Used car market heading for fast lane

• Source: Global Times
• [22:31 February 02 2010]
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Opaque information

Incomplete and unreliable vehicle history information also stops people from buying used vehicles, particularly high priced ones, said Wang. He said vehicles priced below 200,000 yuan ($29,294) account for more than 70 percent of the market's trade volume.

The information gap also discourages insurance agents from providing insurance and banks from giving loans to used car buyers, said Shen.

Shen said China began to train used car appraisers in the late 1990s. But due to lack of appraisal standards and people's doubts about the objectivity of the appraisers, the process hasn't been largely used, said Shen.

Furthermore, second-hand vehicles offer no after-sales warranty like new vehicles, normally two years or 40,000 kilometers.

New regulations

Shen said the Ministry of Commerce will unveil two standards quite soon to boost the country's used car market.
One is certification standards for used car businesses. The other is a technical appraisal standard, said Shen.

Shen added the most effective way to standardize the used vehicle market is to ask vehicle buyers and sellers to provide technical appraisals done by third parties, a recommended price range based on the appraisal and a letter of commitment from the appraisal agency saying it would be punished if it falsifies an appraisal.

A wave of public used car auction also began in the second half of 2009 and Shen said the multi-party pricing process has improved the quality and transparency of used vehicle market.

A report released earlier last month by CADA forecast that China will see a bullish used vehicle market during the next three years. Sales will increase by 40 percent year-on-year, accounting for two thirds of the country's total vehicle market, predicted the report.