Second-hand car transaction increased by 21% in the first 5 months Auto finance or new profit growth point

In the first five months of this year, the domestic trade volume of used cars reached 4.8 million, an increase of 21% over the same period of last year. In comparison, the production and sales of new vehicles only increased by 4.49% and 3.71% respectively year-on-year. The huge growth potential of used car sales, on the one hand, attracted more than 10 billion yuan in capital access. On the other hand, the "unprofitable" ambiguity has not been eliminated.

Industry insiders believe that by extending the ecological chain, value-added services such as finance, insurance, aftermarket, and leasing will jointly provide profit for the used car e-commerce platform.

Used car deal is expected to tie a new car

A few days ago, the data released by the China Automobile Dealers Association showed that the number of used car transactions reached 4.8 million in January-May 2017, which was a year-on-year increase of 21%. In the first five months of this year, China's automobile production and sales were 11.3584 million and 11.18 million, respectively, an increase of 4.49% and 3.71% year-on-year. The growth rate of used car transactions has far exceeded the growth of new cars. As of mid-June this year, 13 provinces across the country have issued documents requiring 135 cities to completely abolish the used-car relocation system, including major auto provinces—Shandong and Henan. According to the statistics of the Ministry of Public Security, as of the first quarter of 2017, the nation’s car ownership amounted to 210 million vehicles. However, the volume of trade of used cars in 2016 exceeded 10 million for the first time, accounting for only one-twentieth of the total inventory. If the seizure rate reaches the international average, the volume of used car trade in China will double.

Shen Jinjun, president of the China Automobile Dealers Association, said that the US used a mature used car market as a reference, and the ratio of used cars to new cars in the United States was 2.5:1. Some industry insiders predict that by 2022, the transaction volume of used cars and new cars in China will reach 1:1, and the sales volume of new cars plus used cars will reach 60 million.

A large amount of capital is integrated into the used car market

In the capital market, second-hand car companies also made a lot of gains. Only on the afternoon of June 16th, three used car companies released financing and strategic plans. A used car company announced that it received 400 million U.S. dollars in Series B financing; another used car company announced the acquisition of 500 million U.S. dollars in Series C financing; After the car makers raised 500 million U.S. dollars of D-round financing in January this year, they also released a brand new strategy on June 16. Incomplete statistics, almost every month this year, the used car industry has financing news. A rough calculation of the amount of funds flowing into the used car industry in the first half of the year has reached 12.926 billion yuan.

Advertising is the most important export of used cars “burning money”. Last year, there was a second-hand car company that spent a billion yuan for advertising. Another second-hand car company spent 180 million yuan on the title of iQiyi "Run Male 3" and implanted the film "Transformers 5". It is understood that there are used car companies planning similar to the "national direct purchase" platform, through the layout of the offline store, logistics network and service security, leading the automotive e-commerce into the new retail era.

Auto finance or new profit growth point

According to reports, a used car company has established a gene bank with 3.5 million vehicles and has information on more than 200 million sellers and car buyers. This information may become a customer bank for automotive finance.

The "non-profitable" ambiguity of used car companies favored by capital has not been eliminated. Compared with “blood-burning”, the relatively weak “hematopoietic” capacity of second-hand car suppliers has been questioned. From the point of view of the profit model, it is difficult to make profits if you only collect service fees and deduct all types of subsidies paid to customers. Xiao Zheng, secretary-general of the China Automobile Dealers Association, said that 2017 is an outbreak of second-hand car e-commerce, but it remains to be seen whether the influx of funds will solve the problems in the development of second-hand car e-commerce.

According to the analysis, more than 50% of second-hand car users have loan demand, and finance contributes an average of 5% of profit to every single transaction. Auto finance should become a dual engine with transactions. Value-added services such as finance, insurance, aftermarket, and leasing will jointly provide profit for the used car e-commerce platform. "Auto finance will surely usher in the blowout in the future, and financial liquidation will support the company's income generation."