Core Insights - The used car market in China is facing significant operational pressures, with the loss ratio for used car dealers rising to 73.6% in the first half of 2025 [1] - Although the transaction volume of used cars has increased, the average transaction price has decreased by 12.3%, from 61,180 yuan in 2024 to 53,673 yuan in 2025 [1] - New energy vehicles (NEVs) accounted for 36.7% of total vehicle sales in China, but only 5.3% of used car transactions, indicating a disparity in market penetration [1] Summary by Sections Used Car Market Performance - The used car transaction volume has shown growth, but the average price has declined significantly, indicating a "volume up, price down" trend [1] - The average resale value of NEVs is lower than that of traditional fuel vehicles, with a three-year depreciation rate of 43% for NEVs compared to 62% for fuel vehicles [1] New Energy Vehicle Trends - The transaction volume of used NEVs reached 687,000 units in the first half of 2025, marking a year-on-year growth of 35.5%, which is significantly higher than the overall market growth [2] - There is an increasing customer interest in used NEVs, driven by their price advantages compared to new models [2] Market Challenges - The ongoing "price war" in the new car market has adversely affected used car dealers, leading to decreased retail purchase volumes and lower customer satisfaction [2] - The used car industry is entering a phase of adjustment, facing issues such as inconsistent inspection standards and severe inventory backlog [3] - The market is expected to shift towards a "low margin, high turnover" model starting in 2025, with new profit opportunities arising from financial and insurance services [3] Industry Resilience - Despite high loss ratios and inventory challenges, the industry shows resilience supported by favorable factors such as the "trade-in" policy, which enhances the supply of quality used cars [3] - NEVs are becoming a core growth engine for the industry, benefiting from policy support and evolving consumer demand [3]

Core Insights - The used car market is facing severe challenges, with over 73.6% of used car dealers reporting losses in the first half of 2025 [3][4] - Despite a 1.99% year-on-year increase in transaction volume to 9.57 million units, the average transaction price dropped by 12.3% to 53,673 yuan, indicating a trend of rising volume but falling prices [3][4] Market Conditions - The ongoing price war in the new car market has significantly impacted used car businesses, leading to increased inventory pressure, high customer acquisition costs, and thin profit margins [4][5] - The average inventory cycle for used car dealers extended to 43 days as of June 2025, with 35.6% of dealers experiencing cycles longer than 30 days, reflecting heightened operational pressure [5] Financial Metrics - The average customer acquisition cost for used car platforms has risen to 6,200 yuan, while the average profit per transaction is only around 1,500 yuan, indicating a challenging financial landscape [5] - Some top used car dealers have managed to achieve gross margins of 6% to 8% by optimizing operations and controlling turnover days to 15-20 days [5] Industry Trends - The used car industry has been undergoing a reshuffle since 2020, influenced by the pandemic, economic fluctuations, and the influx of new energy vehicles (NEVs) into the market [5] - The proportion of NEVs in used car transactions remains low at 5.3%, with concerns over their depreciation rates and market readiness for valuation and after-sales services [6] Growth Potential - Despite the challenges, the transaction volume of used NEVs grew by 35.5% year-on-year in the first half of 2025, totaling 687,000 units, indicating a potential growth area within the overall market [6]

Core Insights - The second-hand car market is facing significant challenges, with over 73.6% of dealers reporting losses in the first half of the year [2] - The total transaction volume for second-hand cars reached 9.57 million units, a year-on-year increase of 1.99%, while the cumulative transaction value was 623.24 billion yuan [2] - The average transaction price for second-hand cars decreased by 12.3%, from 61,180 yuan in the same period last year to 53,673 yuan [2] - The price war in the new car market has adversely affected the second-hand car sector, leading to some new cars being priced lower than their second-hand counterparts [2][3] - The average inventory cycle for second-hand cars has extended to 43 days, with 35.6% of dealers experiencing cycles longer than 30 days [3] - The average customer acquisition cost for second-hand car platforms has risen to 6,200 yuan, while the average profit per transaction is only around 1,500 yuan [3] - The market for second-hand electric vehicles (EVs) remains small, with only 5.3% of second-hand transactions involving EVs in the first half of the year [4] - The three-year depreciation rate for electric vehicles is significantly higher than that of fuel vehicles, with an average retention rate of only 43% compared to 62% for fuel vehicles [4] - Despite the challenges, the transaction volume for second-hand electric vehicles grew by 35.5% year-on-year, totaling 687,000 units in the first half of 2025 [4]

Core Viewpoint - The article highlights the significant depreciation of electric vehicles (EVs) in the second-hand market, leading to financial losses for both car owners and dealers, exacerbated by rapid technological advancements and aggressive pricing strategies in the new car market [6][12][28]. Group 1: Depreciation and Market Dynamics - Tesla Model 3 and Model Y owners are experiencing substantial losses, with depreciation rates reaching 65% over three years for some models, and in extreme cases, vehicles losing up to 70% of their value within a year [7][12]. - The average inventory cycle for second-hand car dealers is reported to be 43 days, with a significant portion of dealers facing longer cycles, indicating a challenging operating environment [9][10]. - The second-hand EV market is characterized by a lack of trust and transparency, with many consumers feeling their rights are not adequately protected due to the rapid depreciation and unclear valuation models [10][28]. Group 2: Technological Impact and Consumer Behavior - Rapid technological advancements in EVs, particularly in battery technology, are causing older models to lose value quickly, with some vehicles depreciating by 40% shortly after new models are released [20][23]. - A survey indicated that 87% of respondents believe the depreciation rate of EVs exceeds their tolerance, leading to 23% of potential buyers abandoning their purchase plans [15][16]. - The introduction of "zero-kilometer second-hand cars" is disrupting the market, as these vehicles are often priced lower than used cars, further driving down the value of traditional second-hand vehicles [30][31]. Group 3: Recommendations for Stakeholders - To address the depreciation crisis, stakeholders suggest implementing equal subsidies for new and second-hand vehicles and eliminating the practice of zero-kilometer second-hand cars, which distort market pricing [30][31]. - Innovations such as AI-based residual value assessment systems and battery rental models are being explored to mitigate depreciation risks and enhance consumer confidence [34]. - Consumers are advised to choose brands that offer official value retention guarantees and to avoid brands with aggressive technological iterations that could lead to rapid depreciation [36][37].

Core Viewpoint - The emergence of "zero-kilometer used cars" in the Chinese automotive market is a response to inventory pressure and sales targets faced by manufacturers and dealers, leading to significant price reductions in the second-hand car market [2][3][24]. Group 1: Definition and Characteristics - "Zero-kilometer used cars" refer to vehicles that have completed registration but have extremely low mileage, often less than 100 kilometers, making them almost new [2][21]. - These vehicles are typically sold by manufacturers directly to used car dealerships, which then resell them to consumers [6][12]. Group 2: Market Dynamics - The current market for "zero-kilometer used cars" is driven by a price war and an imbalance in supply and demand, with these cars serving as a "release valve" for manufacturers and dealers to manage excess inventory [3][24]. - The sales volume of "zero-kilometer used cars" is estimated to account for 5%-10% of the total used car market, translating to approximately 1-2 million units based on projected total used car transactions in 2024 [21][24]. Group 3: Sources and Distribution - The sources of "zero-kilometer used cars" include excess inventory from 4S dealerships, vehicles from rental companies, and those produced to exploit subsidy loopholes [14][15]. - Many used car dealers find it challenging to access these vehicles directly from manufacturers, often relying on established relationships or group purchases to acquire them [15][16]. Group 4: Market Impact - The rise of "zero-kilometer used cars" is expected to intensify competition in the used car market, particularly affecting the sales of "quasi-new cars" [27][28]. - The phenomenon may lead to a decline in the perceived value of traditional used cars, as consumers may prefer the nearly new condition of "zero-kilometer used cars" at similar price points [28][29]. Group 5: Regulatory Considerations - Experts suggest that the lack of regulatory measures for "zero-kilometer used cars" could lead to potential market manipulation, and there are calls for improved oversight from government bodies [32][33]. - Recent discussions among industry stakeholders, including the Ministry of Commerce, aim to address the implications of "zero-kilometer used cars" on the market [33].

Core Insights - The report indicates a decline in the supply of used cars, prompting the industry to readjust growth expectations [1] - The impact of replacement subsidies on the used car market remains uncertain, with the duration of the current used car trend difficult to predict [1] - Ongoing price wars for new cars in May and June may suppress the activity in the used car market [1] - The introduction of new models is not leading to a quick influx of older models into the used car market, with actual transactions primarily involving older vehicles [1]