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China Grand Auto Welcomes a Important Opportunities: Second-Handed Cars with Huge Potential

Release time:2020-04-08   Reading volume:819  source:guanghui

During an online press conference by Ministry of Commerce on April 2nd, Wang Bin, deputy director of Market Operations and Consumption Promotion Division of Ministry of Commerce, stated that the Ministry of Commerce would carry out the relevant policy measures to promote the automobile consumption with the relevant departments, so as to stable new car sales, encourage the local governments to loosen or cancel the measures for purchasing, and speed up the revised Measures for the Administration of the Circulation of Second-Hand Vehicle for the prosperity of second-hand car market, issue the Rules for Scrap Vehicle Recycling Management Approach as soon as possible for promoting the update of scrapped car and digging out the potential of car consumption.

Wang Bin said, the issued vehicle policy of levying the second-hand vehicle dealers at a reduced rate of  0.5% of sale for  value-added tax is a milestone for the second-hand vehicle markets, and it will not only contribute to promoting the development of the market scale of second-hand vehicle, specialization, branding, but also help in guiding enterprises to pay taxes actively, thus increase the fiscal revenue and speed up the release the potential of second-hand vehicle consumption, as well as create a larger market for new vehicle consumption and drive the development of auto parts, maintenance, insurance and other related services.

Not only as the largest service group of automobile dealers in China, is China Grand Auto also the largest entity agent of second-hand vehicle. The introduction of the new policy will promote the transformation of the business model of second-hand vehicle from the previous model of collecting commission to the new one of taking second-hand vehicle as main business. The main business of second-hand vehicle will bring more than 10 billion dollars of incremental revenue to the company. At the same time, the tax reform is conducive to regulating the market. The existing second-hand vehicle trading outside the system is expected to get back the 4S store business, so the Company will meet further growth of trading volume.

From the perspective of profitability, second-hand vehicle trading will bring in significantly increased profit. By changing its business, more methods of added value to increase profit margin will be carried out, such as decoration and equipment. Through the derivative business of insurance, extended warranty, finance and other additional services, the comprehensive profit of single vehicle will be greatly improved.

At the same time, China Grand Auto will get advantage in cost due to its scale effect, thus limit its extra cost; it cooperates with major main engine factories, and gets certification subsidy support and complete brand guarantee; The Company is playing a leading role in the layout of second-hand vehicle business in advance. It has not only national-wide stores as the basis for replacing vehicle sources, but also has built more than 30 second-hand vehicle offline service centers in advance, with professional service functions such as detection, equipment, certification and sales. At the same time, recently the Company has applied convertible bond project, which will also strengthen the second-hand vehicle business, build a solid foundation for the future business from all aspects.

Since the development of second-hand vehicle business in 2012, China Grand Auto has its second-hand vehicle business steadily increased, with an annual compound growth rate of over 40%. In 2018, more than 300,000 second-hand vehicles were traded. In 2019, China Grand Auto obtained the qualification of the first batch of national pilots of second-hand vehicle export enterprises, and succeeded to export second-hand vehicle to Africa, which marks the first step of the internationalization of China Grand Auto.