Foreign Companies Target Secondhand Auto Market in China.doc

1、1Foreign Companies Target Secondhand Auto Market in ChinaRecently, Miss Gao, who is working for a Koreanfunded company, met a problem in deciding her next workplace. An American auto distribution group which is busy acquiring 4S stores in China, and a secondhand auto dealing group funded by Japanese

2、 investors invited her to join in them. “Presently building a 4S store in China costs 10 million to 12 million yuan (USD 1.57 million and 1.88 million) while a secondhand auto dealing market only costs 5 million yuan (USD 785 thousand). Therefore many foreign investors are more willing to invest in

3、the secondhand auto market. I dont know whether I should throw myself into the secondhand auto market or not,” said Miss Gao. Retain customers with secondhand autos Different from the hesitation of Miss Gao, foreign auto companies have much more apparent attitudes towards Chinas secondhand auto mark

4、et. Mercedes Benz under Daimler Group estimated that the sale of secondhand autos in China could increase by 7% from 2010 to 24.1 million units. Such a big market attracts Daimler, Nissan, Volkswagen and several other well-established auto companies. They built their own secondhand dealing business

5、in China in succession to provide the services of exchanging old vehicles for new ones or maintenance and repair services for their suppliers. In recent years, the investment into this field had a gradual but substantial increase. Nissan has already begun to hold an auction to buy back its secondhan

6、d autos. It also sets up training sessions to help its suppliers to estimate the value of old vehicles. The foreign companies actions in the Chinese secondhand auto market began several years ago. The global largest secondhand auto dealer Manheim China has already set up auction companies in Shangha

7、i and Shenzhen. Apple Car, a secondhand auto dealer that cooperates with Japanese Sojitz Co., Ltd and Apple Car Co., Ltd also opened over 50 franchise stores in China. Gulliver, the Japanese biggest and global second largest secondhand auto dealer, said recently that it was actively preparing for th

8、e entry into the secondhand auto market. “We make use of auctions to keep the price of secondhand autos in Japan. But in China, we rely on market-oriented methods. A 3clear price system and a simple process are very important.” “The ideal situation is that a consumer buys his first car when he is yo

9、unger than 30 and his first car should be a secondhand Mercedes Benz. After that we can retain him as our customer for long,” said Klaus Maier, president of Mercedes Benz China. The change of Chinese consum- ers mindset is an important premise for the coming prosperity in Chinas secondhand auto mark

10、et. In China, the car has gradually moved from a symbol of its owners identity to the tool of reducing footwork. “Get a secondhand car and sell it for another one several months later. It wont cost much in one year,” some consumers said. As the trading fees of secondhand vehicles are decreasing and

11、relevant regulations are becoming more and more standard, the idea gradually prevail among many Chinese consumers, who enjoy themselves in the frequent change of cars. “Now the secondhand auto market is so heated that nobody waits in a long queue for a new plate number of a new car,” a middle-aged l

12、ady said a bit exaggeratedly. She has been engaged in the secondhand auto dealing for years and clearly knew the development trend. “The explosive development period of secondhand auto 4market in China is coming soon with the advent of summit of changing cars,” said Luo Lei, deputy secretary-general

13、 of the China Automobile Dealers Association. In the first three quarters of 2011, the trading volume of secondhand vehicles in China increased by 12%, 4 times of the growth rate of new cars. “The Chinese market owns great potential. The interval between summit of new cars and summit of secondhand c

14、ars in developed countries is usually 6-7 years. But China is a coun- try that is developing very fast. Thus the period will be shorter,” said the estimation team of Gulliver. How to make Chinese accept secondhand autos As the secondhand auto market in China becomes gradually heated, numerous second

15、hand auto dealing companies, chain stores and chain supermarkets were established in China recently. New technologies are adopted to simplify trading process and corporate alliances are built to improve the corporate credit. Chinas secondhand auto market is always short of integrated, precise and sc

16、ientific secondhand auto assessment standard. Some dealers purposely lower the price to win the competition. 5Compared with the Chinese market, the foreign secondhand auto market has already been matured. Japan, the second largest secondhand auto market behind the United States, established the “Jap

17、an Automotive Evaluation Association” in 1996. Any secondhand auto dealer must pass the examination of this association before getting the qualification of evaluating secondhand autos. Meanwhile, each secondhand dealing store should have evaluators having passed the test. The term of qualification i

18、s three years and any individuals can get the license through training. In addition, after-sale service is another important hinder for the development of secondhand vehicles. Mr. Wang from Beijing said that he had bought a secondhand auto but when the gearbox had a problem, the seller completely ig

19、nored it. Mr. Wang had no choice but to pay for the repair by himself. A lot of secondhand auto owners had the same problem like Mr. Wang. Some buyers are required to sign purchasing contracts with dealers. Some contracts could not have stipula- tions about the after-sale service. The United States

20、could serve as a good example for China. The U.S. government has already highly standardized the after-6sale service. For example, in some states, if consumers are not satisfied with the cars they buy, they can get all the money back if the car is bought less than three days ago and is not damaged.

21、All in all, in the secondhand auto markets of Germany, the United States, Great Britain and Japan, the auto renting and auction are always active factors in the market. For example, in Japan, there are 150 auction places at different sizes. All of them are members of an association. In comparison, the trading pattern in China is simple and without any modernized marketing methods. The buyers and sellers of secondhand cars usually make the deals in an open field. However, the intervention of foreign companies could cause changes to this situation.