“A sudden drop of 70,000 yuan, who can bear that?” According to a report by Zhongxin Jingwei, Li Hao (pseudonym), a car dealer working in the second-hand car market in Beijing’s Huaxiang, recently stopped accepting new energy vehicles, citing “too much price fluctuation.” This uncertainty has caused headaches for second-hand car dealers.
Since the beginning of this year, with new energy vehicle companies announcing price reductions one after another, the new car market has been gradually heating up. Data released by the China Association of Automobile Manufacturers shows that from January to February, cumulative production and sales of new energy vehicles reached 1.252 million and 1.207 million units, respectively, representing year-on-year increases of 28.2% and 29.4%, with a market share of 30%. However, compared to the increasingly booming new energy new car market, the second-hand new energy vehicle market is relatively “quiet.”
Second-hand car dealers: no longer accepting new energy vehicles
According to Zhongxin Jingwei, the model Li Hao mentioned had a price of over 140,000 yuan last year. “This year, it suddenly dropped by more than 70,000 yuan. Those of us second-hand car dealers who have this car in stock are all losing money. And because of the price drop of this model, it also affects cars from other brands,” said Li Hao. He expressed that such a significant price drop has caused considerable losses to many early consumers and car dealers who bought this car, and now he no longer accepts new energy vehicles.
Wang Zhi (pseudonym), a second-hand car dealer in Chengdu, Sichuan, still accepts new energy vehicles but admits they are not easy to sell. “We usually sell them to other colleagues. Whoever has potential customers comes to inspect the car. But if the car remains unsold for a long time, the price will drop significantly, and we have to bear the risk brought by the price drop of these cars.”
Wang Zhi mentioned that a few days ago, he sold a certain brand of new energy vehicle from 2022. After a month, the final transaction price for this car was 100,000 yuan lower than the price of a new car. “I usually advise owners that if there are no major issues, they should continue driving. Because new energy cars can’t fetch a good price. If the mileage is high or it has been involved in a collision, the market price is almost halved.”
According to Xinhua Daily, Dong Bing, the owner of Shoujia Mingche Tiandi, a second-hand car dealer in Nanjing, said that the price drop wave in February this year and the boom in the new energy new car market also indicate the arrival of a new wave of replacement for new energy vehicles. “When that happens, there will definitely be more second-hand new energy vehicles, and of course, we will also purchase them, but we are more interested in fuel vehicles for now, and we mainly focus on purchasing second-hand fuel vehicles.”
“Second-hand new energy vehicles are like a ‘hot potato,'” said Zhao Shangbin, the regional manager of Guangqi Commercial Trade East China. Generally, second-hand new energy vehicles face a situation where “first-hand car owners are unwilling to sell, second-hand car dealers are unwilling to buy, and customers are not very interested in buying.” “New cars are even cheaper. Not long ago, the price of the new BYD Qin PLUS, which had just been reduced, had dropped to 79,800 yuan. Can the second-hand Qin PLUS still sell for 80,000 yuan?”
Resale value of fuel vehicles is higher than new energy vehicles
The residual value of a vehicle, known as the “second life cycle” of its value, is becoming increasingly important as a factor in consumer car purchasing decisions. “The resale value of second-hand new energy vehicles has always been criticized, which is an important reason affecting their circulation. Despite being influenced by market factors, the resale value of fuel vehicles is more stable,” Zhao Shangbin said.
According to the annual second-hand car residual value data released by Tiantianpaiche for 2023, the three-year average residual value of second-hand new energy vehicles showed a slight decline overall, with a three-year average residual value of 50.9% for the whole year. In comparison, although the residual value of second-hand fuel vehicles is average, their resilience remains, with a three-year average residual value of 56.8%. In practical terms, the residual value of fuel vehicles is generally higher than that of new energy vehicles.
Dong Bing introduced that in January this year, a car owner wanted to sell a NIO ET7 new energy vehicle, which was registered at the end of 2022. The vehicle was fully equipped with various comfort configurations, and had only traveled 22,000 kilometers. The car, which cost nearly 500,000 yuan when it was new, was offered for less than 270,000 yuan as a used car; while another fuel vehicle, a Toyota Asia Dragon registered in December 2021, with a new car price of 239,800 yuan, had a second-hand car price of 160,000 yuan. In the end, Dong Bing did not purchase the NIO ET7 but acquired the Toyota Asia Dragon with a higher residual value.
“The updates and iterations of new energy vehicles are rapid, with technological upgrades happening every year or even every month. This leads to a fast pace of renewal for new energy vehicles,” said Zhu Danqiang, director of the Planning Institute of Jiangsu Branch of the Chinese Academy of Sciences Design Institute. He believes that with each generation change of new energy vehicles, technologies such as batteries, drive systems, and motors become more advanced, significantly improving the performance and range of new cars. This determines that the previous generation of new energy vehicles has certain disadvantages in all aspects, leading to a decrease in their residual value in the second-hand market.
“First car owner lifelong free battery exchange,” “first car owner lifelong free warranty,” “first car owner lifelong free car machine data”… Various “lifelong free” after-sales service policies are increasingly attracting consumers’ attention. But the focus is not only on “lifelong free” but also on “first car owner,” as only the first car owner can enjoy various high-quality services for new energy vehicles. In addition to the frequent updates and replacements of new energy vehicle products themselves, the “first car owner rights” policies of new energy vehicles have also become an important factor affecting the circulation of second-hand new energy vehicles.
Experts: New energy second-hand car market will gradually mature
New energy vehicles are currently in the limelight, so why is the second-hand market suddenly “quiet”? According to Zhongxin Jingwei, Zhang Hong, Secretary-General of the New Energy Branch of the China Association of Automobile Circulation, analyzed that the reasons mainly boil down to the following points:
Battery residual value assessment problem. Due to the lack of objective and fair battery testing methods, buyers and sellers often have disputes over battery issues, and battery valuation usually accounts for half of the vehicle’s value, making it difficult to price electric second-hand cars.
Three-electric quality assurance issues. Because car companies cannot fully grasp the vehicle’s condition, they are often unwilling to make quality assurance commitments to second-hand car customers.
Vehicle valuation and brand reputation issues. Most new energy vehicle brands are young brands with insufficient reputation accumulation, resulting in generally low residual value in the second-hand car market.
Lack of unified standards. Currently, there is a lack of national or organizational unified standards to clarify and standardize the after-sales service of second-hand new energy vehicles. In case of disputes, due to the lack of support from relevant laws and regulations, it is often difficult for both parties to find reasonable solutions.
Will this phenomenon continue? Zhang Hong believes that although the second-hand market for new energy vehicles currently faces many challenges, with the development of technology, the continuous improvement of battery performance, and the accumulation of brand reputation for new energy vehicles, he believes that the future second-hand market for new energy vehicles will gradually mature. At the same time, the introduction of relevant standards and regulations will also provide strong guarantees for the healthy development of the second-hand market for new energy vehicles.
Chinese new energy second-hand cars popular overseas
It is worth noting that more and more Chinese new energy second-hand cars are driving out of the country and being sold to various parts of the world.
According to the overseas edition of People’s Daily, customs data shows that since the start of the second-hand car export pilot work in 2019, China’s second-hand car exports have repeatedly reached new heights. In 2021, China’s second-hand car exports were about 15,000 units, and this figure jumped to 69,000 units in 2022, a year-on-year increase of over 350%.
A considerable portion of the second-hand cars exported by China are new energy vehicles. Tianjin was the first batch of pilot cities for the export of second-hand cars nationwide. In recent years, enterprises in the Tianjin Dongjiang Comprehensive Bonded Zone have explored the export of various types of vehicles, including engineering vehicles, commercial vehicles, traditional energy, and new energy passenger vehicles. Among them, the export of second-hand new energy vehicles has become the main business segment of second-hand car export enterprises in the bonded zone, accounting for more than 70% of the types of vehicles exported by the bonded zone.
According to a report by China News on March 25, recently, Zhejiang Wenzhou’s Second-hand Car Trading Co., Ltd. received overseas orders worth a total of 20 million yuan for domestically produced new energy vehicles. After completing the customs clearance procedures, they will be transported to Central Asia, Eastern Europe, and other regions via the Alataw Pass in Xinjiang, using the China-Europe Railway Express and other means…
As a pilot area for national second-hand car export business, Wenzhou’s domestically produced new energy vehicles are popular overseas. According to statistics, Wenzhou exported a total of 3,459 used cars in 2023, with an export value of 520 million yuan, of which new energy used cars accounted for 70%.
Hu Ben, chairman of the above-mentioned company, said that in the orders exported last year, 60% were second-hand new energy vehicles, of which 75% were exported to five Central Asian countries and 15% to Russia, all of which were domestic models. “Our domestically produced new energy vehicles are developing very fast, with rapid product iteration, advanced technology, and high cruising range, which have good cost performance and are very popular in the international market.”