Customers browse used cars at a market in Xi'an, Shaanxi province. YUAN JINGZHI / FOR CHINA DAILY

New regulations for cross-provincial sales, internet companies drive growing market

Used car sales in China are gaining momentum as local authorities are removing trade barriers and people in the industry continue pushing for reforms.

Statistics from the China Automobile Dealers Association show that 825,000 used cars were sold in February, a 41 percent increase year-on-year.

That brought the sales in the first two months of this year up to 1.71 million units, up 22.55 percent from the same period last year.

Luo Lei, a deputy secretary-general of the CADA, expects the sales this year to grow at around 20 percent to reach some 12 million units as more local authorities are expected to remove their bans.

"Many in the industry are feeling upbeat, that the whole market environment will see much improvement this year," said Luo.

The ministries of commerce, public security and environmental protection released a notice in March, urging local governments to remove trade barriers on used cars and demanding they report how the job will be done before April 14.

It is the latest and harshest decree from the central government since the State Council released a guideline in March 2016 instructing local governments to lift any limitations on the flow of used cars between provinces.

Industry insiders say many local governments have failed to lift the ban because used cars usually have higher emissions and contribute less to the local economy than new cars.

China sold 10.39 million used cars last year, equivalent to 37 percent of total new car sales in the year while in developed markets such as the United States, they are usually more than double those of new cars.

Luo's association is also pushing for tax reform for used car transactions.

Currently, used car dealers pay 2 percent of a car's price as tax, almost equal to all their profits from cars sold at around 30,000 yuan ($4,349) or below, which means after tax, they earn nothing.

"Many large used car dealers sell more expensive cars, and the tax rate is an even bigger burden on them, so we suggest changing the tax rate to 17 percent of the profit," said Luo.

"This is one of the important tasks for our association and we will strive to make some progress this year."

Estimates put the number of dealerships, big or small, at around 100,000 in the country.

Internet companies are doing their job, too. With their vast databases, they are either putting used cars online, making it easier to choose, or enabling potential buyers to better evaluate a used car.

They can get a ballpark price if they simply type some parameters－including the vehicle's marque, model, age and place of registration－into apps such as Jingzhengu.

Sheng Qiujian, chief data officer of the Kelley Blue Book-backed startup, said it has statistics for around 46,000 models on China's roads with information provided by multiple sources, including carmakers, dealer groups and insurance companies.

Jingzhengu now receives about 3.5 million visits a day and another major evaluation company Che300, some 3 million visits.

Luo said this popularity reveals the sector's potential. "After all, where there is demand, there is business," he said.