dealers as policy curbs on new vehicles drive prospective buyers into the secondhand market.

According to the China Automobile Dealers Association, 2.48 million used vehicles were sold in the country in the first half, about a quarter of the number of new cars sold in the same period. The association expects the used-car trade to grow to 10 million units in 2015.

If China goes down on the same path as the United States, there should be a lot of room for the secondhand market to move. In the US, the number of used cars sold each year is about three times the total for new cars.

– Contact the writer at [email protected]



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