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The second-hand car market has gradually evolved into a niche sector, driven in part by manufacturer initiatives, but its deep development has remained challenging. As new car sales hit a low point, the long-misshapen used car trade began to gain momentum. On August 28, FAW-Volkswagen launched 16 second-hand car showrooms; on September 1, Shanghai Volkswagen expanded its used car sales to 30 cities nationwide. Meanwhile, on August 26, 46 cities in Shanghai saw the opening of "Shanghai GM Autos" outlets. Manufacturers like Guangzhou Honda and Dongfeng Citroen are also entering the market, with plans to officially launch their used car businesses soon.
FAW-Volkswagen has also ramped up its efforts in the used car segment. From September 28 to October 27, owners of any FAW-Volkswagen brand (Jetta, Bora, Golf) can receive free gas tickets and a complimentary maintenance service. Additionally, all customers who inquire about the used car business can enjoy a free vehicle inspection and valuation. In anticipation of National Day, the Ministry of Commerce released the “Second-hand Vehicle Circulation Management Measures (Consultation Draft)†for public feedback, signaling potential regulatory improvements.
Experts predict that the second-hand car industry may experience a small boom in the future. However, several obstacles remain on the path to sustainable growth. One major issue is that dealers lack the authority to handle transfer procedures. As one analyst put it, “How do these shops issue invoices?†Under China’s current policies, only authorized used car dealers are allowed to conduct transactions, and special invoices must be issued. Transfer procedures still require completion within the official used car market.
This means that while car owners can sell their vehicles to dealers, the final paperwork must be handled through the market. A dealer explained, “It's just putting the dealer’s business into a car dealership.†The transaction volume in these stores remains modest. For example, Dongfeng Nissan’s franchise store, which was approved for used car operations in mid-June, recorded single-digit sales in July. In contrast, Shanghai GM dealerships have seen better results, with dozens of used car transactions each month.
According to Di Qiong, a Beijing-based Shanghai GM dealer, “The transfer process still needs to go to the old car market, but our dealers handle the rest. Customers here get a one-stop service.†Li Shuangquan, general manager of the Beijing Borui Xianghong Sales Center, added that their advantage lies in guaranteed follow-up service, unlike the one-time sales typical of the old car market.
Another challenge is the evaluation system for used cars. While auctions are common in the market, many older cars are still sold through brokers. Some worry that appraisers employed by dealers might favor the dealer’s interests over the consumer’s. Li Shuangquan acknowledges that there may be differences in evaluations, but he insists that manufacturers have strict assessment standards. Although the computer determines the tax based on hard metrics like brand, age, and mileage, the actual transaction price can vary significantly due to factors such as driving habits and damage levels.
Dealers are still closely tied to the old car market. Many continue to work with brokerage companies or even operate directly in the market. Non-brand-specific used cars often rely on these brokers to find buyers. After-sales support is not a concern for dealers, as manufacturers set minimum quality standards. If a vehicle doesn’t meet these standards, the dealer will ensure it does before selling.
Quality assurance remains a key advantage for brand franchise dealers in the used car business. Despite challenges, the sector is slowly gaining traction, with manufacturers and dealers working to build trust and improve transparency.
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