On Monday, the Chinese government finally agreed to export used vehicles for the first time. It plans to jump-start the new-car market in the country, and to do that, the pre-owned vehicles need to be removed. China’s decision to export cars to drive the global trade, as well as domestic auto sales, has been a long time coming. The Chinese auto market had been steady, but last year, it declined. Reports indicate that the reason for the decline is the looser government rules on private ownership of vehicles.
Slim Chance US Sees Them
Ten cities in China are set to export used vehicles to the global market. The probability for them to land in the United States is slim, especially when there are so many regulations that limit the importation of vehicles younger than 25 years. In 1994, very few vehicles were sold in China; because the values depreciated significantly, it’s not likely to be profitable to export them.
Where Are They Going?
The Ministry of Commerce in China is set to approve which companies get to handle the used-car exports. As such, testing is required to ensure that the vehicles are safe and reliable. China has noted that many developed countries export about 10 percent of its pre-owned vehicles, making it a significant opportunity for China to drive the local auto market.
Most of the vehicles from China are going to Africa. Nations and automakers have been battling for the slim promise on the continent. Household incomes are rising, and the population is growing. Many automakers desire to make it easier to import new cars, but the well-protected pre-owned market is a very steep hurdle, and Chinese exports are more likely to add to the issue.
Last year, in 2018, 13.82 million used cars were purchased by Chinese consumers, which is comparable to the 28.08 million new vehicles that were available for purchase.