Used luxury cars are poised to make up a larger portion of auto sales in China. (Shutterstock)
Shiny, brand new cars have a magnetic pull anywhere in the world, and China is certainly no exception with its booming auto sales. However, as the market matures, secondhand models are starting to attract new buyers at a time when vintage cars are being touted as a marker of brand heritage.
As the luxury auto sector in particular has seen an accumulation over the past few years, we are likely to see the development of a full, fertile business sector as buyers begin to “trade in” to get the next new model. In China, new cars currently account for a massive majority of total auto revenue for dealers—90 percent, compared to only 55 percent in the United States. This may all be set to change, according to a new AP article that states the time is ripe for used cars to move in on the market:
Chinese started buying new cars in huge numbers about four years ago, about the average length of time analysts say drivers will stick with a vehicle before trading it in for a fresh model.
The secondhand market is already taking off, with sales growth last year outpacing that for new vehicles. By volume it is still dwarfed by new cars, which outsold used vehicles three to one. In countries such as the U.S., that ratio is reversed, highlighting the secondhand market’s vast potential to make car ownership affordable for millions more Chinese.
Accompanying this trend is a growing visibility of vintage cars in China. While vintage cars have long held cachet in the West, they’re beginning to serve as an increasingly prominent signifier for brand heritage as a growing number of luxury auto companies are using them for marketing campaigns.
A Volkswagen model in China's Classic Cars Challenge event. (Volkswagen)
The most prominent example of this was the Classic Cars Challenge event held in China this October, in which vintage car brands from more than 20 countries participated in a cross-country drive. Classic models by Volkswagen, Mercedes, and more were driven from the Great Wall of China outside Beijing to Shanghai, where they attracted the attention of many Chinese tourists while on display. On the way, the cars stopped in major cities including Tianjin, Qingdao, Nanjing, and Hangzhou, allowing the auto companies to have a promotion opportunity outside first-tier cities.
The vintage auto has also made its way into marketing campaigns. For example, to promote its sponsorship of last week’s Shanghai Art Fair, Cadillac used images of vintage car ads on the very modern mobile platform WeChat, where it hosted a giveaway of free tickets to the event. Meanwhile, the most nostalgia-inducing example of the use of classic cars in China may be Chinese luxury automaker Hongqi’s efforts to incorporate elements of the classic limousine that carried the Chinese political elite of an earlier era.
The growth of secondhand sales is a rising trend not only for luxury autos, but has been spreading like wildfire across the luxury sector in China. One main area in which we’re seeing this is high-end pawn shops, which are now featuring not only traditional items such as gold, jade, antiques, and paintings, but also luxury fashion items including watches, handbags, and diamonds.
While the popularity of pawn shops is likely propelled by the value of luxury items as investment pieces in China’s hard asset-focused economy, the concept of “vintage” is also gaining attention as a fashion statement. This was clearly demonstrated by Jing Daily’s recent interview with the owner of the new high-end vintage boutique Old Lyric that just opened in Shanghai and is already gaining a significant amount of attention.
These trends all point to the fact that as China's luxury market matures, it is becoming saturated with high-quality goods. While somewhat cheaper than high-priced luxury items, these used goods may not necessarily be a major source of competition for sales of new products, as many are being sold off as incomes rise and owners "trade up."