Billion-class second-hand market, is on the eve of the outbreak?

Text/Xie Morningstar

The second-hand car industry has recently received worldwide attention, with red dots investing in US-Used Cars http://www.aliyun.com/zixun/aggregation/36886.html "> Online trading platform Beepi just completed the B round of 60 million dollar financing, The total valuation is over 200 million dollars. At the same time we in the domestic investment approximation model, the second-hand car online virtual consignment platform "Renren" since July this year on the line has also developed rapidly.

The structure of Chinese used car industry is similar to that of America, the traditional circulation mode is c-b-b-c, but it is slightly different. Compared with the new car market pricing power to a large extent in the whole plant, the second-hand market liberalization is very high. This is because each second-hand car is a non-standard product, all need to be based on the condition of individual evaluation pricing.

According to different circulation links, this market in China mainly has C to B overcharging auction mode, B to c store mode, B to B auction mode, c to C consignment mode.

Everyone car according to China's national conditions of the original C to C virtual consignment model can be said to be a most extreme solution, not only does it compress all the intermediate circulation links up to 15%-50% of the cost, and eliminates the cost of the offline site, only a very small transaction service charge (less than 3%), so that the car sellers can sell the car to the highest price, A car buyer can buy a used vehicle at a minimum price for safety.

And Beepi is not a complete Consumer-to-consumer mode, is the C-B-C mode, first door-to-door overcharging, and then sell the car online, the car express to customers. Even so, the meaning of Beepi is compressed in the middle of up to 36% of the circulation link costs, and provide door-to-door, seven days package returned service experience.

In the second-hand car market, American used car relative circulation radius is bigger, causes this difference not only is the population concentration degree, but also has the policy stratification plane influence.

Recently, due to the domestic provinces in the environmental protection, tax considerations and the introduction of policies to settle the emissions of second-hand cars and production life limits, China's second-hand car industry from the "first-line cities > two or three-tier cities" of "large circulation" mode, to Beijing-Tianjin-Hebei, Yangtze River delta, Pearl River Delta "Regional circulation" mode, This will, to some extent, affect the future potential of business-to-business and consumer-to-consumer two markets.

Looking back at China, in the past ten years, China's second-hand car market sales basically maintain a steady increase in double-digit growth, compared to many industries, the growth rate is not really fast, or even in the near three-year growth has a downward trend.

But if you look at the changes in the number of new registered small passenger cars in China, it will be found that sales of new cars rose sharply in 2009, with an annual growth rate of 65.1% per cent, and have since risen to a new ladder. This is because 2008 years later, the auto industry really become China's four core pillar industries, by multiple economic, policy positive stimulation, resulting in a large increase in sales.

According to data released by China Auto Circulation Association, the average age of Chinese used cars is 6.2 years. 2009 to present, just about 6 years, the market reached the eve of the outbreak.

In the long run, the number of Chinese civilian cars will also maintain the high speed growth, the future market is broad, this is the steady development of the second-hand car industry lay the foundation.

How big can China's second-hand car market scale in the future? We tend to look for answers from data in the US market.

According to a report by Manheim, the largest used car auctioneer in the US, as the U.S. auto industry started earlier, the earliest data available was earlier than 1976, when the United States used to sell more than 25 million vehicles a year, twice times more than 13 million cars in the same period. This ratio reached 3:1 per cent in 2012.

But in 2013 China used passenger cars sold 3.04 million cars, and new cars sold about 15 million cars, while second-hand cars were only 1/5 of new car sales. So in the long term, China's second-hand car in the future still has 10 times times more room for growth. According to the average car price of 50,000 yuan in Chinese second-hand cars, the average car price of US cars is 10,000 U.S. dollars, the market will be as high as 2 trillion yuan/year.

Huge market size, naturally attracts many new players and investment institutions to enter. But we believe that the market in the future can accommodate a number of tens of billions of dollars of companies, all kinds of models will blossom.