China’s used car market has experienced a slight uptick in transactions during the first seven months of this year. According to data released by the China Automobile Dealers Association (CADA), a total of 11.2748 million used vehicles were traded, marking a year-on-year increase of 0.39%. This translates to an additional 43,800 vehicles compared to the same period last year.
The close relationship between the new and used car markets is becoming increasingly evident. CADA Vice President Luo Lei highlighted that the ratio of used car sales to new car sales reached 97.9% in the first half of the year, nearing a 1:1 parity. This suggests a maturing market where used cars are becoming a more significant alternative to new purchases.
New Energy Vehicles Driving Growth
A particularly bright spot in the used car sector is the rapid expansion of the new energy vehicle (NEV) segment. In the first half of 2023, NEV used car transactions soared to 839,000 units, a substantial 22% increase year-on-year. NEVs now account for 8.6% of the total used car market, indicating a growing consumer acceptance and demand for pre-owned electric and hybrid vehicles.
Luo Lei commented on the improving value retention for NEVs, a factor that previously deterred some consumers. “The industry pain point that consumers were troubled by, such as rapid depreciation and low residual value of used NEVs, has now been significantly improved, and market acceptance has greatly increased,” he stated. This positive trend is reflected in recent data concerning vehicle depreciation.
Resale Value Gap Narrows
Regarding concerns about resale value, a recent report indicates that the average three-year residual value for internal combustion engine (ICE) vehicles stood at 46.07% in the first half of 2026 (note: the source text states 2026, which is likely a typo and intended to be a current or recent period). In comparison, NEVs showed a slightly lower average three-year residual value of 44.8%. The minimal gap of 1.27% suggests that the depreciation concern for NEVs is diminishing.
The overall automotive landscape in China is also a key factor. With the total number of vehicles on the road reaching 370 million, a continuously increasing number of vehicles are entering their replacement cycles each year. This trend provides a substantial foundation for the continued growth of the used car industry.
Future Outlook
Looking ahead, Luo Lei expressed optimism about the future of China’s used car market. He emphasized the vast growth potential and predicted a further increase in the market penetration of NEVs within the used car sector. As more consumers become comfortable with the quality, reliability, and value retention of used NEVs, this segment is poised for even greater expansion.
The evolving dynamics of the Chinese auto market, coupled with technological advancements and increasing environmental awareness, are shaping a robust future for the used car industry. The improving perception and performance of used NEVs, in particular, signal a significant shift in consumer preferences and market maturity.
