Science and technology + ecology boost industrial development

China's used-car market is still in its early stages of development

The report pointed out that in the past, China's second-hand car market has long existed non-standard and opaque industry phenomena, and under the influence of factors such as taxation and the imperfect commercialization of second-hand cars, China's second-hand car market has developed slowly as a whole. However, under the influence of the supply side and the consumption side, the future used car market has great potential for development. At the same time, the disruptive change trend of MADE (i.e. mobile travel, autonomous driving, digital application and electrification) in the automotive industry has also had a certain impact on the development of the used car market.

On the one hand, the change of the concept of automobile consumption and the standardization of the second-hand car market promote the rise in the demand of the second-hand car market, and the proportion of automobile consumers will exceed 50% in the next five years. On the other hand, the continued rise in car ownership, the growth of institutional fleet size and the increasing demand for digital asset management are driving the increase in used car supply. At the same time, the reform will also have an impact on the used car industry. For example, the supply of used cars in various institutions with stable supply and short vehicle age will increase; Assist/autonomous driving software iterative upgrade, improve the value of used cars; Digital applications bring massive vehicle data assets, superimposed digital economy enabled, used car circulation will be more smooth and transparent; Electrification will accelerate the expansion of new energy used car trading and innovative trading models.

Previously, the Ministry of Commerce spokesman publicly said that the ratio of used cars and new cars in circulation in developed countries is generally more than 1.5:1, and the United States, Germany and other countries are more than twice, while China's used car transaction volume is only 43% of new car sales. At present, the number of cars in China has reached 287 million. With the transformation of China's automobile market from incremental market to stock market, the proportion of upgrading and purchasing in automobile consumption has gradually increased, and the demand for second-hand car trading and market potential are huge.

According to the data of the China Automobile Circulation Association, China's used car market showed a growth momentum in the first half of the year, with the transaction volume of used cars reaching 8.43 million, an increase of 52% over the same period last year, and an increase of more than 22% compared with the same period in 2019, which is the best performance of China's used car market in recent years. At present, the ratio of used car transaction volume to new car sales in China has increased from 0.55:1 in the same period in 2019 to 0.64:1, but compared with mature markets, China's used car market is still in the early stage of development.

The report pointed out that China's second-hand car market has significant characteristics such as small and scattered participants, wide and deep geographical span, rapid market development, and diversified consumer demands, and the current second-hand car ecology in China faces certain challenges at both ends of supply and demand, circulation links and policy supervision.

First of all, in terms of the supply of used car sources, the current sales and disposal of vehicles by individual owners are mainly, and the overall stability of the supply is poor, not large-scale, obvious regional differences, and uneven quality; In terms of terminal demand, information asymmetry and complex transaction process have become two core pain points. Secondly, China's second-hand car circulation links, including vehicle evaluation and pricing, vehicle repair, logistics and warehousing, vehicle sales, finance and insurance, extended warranty maintenance, value-added services and other links are facing the corresponding challenges to be solved. In addition, there are key pain points in China's second-hand car policy and supervision, such as scattered management objects, high implementation difficulties and data interoperability obstacles.

In addition, with the increase in the number of new energy vehicles, the used car industry chain is also facing new challenges, such as low vehicle preservation rate, short replacement cycle, second-hand new energy charging pile industry and intelligent electric vehicle network connection data in the used car industry need to be explored.

Science and technology + ecology boost the development of second-hand car industry

As an important force to boost used car consumption, China's used car finance also has considerable room for development. According to estimates, in 2020, China's second-hand car finance penetration rate (the number of new financing units/the actual transaction volume of second-hand cars in the year) has reached 30%, an increase of 2% compared with 2019, and the proportion of mature foreign auto markets is 50%. In terms of structure, used car loans (including credit card financing) accounted for about 78% of the total financing, and financial leasing accounted for about 22%.

Roland Berger expects that under the joint promotion of industry participants and regulatory policies, all aspects of China's second-hand car circulation will be more transparent. By 2023, the financial penetration rate of used cars will reach 38%; By 2025, that figure will rise to 48%.

In recent years, participants in the used car industry at home and abroad have focused on consumers and created value for users through a series of initiatives. Roland Berger summarized it as "an ecosystem, a golden key", that is, ecological model innovation aimed at consumer value creation, and through the "golden key" of scientific and technological innovation, activate the ecosystem.

China's second-hand car ecosystem can be composed of supply and demand subjects (owners and vehicle sources), circulation service subjects (including vehicle trading, vehicle circulation, vehicle finance, vehicle services, vehicle life, enabling support and travel, etc.) and policy and regulatory subjects (including policy making departments, financial regulatory departments, consumer protection departments, urban management departments and industry associations, etc.).

The creation of the second-hand car ecosystem will meet the core demands of supply and demand subjects, improve the operation efficiency of circulation service subjects, and help solve the pain points of the standardized development of the industry from the policy and supervision side.

With the establishment of the second-hand car ecosystem and the evolution of cars into "Computer-on-Wheel", a new business model characterized by "three separates" (namely "soft and hard separation, human-vehicle separation, car-electric separation") is taking shape, and technology is the key kinetic energy for the formation of second-hand car finance related business models and new business models.

Zheng Yun, head of Roland Berger Automotive Industry Center and global Senior Partner, said: "By 2035, the profit share of the front end of China's automotive value chain will decline from 54% in 2020 to 26%, while the profit share of the automotive aftermarket and mobility business will achieve significant growth. Looking to the future, China's used car finance and ecology are expected to usher in considerable development."