2024 China Used Car Conference: Issue a Declaration of Integrity and Make a Ten-Year Promise
Jul 19, 2024
Hello, brothers and sisters of the second-hand car industry! (Good), very confident, this time I used a well-intentioned topic "The Faith and Heart of the Second-hand Car Industry". If we remove the word "and" it becomes confidence. Why use this word? I searched on Baidu, this "faith" has many explanations in two-character phrases, I only list five here: information, belief, conviction, credit, trust. The focus of the second-hand car industry is all on "faith", and "heart" is at ease, initial heart, confidence, care, and happiness. Everyone has made money and is happy.
It is a common greeting among friends in the second-hand car circle, "Brother, have you lost a lot this year?" Indeed, many car dealers have told us about the issues they are facing, such as a decline in customer flow, transaction volume, and even the gross profit per car, which is indeed the case. Here I compare the data from ten years ago with this year's data. Ten years ago, the first thing to look at was the gross profit margin per car, which was more than 10% reaching 16%; by 2022, there were very few cars with a gross profit margin above 10%, most were below 10%, at 1%. Looking at the losses, ten years ago, the statistical data of car dealers' losses was only 1%, and by 2022, the loss surface reached 82%, and this year may not be much better than 2022.
Undoubtedly, the market data is growing rapidly. We have seen these two years, except for the impact of the Spring Festival holiday, basically every month is a positive growth. Over the past decade, the overall scale of the second-hand car market has been more than 9 million vehicles, and in 2023 it reached 18.41 million, exactly doubled.
Firstly, on the macro level, this is the government work report's description of the macroeconomy, saying that there is a lack of effective demand in the macroeconomy and social expectations are weak. This is the vocabulary mentioned in the government work report. Secondly, our front-end market, referring to the new car market, everyone uses the word "volume", I use: the new car market price has dropped significantly, which brings a lot of interference to the second-hand car business. Thirdly, our new policies are being implemented, and all industry colleagues are gradually going through a period of adaptation to the policy. Fourthly, the automotive industry is transitioning from rapid development to high-quality development, and the pain that comes with this process, we have to go through this pain. Fifthly, changes in new media, through market drainage rely on natural drainage, sitting in the store, customer flow comes, now it's different, new communication methods need to bring customer flow.
Although the feeling is not good, I still want to tell everyone that the second-hand car industry is a very good industry, and there is still a lot of room for development. The first data is macroeconomic. Although the macroeconomy has encountered some problems, the overall curve has been rising, and the slope is still very high. Looking at the GDP data released by the National Bureau of Statistics, last year and this year, the GDP data has always maintained a growth of more than 5%. The second-hand car base plate, we call the car ownership, has been rising, reaching 330 million last year, such a large base plate, so what are you afraid of doing second-hand cars. Looking at various data is good for second-hand cars. The first is the average car age is increasing, the average car age in 2022 is 6.4 years, the peak period for second-hand car replacement is about 6 years, undoubtedly it is the golden period for the development of the second-hand car market. Looking at new car buyers, we see that in 2023, 45% of new car buyers were realized through replacement, so the supply of second-hand cars to the market will be more and more. We see that the contribution of second-hand cars in the entire automotive industry is getting higher and higher, and the status is also getting higher and higher. So we see that in the central policy, many have mentioned to activate the second-hand car market. The potential of the second-hand car market is undoubtedly, first it is the world's largest market, the largest ownership country of 330 million, several million more than the United States. The second is that the second-hand car circulation policy encourages the development of enterprise scale. The third is the policy of replacing the old with the new to promote the replacement of second-hand cars. There is one more thing that everyone must see, the overall second-hand car industry is transitioning from the past extensive development to a refined division of labor, have we seen someone specializing in retail now, is someone starting to specialize in acquisition? I think this is a new industry division that is gradually taking shape, and the overall trend is undoubtedly large-scale, standardized and branded.
Here are four sentences for industry colleagues:
Thank you all! Xiao Zhengsan: Strive to build a standardized, efficient, convenient, and reassuring second-hand car market!
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