Counting from the birth of the world’s first internal combustion engine car in October 1885, the automobile industry has a history of nearly 130 years of development. During this period, automobiles experienced developments such as assembly lines, industrialization, and product diversification, and stimulated industries such as steel, rubber, and petrochemicals, becoming the “crown” of modern industry.

This “crown” has been worn on the heads of European and American countries for more than a hundred years and has formed an insurmountable barrier. However, in the past ten years, as the electrification of global automobiles has begun, China has been striving to dominate the global electric vehicle industry with more than 40 years of accumulation in the electric vehicle industry, and has transferred this capability to the world through overseas expansion, gradually leading the entire automobile industry. A century of changes in the industry.

To this end, Xiaguang News has launched the industry observation column “Chinese Auto Globalization” to sort out, observe and record the overseas expansion of Chinese auto companies under the great changes in the global auto industry, and to provide new perspectives on the globalization of the Chinese auto industry. In February this year, five departments including the Ministry of Commerce issued the “Notice on Further Improving the Export of Used Cars” and decided to launch the export business of used cars nationwide. A new automobile foreign trade business has officially entered the public eye.

This article will record a growing Chinese second-hand car overseas market.

While Chinese car companies are entering into fierce head-to-head battles at home, few people have noticed that a “vacuum market” for Chinese cars is forming overseas.

In this “vacuum market”, some customers’ love for Chinese cars is unimaginable – a car that sells for 300,000 to 400,000 yuan domestically can be sold to overseas customers for as much as 67 yuan. 100,000 yuan; and some new models that sell for 7 to 8 million yuan in China are sold for more than 1.5 million yuan overseas, which is more than double the price in China.

What’s even more surprising is that these cars are “second-hand cars” from China.

A secret track began to emerge – used cars going overseas.

At the westernmost end of China’s territory, Horgos, Xinjiang, is the country’s largest land port for car exports. Here, at peak times, thousands of commercial vehicles pass customs every day, and nearly half of them are “second-hand new vehicles” that have been registered in China but have not been driven on the road.

These cars were then shipped to Central Asia and Europe around the clock, where they were sold well.

According to statistics, in 2023, there will be more than 100,000 second-hand cars shipped from China (some figures say it is 160,000), which is an increase of 45% from 69,000 in 2022; and in 2021, this number There are only 15,000 vehicles. It is predicted that by 2025, China’s used car exports will reach 400,000 units.

What is growing more rapidly than the number of vehicles is export volume. A cross-border payment platform shows that the amount of funds collected from its second-hand car exports in 2023 increased by nearly 900% compared with 2022, and the average customer order was close to US$1 million.

What kind of Chinese second-hand cars can make overseas customers so obsessed with them? Is selling used cars overseas a golden track?

Especially recently, 14 departments including the Ministry of Commerce jointly issued the “Action Plan for Promoting the Trade-in of Consumer Goods for New”, proposing to strive to accelerate the phase-out of passenger cars with emission standards of National III and below by 2025; by 2027, the transaction volume of second-hand cars will increase by 45% compared with 2023. %. For China, a huge market with more than 300 million cars, how to solve the problem of used cars will be a problem full of unlimited opportunities and challenges.

After communicating with many practitioners in the industry, Xiaguangshe tried to clarify the growing trend of Chinese second-hand cars going overseas and the changes in industrial interests behind it.

On the evening of September 1, 2023, at the launch of Jikrypton 001 FR, Jikrypton CEO An Huicong just announced the sales quota of this new car. After 15 seconds, the quota of 99 units of this car that month was sold out.

As one of the new domestic car-making forces, Jikrypton is familiar to many people. Its product positioning is high-end electric vehicles. This new car is claimed to have “top-notch smart cockpit and smart driving experience, F1 world champion driving ability, on-board satellite phone” and other amazing experiences. The official retail price has also reached a historical price of 769,000 yuan.

With the current domestic auto market in such a state of involution, perhaps the vast majority of people who attended the conference that night would not remember these dazzling selling points. But a small portion of the audience, by this time, had realized that there would be a great opportunity to make money.

About two months later, on October 27, Jikrypton 001 FR officially started delivery. At this time, some foreign traders engaged in second-hand car overseas business also began to get busy.

A practitioner told Xiaguang News about a phenomenon he observed: Just after the release of this new car, some foreign traders immediately released the relevant information overseas through cross-border e-commerce platforms and social platforms, which immediately attracted overseas consumers. readers’ attention. After seeing the relevant vehicle evaluation video, some overseas consumers said they couldn’t wait to buy one. However, at that time, JiKrypton only had sales channels in a few overseas markets such as Europe and the Middle East, and there were no purchase channels in markets such as Central Asia, Russia, and Latin America. As a result, some foreign traders took advantage of their own advantages to obtain orders from overseas customers and ordered Ji Krypton 001 FR vehicles domestically. After the new vehicles were delivered, they non-stop transferred the vehicles to overseas consumers. At this time, the selling price of the vehicle has reached 1.5 million yuan, which is more than 700,000 yuan higher than the domestic selling price.

In this process, because foreign traders cannot obtain brand authorization from the OEM, they cannot directly enter the export model. Therefore, the most common method used by foreign traders is to first buy the vehicle in their own name, register it and obtain the ownership of the vehicle, that is, it becomes a nominal second-hand car, but it is not registered on the road (it is actually still a new car); and then the vehicle is Arrive at the export port and deliver to overseas customers. Due to relevant national regulations, all domestic registration information of the vehicle is not handed over to overseas customers with the vehicle, but is canceled domestically. In this way, the second-hand car obtained by overseas customers will become a pure new car when it arrives overseas.

This model is called “parallel export” in the circle, that is, traders purchase vehicles from the Chinese market without authorization from brand manufacturers, and then introduce them to overseas markets for sale. This is exactly the same “parallel import” car model that was popular in China a decade ago, just in the opposite direction.

According to relevant data analysis, with the rise of domestic second-hand car exports in recent years, the parallel export contribution of new energy vehicles has reached 90%. Jiang Kunping, general manager of Dongxi Jingwei New Energy (Chengdu) Co., Ltd., told Xiaguang News that his company will export about 100 commercial vehicles in 2023, including more than 90 new energy vehicles and less than 10 real fuel used vehicles.

Behind this, it actually reflects a demand from overseas consumers. In fact, due to the lack of new energy vehicles with product strength in overseas markets, and in recent years, with the joint assistance of new car-making forces and the transformation of traditional OEMs into new energy sources, the strength of new energy products in China has increased rapidly, and overseas consumers have become more interested in China’s new energy vehicles. The car can be said to be defenseless.

Wang Jian, general manager of Dongxi Jingwei New Energy Vehicle Division, has personal experience of this. In 2023, Wang Jian visited Brazil twice. Locally, the vehicles that I see are very similar to the mainstream models in China ten or even twenty years ago, such as small cars such as QQ and Alto. “Locally, the ones I see most are Chevrolet, Renault, Cars from older brands like Fiat are also older hatchbacks and sedans, and the seating space is very small.”

Looking back at the new energy vehicles produced in China in recent years, they can be said to be an instant hit – large space, large sofas, large color TVs and refrigerators, highly intelligent, not burning oil, and low cost. It seems that no matter from which aspect you look at it, you can win it. “Overseas people, especially Europeans and Americans, have large bodies. Once you sit in a Chinese car, you will instantly feel spacious. By such a comparison, the advantages of China’s new energy vehicles are obvious. It is no longer a car, but a home.” Wang Jian said.

Even the hidden door handle design, which is often complained about by domestic consumers, can also become a major selling point to impress overseas consumers.

“We were walking on the streets of Brazil and took a local taxi. When the driver heard that we were Chinese and engaged in the car trade, he excitedly replied, ‘Chinese car is a good car.’ In that case, , your pride arises spontaneously,” Wang Jian said.

You can imagine that in front of Chinese new energy vehicles, some overseas consumers are simply fans.

In this case, almost all domestic new energy vehicles can be sold overseas by foreign traders in the form of parallel exports, including the current new power car brands, as well as BYD’s Tang, Song, Yuan, Han and other series, Geely’s Jikrypton, Polestar, Xingtu under Chery, Tank under Great Wall, FAW Hongqi, SAIC ID series, etc.

Xiaomi Motors was released in China on March 28 this year, which also attracted widespread attention. It is said that Russian customers have already expressed interest in new cars, and Xiaomi cars may also appear on Russian streets in the near future.

 

In a sense, parallel export is not a formal channel and can be understood as a “parallel import version”.

On the surface, this method bypasses the brand’s authorization and saves foreign traders an authorization fee; in fact, since the product vehicles have not been serviced by the brand’s channels, it is very likely that the quality of the products cannot be guaranteed and the after-sales service cannot keep up. and other situations, affecting overseas consumers’ impression and trust of the brand.

But in another sense, parallel exports are currently also a way to help Chinese electric vehicles that have no time to consider overseas markets test overseas markets and increase sales. Because these parallel export vehicles will also be counted in the sales announced by car companies. Therefore, some car companies will adopt a “turn a blind eye, close a blind eye” attitude towards this.

Also because there is no need for investment in channel construction, brand promotion, after-sales service, etc., parallel exports will generate huge profits within a certain period.

Take the above-mentioned Jikrypton 001 FR as an example. Its overseas price is more than 700,000 yuan higher than that in China. After excluding freight, customs clearance fees, miscellaneous fees, tariffs, etc., there is still a net profit of 20%-30%, which means that selling a car can net a net profit of 150,000-200,000 yuan.

In addition to the Ji Krypton, BYD Han also became a popular model for parallel exports when it was launched. It is said that a BYD Han, which sells for about 300,000 yuan in China, sells for RMB 600,000-700,000 in Brazil, with a gross profit margin of over 100%.

Li Auto is also the favorite brand for export by foreign traders. In July 2023, Li Auto employees discovered that the company had 200 cars registered in China but had never been insured, which meant that these cars could not be driven on Chinese roads. Later, Li Xiang, CEO of Li Auto, tweeted about the matter and said: More than 200 Li Autos have been exported abroad in the past two weeks. After detailed investigation, it was found that they were mainly exported to Central Asia and the Middle East. The pictures on its Weibo show that an Ideal L7 is priced at 31.8 million Kazakhstan tenge (approximately RMB 508,500), while the starting price of the L7 in China is RMB 319,800, a price difference of nearly RMB 200,000.

 

Ideal L7 overseas selling price

But normally, the window period for such huge profits will not be too long, usually only within the first few months of the sale of popular models.

Moreover, on the surface, when a car is sold overseas, the price increase is more than 100,000 or even hundreds of thousands of yuan, which is extremely profitable. But after careful calculation, you will find that the profit is not as high as imagined.

Wang Jian of Dongxi Jingwei New Energy calculated a parallel export of new energy vehicles with Xiaguangshe. If a domestic new energy vehicle sells for 100,000 yuan in China, the shipping cost to overseas markets is about 20,000 yuan. Tariffs vary from country to country, so assuming 50%, the cost is already 170,000 yuan. Domestic traders will add a profit of 10,000 yuan, and foreign traders will add a profit of 50,000 yuan. In this way, the price of this car priced at 100,000 yuan is already 230,000 yuan overseas. “In fact, it is possible for a domestic new energy vehicle that costs about 100,000 yuan to be sold overseas for the equivalent of 250,000 yuan or 300,000 yuan,” Wang Jian said.

Therefore, the real “profits” are still made by foreign traders and tariffs.

In fact, if we look at formal export data, the price of new energy vehicles exported from China is not much higher than domestically. In 2023, China will export 1.5848 million new energy vehicles, with an export value of US$42.401 billion. Calculated, the average export value of each vehicle is US$27,000, which is approximately RMB 200,000. This price is basically the price of a domestic mid-range pure electric car.

In an interview with The Paper, a car dealer said that a year ago, a parallel export of a car might still have 15% profit, about 50,000 yuan; now it is only about 10,000 yuan.

This is also the common feeling of all new energy vehicle foreign traders at the moment – the era of huge profits from parallel exports of new energy vehicles is disappearing.

One reason behind the disappearance of huge profits is changes in overseas markets.

Taking the Middle East and Russia, popular markets for China’s new energy vehicle parallel exports, as examples, China’s overall exports to Russia and the former CIS will grow rapidly in 2023, accounting for 42% and 59% of China’s auto export increase that year respectively. In 2023, it is estimated that China’s automobile exports to the CIS countries will be approximately 1.35 million vehicles, an increase of 412%; the export value will be US$25.6 billion, an increase of 327%; of which, 950,000 vehicles will be exported to Russia, an increase of 481%; the export value will be US$19.7 billion, an increase of 388% .

In fact, a very important reason for the rapid growth of the Russian market is the withdrawal of European and American car companies from Russia caused by international geopolitics, which has brought new opportunities to Chinese cars.

In the past, China’s parallel exports of new energy vehicles entered the Russian market through Central Asia and could enjoy lower tariffs. However, Russia has made several adjustments to its tariff policy since last year. The latest time is that since April 1 this year, Russia has increased tariffs on parallel imported cars. Under the new rules, additional scrappage taxes must be paid when importing cars from Eurasian Economic Union countries including Armenia, Belarus, Kazakhstan, and Kyrgyzstan. This tax requires different scrap tax amounts for cars with different displacements. Moreover, electric vehicles are not immune, and they also need to pay an additional fee of 360,000 rubles (approximately RMB 28,000).

In addition to Russia, automobile tariffs in other overseas markets are also rising year by year. Just before this, Brazilian President Lula announced that tariffs would be restored this year. Since January this year, Brazil’s import tax on pure electric vehicles has been adjusted to 10%, and the import tax on hybrid vehicles has been 15%. By July this year, the import tax on pure electric vehicles has been adjusted to 10%. The import tax on cars will be adjusted to 18%, while the import tax on hybrid cars will rise to 25%.

This greatly reduces the profit margins of foreign traders.

Another reason for the disappearance of huge profits is that the export volume of second-hand cars is increasing.

In early February this year, five departments including the Ministry of Commerce issued an announcement clarifying that starting from March 1 this year, second-hand car export business will be carried out nationwide, and production companies, circulation companies, enterprise declaration procedures and materials, and second-hand car export business licenses will be required There are clear regulations on certificate application and so on.

The new regulations not only relax past pilot restrictions, but also clarify and simplify the relevant business processes for second-hand car exports, which will further stimulate more companies to join the trend of second-hand car exports.

In fact, since the second half of last year, Wang Jian in Chengdu has clearly felt that more and more foreign trade companies and friends around him have begun to get involved in the parallel export business of new energy vehicles.

Similarly, Li Baojun, general manager of Hamster Youche, which exports second-hand cars in Zhengzhou, Henan, also feels the same way: “Those who were qualified but did not do business started doing business (exporting second-hand cars) this year; those who were not qualified also applied for qualifications this year. , I tried it, and more and more people are participating.”

Under the influence of these factors, Li Baojun had a feeling that the craze for parallel exports of new energy vehicles (exports of second-hand cars) had begun to change. “It’s just a vague feeling that this year is not as hot as last year.”

To put it more directly, the increase in participants leads to a decrease in profits. Jiemian News once interviewed an export car dealer, who said that the Russian and Central Asian markets are already experiencing a “volume” trend. Compared with the barbaric growth period, the current profit margin has shrunk by nearly half. Even some people who were originally engaged in parallel import wanted to switch to exporting, but chose to give up after the final inspection.

The reason why these people give up is because there are actually certain thresholds and professionalism for exporting second-hand cars. “The entire second-hand car export chain is very long, and the workload is almost 20 times higher than that of domestic trade.” Li Baojun said frankly.

Specifically speaking, the domestic transaction of a second-hand car generally involves viewing the car in the showroom, comparing prices, inspecting the car, closing the deal, and transferring ownership, which is relatively clear and simple. However, when it comes to transactions with foreign customers, it requires a lot of initial steps. Collect customer needs through cross-border e-commerce, social platforms and other channels, and then make appointments with customers for offline inspections. After the customer has an order intention, the domestic traders must find car sources in the country, followed by car purchase, customs declaration, transportation and customs clearance. , delivery, collection and a series of processes. Each link requires relatively professional foreign trade accumulation.

“It requires a certain amount of time and business volume to train the team, so that it can truly be considered an industry insider.” Li Baojun told Xiaguang News.

Therefore, he saw that many of the new players who have entered the second-hand car export business in recent years only focus on one of them: some only take orders, some only look for domestic car sources, and some only provide intermediary services. But they In fact, it has not entered the core of this business, but only provides some peripheral services.

In the long term, the parallel export automobile market will still maintain growth, but profits will definitely become lower and lower. These Chinese new energy vehicles that have gone global through parallel exports have, to a certain extent, shaped the new image of Chinese cars.

According to data released by the 2023 China (Dongjiang) Second-hand Car Export Industry Development Forum, as of October 2023, there have been 39 regions carrying out second-hand car export business across the country, with more than 400 second-hand car export companies, and the scale of second-hand car exports has ranged from The number of vehicles increased from more than 3,000 in 2019 to more than 100,000 in 2023.

The popularity of second-hand car exports is most obvious in the two cities.

Tianjin is the city with the largest number of second-hand car export pilot enterprises in the country, with a total of 28. As one of my country’s important automobile ports, Tianjin Dongjiang Comprehensive Bonded Zone successfully launched the country’s first second-hand commercial vehicle export business in July 2019. Since 2019, Tianjin has exported more than 20,000 second-hand cars, with an export volume of US$523 million, ranking among the top in the country. In terms of vehicle types, new energy vehicles account for about 70%.

But when it comes to the largest port for second-hand car exports, it is undoubtedly Horgos, Xinjiang, in the westernmost part of China. It is the largest land port for car exports in the country.

On January 8, 2023, Horgos Port resumed full customs clearance. Since then, the export of complete automobiles here has shown a “blowout” growth trend, with the highest single-day export volume of commercial vehicles reaching 1,302 units, a record high.

Exported commercial vehicles include forklifts, passenger cars, dump trucks, new energy vehicles, etc. Among them, new energy vehicles are basically vehicles exported to Central Asia and Russia in parallel. According to Horgos Customs statistics, Horgos Port will export 304,000 commercial vehicles in 2023, a year-on-year increase of 307.5%. Entering 2024, the number of commercial vehicles exported from the Horgos Highway Port in the first two months has exceeded 20,000, a year-on-year increase of 388%. These cars mainly come from Zhejiang, Jiangsu, Henan, Shandong, Sichuan, Beijing, Tianjin and other places.

New energy vehicles for export that are about to be launched, photo provided by interviewee

Seeing this popularity, it is easy to think, are the happiest domestic second-hand car dealers?

But the opposite is true.

The story starts five years ago. In April 2019, the Ministry of Commerce, the Ministry of Public Security, and the General Administration of Customs jointly issued the “Notice on Supporting the Development of Second-hand Car Export Business in Areas with Mature Conditions” to support the development of second-hand car export business in 10 regions including Beijing, Tianjin, Shanghai, and Xi’an. Export business. As a result, my country’s second-hand car export business started.

Subsequently, on July 8 of that year, the first batch of used cars for export provided by Uxin, a domestic second-hand car e-commerce trading platform, were packed in Xi’an Port Area and sent to Warsaw, Poland. This is also the first second-hand car export business in the country.

With policy support and market demand, it is said that this is the dividend that Uxin and other domestic used car platforms dream of.

However, when Xiaguangshe found relevant people close to Uxin used cars for consultation, they learned that Uxin is still focusing on the domestic used car business and has basically stopped doing overseas business.

It is understood that after Uxin tested the used car export business in 2019, it encountered three years of epidemics and was unable to carry out this business.

When a salesperson from another second-hand car platform heard that Xiaguangshe was inquiring about the second-hand car export business, he bluntly said that it was a big pitfall. “A friend of mine lost more than 1 million yuan in this business. I don’t want to talk about it.” So he refused.

In fact, in the first few years of the second-hand car export pilot, this business was better than nothing-in 2019, 2020, and 2021, the national second-hand car export volume was 3,036, 4,322, and 15,123 vehicles respectively. The number of cars in China exceeds 300 million.

Even though the second-hand car overseas business has risen in the past two years, it is also driven by the explosive growth of new energy vehicles. Currently, most of the so-called used cars going overseas are actually parallel exports of new energy vehicles in the name of “used cars”; less than 10% of them are genuine second-hand cars.

Why does this happen?

Fu Yi, assistant to the chairman of Chongqing Huanyu Auto Sales Co., Ltd., said in an interview with China Automobile News that traditional second-hand car dealers have almost no advantage in exporting second-hand cars due to factors such as lack of car sources, no funds, and fierce competition in the industry.

And this also explains the embarrassment of second-hand car export:

First, there are few vehicles. In terms of domestic used car sources, no one company or independent department can complete the collection of information on large quantities of cars. Therefore, it requires the joint participation of trading markets, car dealers, used car network platforms and other entities. And good second-hand cars can basically be digested in the domestic market. Most of the second-hand cars that are really exported are cars that are more than 10 years old, even close to being scrapped, and need major repairs. There is no domestic market for these cars, and overseas costs such as freight and tariffs make it even more difficult to sell them.

Secondly, second-hand car dealers are not familiar with exporting and have difficulty getting overseas orders. The biggest difficulty facing the export business is the inability to effectively expand overseas channels. Many second-hand car exporters said when communicating with Xiaguang Social that the most important thing as a foreign trader is that you can get orders from abroad. For second-hand cars, even if you get an order, you still need to be able to sell the car smoothly. In one case, a second-hand car dealer contacted a trader in a certain country through a personal relationship and shipped a batch of second-hand cars to that country. However, the other party did not have the ability to sell second-hand cars. These vehicles had been parked in the garage for several months, and various costs were incurred. Already several times the price of the car.

Third, there is a lack of unified second-hand car evaluation standards in China. At present, domestic second-hand car transactions rely heavily on the reports of second-hand car appraisers from middlemen. These reports are standards set by their respective companies, and there is no unified evaluation system in the industry. It is still not possible to achieve unified standards in China, and it is even more difficult to gain the trust of customers overseas.

The fourth difficulty is that car prices are too high and companies cannot make profits. Before doing the second-hand car export business, Li Baojun worked in the 4S store business and had a good understanding of car sales. He believes that the current price of domestic second-hand fuel vehicles is still too high. At this price, it will be difficult for China’s second-hand fuel vehicles to open the market overseas. Take a Toyota Camry in ordinary condition as an example. A domestic second-hand car dealer quoted a price of US$11,000, while the price on a Japanese website was US$10,000.

“I believe that China’s second-hand car prices will have to go through three years of price cuts before they can have a price advantage in overseas markets.” Li Baojun said.

Fifth, due to the huge differences in situations in overseas countries, third-party services such as finance and logistics have not achieved relatively smooth interoperability with our country. Therefore, during the export process of second-hand cars, they also face high international logistics costs for small-scale exports and insufficient collection accounts. Difficulties such as security and exchange rate fluctuation risks.

It is for the above reasons that although China’s second-hand car export business has been launched for five years and its volume has been growing year by year, second-hand car dealers still have limited willingness to go overseas.

Every year, nearly five million light used vehicles are exported from high-income countries to middle-income countries around the world.

These second-hand cars mainly come from: Europe, accounting for about 54%; Japan, accounting for about 27%; the United States, accounting for about 18%; and South Korea.

Among them, Japan is the country with the largest export volume of used cars in the world. Since 2015, Japan’s second-hand car export volume has stabilized at 1.2 million units per year; by 2023, second-hand car export volume will have exceeded 1.6 million units.

Also the United States. The export volume of used cars in the United States has been stable at 900,000 vehicles all year round, and it was close to 1 million vehicles in 2019.

Although South Korea’s used car export business has fluctuated greatly, its growth cannot be underestimated. According to data released by the Korea Used Car Export Association on January 20, 2024, South Korea’s second-hand passenger car exports will reach US$4.44 billion in 2023, a year-on-year increase of 66%. In 2023, South Korea exported a total of 555,500 second-hand passenger cars, a year-on-year increase of 68%. Among them, fuel vehicles accounted for the largest proportion, accounting for 67.5%.

The reason why they have become a powerful country in exporting second-hand cars is that, in addition to their strong foundation in the automobile industry, they also benefit from a mature second-hand car market and a complete export system.

Taking Japan as an example, a very important factor for its second-hand cars to gain a foothold and grow overseas is that car brands penetrated the world market earlier. As early as the 1950s, Japan started trading second-hand cars domestically, and then began exporting used cars in the 1960s. Today, among Japanese used car export companies, overseas companies account for 70% to 80%, achieving the ultimate in localization.

Another factor is that it has a clear and clear second-hand car evaluation system – Japan’s 5-level evaluation standard allows overseas customers to place orders directly based on the vehicle’s score, without even looking at the vehicle picture. At present, the Japanese second-hand car market has formed a “trading network” with even distribution and complete coverage. In this network, the main transaction modes include 4S store replacement, entrusted second-hand car dealers to buy and sell, auctions, etc. Among them, most of the vehicles are resold through auctions (about 70%) to specialized second-hand car dealers, and finally sold by the dealers to users, overseas markets or scrapping and dismantling companies.

The USS second-hand car trading market is the largest second-hand car market in Japan and even the world. Here, on average, a second-hand car is sold every 20 seconds, and the annual transaction volume is close to 3 million vehicles. USS’s auction success rate is about 60%, but in the view of member car dealers, “as long as the price is right, there is no second-hand car that cannot be sold.”

In contrast, China’s second-hand car market started in 1999, and the second-hand car export business only lasted for five years. Most of them are local companies doing second-hand car export trade, and they have not gone deep into localization.

Judging from the current global second-hand (fuel) vehicle market, the markets in Central Asia and the Middle East were previously occupied by Japanese brands. There are very few opportunities for used fuel vehicles in China. Only passenger cars, trucks, and engineering vehicles have a certain space; in the South American market, Chinese second-hand vehicles Compared with North American used cars, there is no price advantage, and many countries prohibit the import of used cars, so China’s used car exports are not optimistic.

Looking at the second-hand car trading market in a country in Central Asia, almost all of them are Japanese and Korean cars. Photo provided by interviewee

In the African market, China’s second-hand cars have greater relative potential. However, since Japanese brand used cars have already established a good reputation, it is not easy for Chinese cars to break into the market.

Therefore, new energy vehicles have become a breakthrough for China’s used cars to go overseas. “China’s new energy vehicles are selling well overseas and building up the power of Chinese car brands will naturally also drive the influence of China’s used cars,” Li Baojun said.

Entering 2024, China’s new energy vehicle industry will perform increasingly eye-catchingly in the global market. But there is also a hidden danger.

When many overseas consumers get Chinese new energy vehicles, their first reaction is surprise. But after the surprise, a wave of complicated emotions began to arise.

In addition to appearance, space, and configuration, the selling points of China’s new energy vehicles are intelligence, which requires constant OTA upgrades, and OTA upgrades require OEMs to have official service channels in overseas markets. At present, the vast majority of Chinese new energy vehicle companies have not established such channels overseas. Therefore, new energy vehicles that are exported overseas in parallel cannot actually enjoy this kind of intelligent service.

In addition, there are no official after-sales service channels, and subsequent services for these vehicles, such as charging, repairs, and maintenance, will also be limited.

Therefore, after Wang Jian contacted many overseas customers, he saw that “many Russian customers bought Chinese new energy vehicles back, and they did not perform amazing functions. They were more like trying out a new means of transportation.” Usually, these New energy vehicles are only the second car for wealthy customers, while fuel vehicles are still the mainstream.

In the long run, overseas customers’ impression of China’s new energy vehicles will also be greatly reduced.

This raises a new question – how to provide overall service when Chinese cars go overseas?

The answer is to rely on dealers to go overseas.

As a large-ticket consumer product, most of the experience of cars needs to be supported by perfect after-sales service. Tao Jiayuan, deputy general manager of Sichuan Jiaoyun Automobile Import and Export Co., Ltd., once told the media that when Chinese cars go overseas, they cannot stop at pure vehicle trade, but must improve the quality of after-sales services to impress customers.

For new energy vehicles, on the one hand, this after-sales service includes the maintenance and intelligent upgrade of the vehicle itself; on the other hand, it involves the construction of charging piles and the development of peripheral supporting products.

After more than a year of parallel export of new energy vehicles, Wang Jian, general manager of the vehicle division of Dongxi Jingwei New Energy (Chengdu) Co., Ltd., also saw such an opportunity. At present, the company’s business has extended to three business sectors including the export of complete vehicles, the export of charging pile accessories, and the export of outdoor energy storage products.

Wang insisted that he would not rule out providing more extended services around automobile exports in the future. “Next, we hope to do something for the export of new energy vehicles, including vehicle after-sales, insurance, finance and other combined services. Copy the mature system of domestic car sales to foreign countries. However, this will take a lot of time and “Investment.”

Due to the scattered overseas layout, few car companies currently have established their own sales and service systems overseas. They generally choose to cooperate with overseas dealers or comprehensive trading groups with rich resources to achieve distribution services overseas.

Take BYD as an example. Its global dealer network covers Southeast Asia, Europe, Latin America and other markets. In Thailand alone, it will cooperate with dealer RÊVER Automotive to open more than 60 stores by July 2023; in Brazil, it will cooperate with dealer group Saga to open 100 stores by the end of 2023.

In the Middle East, BYD and Polestar chose Al-Futtaim Group, Geely cooperated with AW Rostamani Group, and Chery Xingtu teamed up with Al Ghurair Group. These three local groups are all ranked among the TOP50 family enterprises in the Middle East by Forbes. among the list.

Some powerful automobile dealership groups are also setting their sights overseas. According to China Automotive News, since 2022, Harmony Group, located in Zhengzhou, Henan, has been in-depth cooperation with Chinese new energy brands such as GAC Eon and BYD, opening outlets in Thailand, the Philippines, Indonesia, Japan and other places to join hands with China’s new energy vehicles The brand goes global.

In November 2023, GAC Aian and Harmony Group jointly opened the first Aian Auto Showroom in Bangkok, Thailand. Harmony Automobile’s goal is to open at least 10 Aian sales outlets in Thailand and strive to become the largest agent of Aian in Thailand.

GAC Aian showroom in Bangkok, Thailand. Source: Harmony Group official website

At the same time, according to China Automotive News, GAC Trading, one of the top 100 domestic dealer groups, also followed its parent company GAC Group to the Russian market to plan the establishment of a local store.

There is no doubt that the overseas expansion of automobile dealers has become a new driving force for Chinese automobiles to go overseas.

Looking further, some Chinese car dealers going overseas are also taking full advantage of China’s model – using online live e-commerce + offline direct stores to open up overseas markets. After all, in emerging markets such as Southeast Asia, the Middle East, Latin America and even Africa, China’s live streaming e-commerce is sweeping young people.

Perhaps in the near future, we will see overseas dealers lead Chinese cars to complete a localization construction and open a new chapter in the globalization of Chinese cars.

On April 25, Xiaguang Think Tank will release “Insights on the Ten Trends of China’s New Energy Vehicles Going Overseas in 2024 – The New Four Modernizations in a Counter-trend Export Environment” at the Shenzhen “New Energy Vehicles and Charging and Swapping Ecosystems Going Overseas Summit Forum”. A comprehensive and in-depth discussion of the opportunities and challenges currently faced by China’s new energy vehicles going overseas from the perspectives of going overseas in the industry chain, building and operating local factories, and policy compliance.