China Automobile Dealers Association: A brief analysis of the used car market in December 2021 and the whole year

In 2021, the automobile market is facing a complex and severe situation due to the combined impact of multiple international and domestic factors such as repeated epidemics, frequent extreme weather and natural disasters, lower consumer expectations, and a surge in global supply chain risks. However, the used car market has become a new highlight of the automobile market in the face of many challenges and pressures. According to data from the China Automobile Dealers Association, from January to December 2021, a total of 17.5851 million used cars were traded, a year-on-year increase of 22.62%, and the transaction amount was 1,131.692 billion yuan, a year-on-year increase of 27.32%.

Judging from the consumption patterns of used cars, the demand for car purchases increases near the end of the year, and December is generally the peak of used car transactions throughout the year. In December 2021, a total of 1.6182 million used cars were traded nationwide, with a month-on-month increase of 4.83% and a year-on-year decrease of 5.25%, with a transaction amount of 116.186 billion yuan. This month, mainly affected by the continued impact of the sporadic epidemic, the overall passenger flow in the market has decreased compared with the same period. Some regions have advocated policies such as celebrating the New Year locally and the increase in severe weather, resulting in poor cross-regional circulation.

Passenger car situation: A total of 970,000 basic passenger cars were traded, a month-on-month increase of 4.64% and a year-on-year decrease of 6.59%; a total of 200,000 SUVs were traded, a month-on-month increase of 8.61% and a year-on-year increase of 16.33%; a total of 88,400 MPVs were traded, a month-on-month increase of 2.81% and a year-on-year decrease of 10.25%; a total of 36,800 crossover passenger cars were traded, a month-on-month increase of 3.04% and a year-on-year decrease of 2.67%.

Commercial vehicle situation: 115,900 passenger cars, a month-on-month increase of 3.79% and a year-on-year decrease of 15.63%; 126,000 trucks, a month-on-month increase of 3.99% and a year-on-year decrease of 16.51%.

From the monthly trading trend this year, the overall trend is a fluctuating upward trend. Since the fourth quarter, affected by the sporadic epidemic and the high base of the same period last year, there has been a continuous negative growth year-on-year. December is still the peak of trading for the whole year, but the monthly year-on-year growth is a trend of continuous narrowing.

In December 2021, the transaction volume in the six major regions of the country increased to varying degrees month-on-month. Among them, the growth in North China was the most obvious, with a month-on-month increase of 9.63 percentage points, and the second-hand car transaction volume was 206,100 vehicles; followed by the Northeast region, which increased by 8.08% month-on-month, with a total transaction volume of 96,200 vehicles; the Southwest region increased by 7.39% month-on-month, with a total transaction volume of 241,900 vehicles; the three regions of Central and South, East China and Northwest China had smaller increases, with month-on-month increases of 3.77%, 2.64% and 2.33%, respectively, with transactions of 486,300 vehicles, 524,300 vehicles and 63,500 vehicles, respectively.

In December, the transfer rate of used cars was 27.87%, an increase of 0.79 percentage points from the previous month, a decrease of 1.01 percentage points from the same period last year, and the same as in July last year.

In 2021, a total of 17.5851 million used cars were traded nationwide, a year-on-year increase of 22.62%. Among them, a total of 10.5911 million basic passenger cars were traded, a year-on-year increase of 23.34%; a total of 1.9763 million SUVs were traded, a year-on-year increase of 44.18%; a total of 1.0086 million MPVs were traded, a year-on-year increase of 21.24%; a total of 402,300 crossover passenger cars were traded, a year-on-year increase of 18.59%; 1.3203 million buses, a year-on-year increase of 7.02%; and 1.4538 million trucks, a year-on-year increase of 9.63%. In 2021, all models have increased to varying degrees compared with 2020, among which SUV models have grown most significantly, with a growth rate of more than 40%.

The transaction volume in the first quarter of 2021 accounted for 22.5%, an increase of 8.5% over the same period last year and an increase of 0.68% over the same period in 2019. The second quarter accounted for 25.47% of the whole year, an increase of 0.99% over the same period last year and an increase of 1.3% over the same period in 2019. The third quarter accounted for 25.78%. It decreased by 2.57% over the same period last year and increased by 0.82% over the same period in 2019. The fourth quarter accounted for 26.26%, a decrease of 6.93% over the same period last year and a decrease of 2.8% over the same period in 2019. Overall, the transaction volume in the first quarter of 2021 was the smallest due to factors such as the Spring Festival holiday. Second-hand transactions in the second and third quarters were relatively stable, and the proportion was basically the same. In the fourth quarter, affected by unfavorable factors such as the spread of the epidemic, the proportion of second-hand car transactions showed a significant decline compared with the previous two years, but it was still the highest point of the year.

From the perspective of vehicle age structure, in 2021, a total of 4.148 million vehicles with a vehicle age of less than 3 years were traded, and the transaction volume increased by 17.3% compared with the same period, accounting for 23.59% of the total transaction volume. This year, affected by the insufficient supply in the new car market, many consumers have turned their attention to the quasi-new car market with shorter vehicle age; a total of 6.3559 million vehicles with a vehicle age of 3-6 years were traded, accounting for 36.14% of the total transaction volume, and the proportion decreased by 1.62 percentage points compared with the same period last year. The proportion of models with a vehicle age of 7-10 years decreased by 0.16 percentage points compared with last year, accounting for 24.06% of the total transaction volume, and a total of 4.2308 million vehicles were traded. With the increase in the number of vehicles in stock, the source of second-hand cars with a long age has also increased year by year. In 2021, the proportion of models with a vehicle age of more than 10 years increased by 2.11 percentage points compared with the same period last year, and a total of 2.8505 million vehicles were traded, with a year-on-year increase of 29.1%.

The auto market will enter a peak period of replacement purchases in 2022. Activating the stock of used cars is the key to activating the entire auto market. On the one hand, the replacement of used cars boosts the upgrading of auto consumption, especially luxury cars and new energy vehicles, which are the main driving force for the growth of the auto market in 2021. On the other hand, the replacement and circulation of used cars promotes the transformation of vehicles from first- and second-tier cities to third-, fourth- and fifth-tier cities in economically underdeveloped areas, which can promote the in-depth development of auto consumption in rural markets and enhance the overall vitality of the local economy. Therefore, activating the stock of used cars can truly drive the incremental auto market.

Overall, my country's used car market has ushered in major benefits. Since the release of the "Notice on Clarifying Several Value-Added Tax and Other Collection and Management Issues for Used Car Dealerships" on March 31, 2020, relevant government departments have successively launched policies such as the "Guidelines for Promoting Automobile Consumption in the Business Field" and the "Notice on Promoting Cross-Provincial Registration of Used Car Transactions to Facilitate Cross-Provincial Transactions of Used Cars". The full implementation of the "cross-provincial registration" for used cars in 2021 will focus on solving the problems of inconvenient used car transactions and long transfer cycles from the institutional perspective. The successive introduction of many policies will surely promote my country's used car market into a new stage of development.