SHANGHAI, China — Saving 10 percent on the purchase of a Mercedes-Benz sedan in China? It's not a dream in an impressively expanding market for used vehicles, a corollary to the new-car marketplace here that is currently the fastest growing in the world.
Ryan Shao, a 35-year-old businessman, is an example. He recently traded his 2006 Toyota Camry in at a Mercedes-Benz dealership and bought a Mercedes-Benz S350 long-wheelbase model for 1.2 million yuan, the equivalent of $175,950.
"I wanted to save some money because of the economic environment," said Shao, who runs an information technology company. "The salesperson introduced me to Mercedes-Benz's used-car program, and I thought it was a good deal."
In the past, many Chinese people disdained used vehicles because new ones were considered symbols of wealth and success. Now, however, "Auto buyers are becoming more open-minded about used cars, and many are finding quality there," according to Su Hui, general manager of Asia Olympic Village Automobile Trading Center in Beijing.
Along with Mercedes-Benz, other foreign carmakers including Volkswagen, Audi and BMW have latched on to the trend, seeking to increase revenues as sales slip in developed markets.
Shanghai Volkswagen launched its first used-car promotion in 2004 in Beijing. Since then, carmakers including General Motors, Toyota, Guangzhou Honda and Dongfeng Yueda Kia have built up similar businesses in the fledgling market segment.
Mercedes-Benz launched its used-car program, named Star Elite, among its Chinese dealers late last year. It has 15 Star Elite dealers in China now and plans to double that in 2010. The program enables car owners to trade in old models for either a new Mercedes-Benz or a Star Elite used model. Used Mercedes-Benz premier sedans are required to pass 158 check points before they can be sold under the Star Elite program, which offers buyers a one-year warranty and other benefits such as road assistance.
BMW dealer Shanghai Debao Motor Service reported its used-car business increased 45 percent last year. Trade-ins grew 37.5 percent, with nine BMWs sold under that program each month. The dealer offers a warranty good for one year or 12,400 miles.
Most of the used BMWs are test drive vehicles or are under five years old with less than 75,000 miles on the odometer.
Explosive growth in car ownership in China in the last six years has put about 70 million vehicles on the roads. Since car owners typically replace their vehicles after five years, the prospects for a surge in the used-car market are strong this year. According to a report released by the China Automobile Dealers Association, the used-car market in China may hit 3 million units this year, rising to more than 4.8 million vehicles by 2012.
In the United States, three used vehicles are sold for every new car sold. In Japan, the ratio is about 2.5. In Beijing, the biggest used-car market in China, the proportion is only 0.66. That suggests a lot of room for growth.
The used-car market in China will eventually account for two-thirds of auto sales, up from 23 percent at present, the dealers' association said.
Inside Line says: Industry analysts are hoping the government supports used-car buyers by easing regulatory hurdles for them. — Vivian Jin, Correspondent
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