Auto makers vie for used-car market
- Source: Shanghai Daily
- [08:17 January 19 2010]
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Ryan Shao could never have imagined he would save 10 percent on the purchase of a Mercedes-Benz premier sedan.
The 35-year-old businessman recently traded his 2006 Toyota Camry in at a Mercedes-Benz dealership and bought a Mercedes-Benz S350 long-wheelbase model for 1.2 million yuan ($175,953).
"I wanted to save some money because of the economic environment," said Shao, who runs an information technology company. "The sales person introduced me to Mercedes-Benz's second-hand car program, and I thought it was a good deal."
China is the fastest-growing new car market in the world, and the used-car business is rapidly developing on its heels. Mercedes-Benz, Volkswagen, Audi, BMW and other car makers, seeking to increase revenues as sales slip in developed markets, have been quick to latch onto the trend.
Mercedes-Benz launched its used-car program, named Star Elite, among its Chinese dealers late last year. The program enables car owners to trade in old models for either a new Mercedes-Benz or a Star Elite second-hand Benz model.
Used Mercedes-Benz premier sedans are required to pass 158 check points before they can be sold under the Star Elite program, which offers buyers a one-year warranty and other benefits such as road assistance.
BMW dealer Shanghai Debao Motor Service Co reported its used-car business increased 45 percent last year. Trade-ins grew 37.5 percent, with nine BMWs sold under that program each month. The dealer offers a warranty good for one year or 20,000 kilometers.
Most of the second-hand BMWs are test drive vehicles or cars driving within five years or 120,000 kilometers.
"The trade-ins really give a boost to new car sales," said a salesperson surnamed Zhang.
In the past, many Chinese people disdained used vehicles because new ones were considered symbols of wealth and success.
"Auto buyers are becoming more open-minded about used cars, and many are finding quality there," said Su Hui, general manager of Asia Olympic Village Automobile Trading Center in Beijing.
"The only reason luxury car makers are keen to exploit the used-car market is to keep their premier brand image."
He said original equipment manufacturers are the best bets in the used car market because reputable dealers have the expertise to maintain cars in top running order. That adds value to a second-hand luxury car, he added.
Since Shanghai Volkswagen launched its second-hand car promotion in 2004 in Beijing, car makers including General Motors Corp, Toyota, Guangzhou Honda and Dongfeng Yueda Kia have built up similar businesses in the fledgling market segment.
Explosive growth in car ownership in China in the last six years has put about 70 million vehicles on the roads. Since car owners typically replace their vehicles after five years, the prospects for a surge in the second-hand market are strong this year.
