By the end of 2015, the vehicle reserve exceeded 170 million in China. The profit of new cars declines severely with the slump growth rate of sales volume. Facing the huge car stock market, the government and practitioners actively seek to develop used car trades.
The trade volume of used cars increases with a rapid growth of car reserve in China while consumers are getting used to buying used cars. With the development of Internet and mobile Internet technology, various e-commerce modes emerged in the used car market in recent years. The used car e-commerce industry has been experiencing an explosive growth since 2014, which attracted many entrepreneurs and investors to enter this promising market.
Generally, the used car e-commerce industry is at an initial stage transiting to a fast development period. Major characteristics of the industry are as follows: the penetration rate is low but the release volume, trading volume and rate are high; the buyer’s market is still at the initial stage of growing user bases, where the industry chain is not entirely mature and various parties are competing for car sources. Some e-commerce platforms are developing new commercial modes and creating their own industry ecosphere of used cars to release financial businesses and products for profit.
In China, approximately 70% of the profit in the car industry derives from circulation and after-sales services. Used cars are one of the most important sections in the value chain of car circulation and after-sales service with huge development potential. Therefore, the whole industry chain of used cars has plenty of participators for a long time. The emergence of e-commerce combined with traditional chains provides efficient, transparent and convenient channels and various modes for the trade of used car industry. According to CRI, the trade volume of used cars on e-commerce platforms was about 1 million, accounting for only about 11% of the total (9-9.5 million) in China in 2015, which shows the huge market potential.