Sourcing used cars from China can actually help car dealerships earn higher profit margins and boost their sales.
How?
Well, both these things are directly linked to how a car dealership is sourcing its inventory. If you choose to buy used car inventory from China, it can be financially lucrative.
Let’s discuss the reasons why car dealers should buy used cars from China. How will it help them earn more money and get more sales?
1. Car Dealer Can Earn Up to 12% More Margin on Used Cars
A recent survey revealed that car dealerships can achieve profit margins of up to 20% on used cars. On the other hand, the average margin on new vehicles is 8%. This can be attributed to two key factors: lower acquisition costs and the potential for substantial value enhancement.
Used cars are inherently more affordable than their new counterparts. While this might suggest that selling prices should also be lower, the reality is that car dealers operate with fixed budgets. Consequently, a given budget can purchase a larger quantity of used cars compared to new ones. This offers greater inventory diversity and attract a broader customer base.
The potential for value enhancement in used cars is even more compelling. With access to specialized mechanics, dealers can significantly improve a vehicle’s appearance and performance. This can help justify a higher selling price. However, this advantage can be mitigated if the used cars purchased are already in excellent condition.
At GuangcaiAuto, all our used cars are meticulously maintained to ensure they are in top condition. This means that dealers can acquire vehicles that are ready to be sold without requiring additional reconditioning efforts. This streamlines the sales process and maximizes profitability.
2. Used Cars are 50% Cheaper to Import
As a car dealer, you cannot rely only on locally sourced inventory. So, you must import diverse models from other countries as well. When it comes to sourcing imported car inventory, it’s actually much cheaper to import a used car than a brand-new car.
That’s an added benefit if you’re operating a car dealership in a North African country like Algeria or Egypt or even in a Middle Eastern country like the UAE or Saudi Arabia.
For example, for new cars, Algeria imposes import duties ranging from 0% to 100%. Plus, you have to pay a Value-Added Tax (VAT) that can be as high as 25%. In contrast, used cars imported into Algeria generally face lower or even waived customs duties. This significantly reduces the overall cost of importing a used car.
Taxes on importing a car are directly linked to its initial price in most countries. So, it’s simple. Since used cars are cheaper than new cars, the cost of importing them is also lower.
3. Used Cars in China Are 40-50% Cheaper Than Other Countries
The used car market in China offers significant financial advantages. Used car price in China are typically 40-50% lower than those in countries with little or no local car production. This price disparity is largely due to China’s status as the world’s largest automobile manufacturer. It leads to a high supply of vehicles and a relatively low demand for used cars.
Factors such as economies of scale, lower labor and material costs, and government support further contribute to the affordability of Chinese used cars. For countries like Algeria and Egypt, which may have limited domestic automotive production, this presents a unique opportunity to access high-quality vehicles at a fraction of the cost found elsewhere.
4. Value of a Used Car Has Already Depreciated
Most cars lose up to 50% of their value in the first three years, known as depreciation. The depreciation of used cars means that their resale value has already adjusted downward compared to new vehicles. This allows dealers to purchase vehicles at prices that reflect their current market value rather than inflated new car prices. As such, they can sell these vehicles at competitive rates while still maintaining healthy profit margins.
5. Used Cars From China Are of High Quality
As an export-oriented economy, China places a strong emphasis on ensuring the quality of products leaving its shores. This commitment to quality extends to the automotive industry, where stringent standards are enforced to guarantee the reliability and performance of vehicles.
All used cars exported from China must undergo a rigorous certification process, obtaining the Compulsory China Certificate (CCC). This mandatory certification ensures that these vehicles meet the highest quality standards, effectively making them comparable to new cars.
By incorporating used cars from China into their inventory, dealerships can offer their customers high-quality, affordable options that meet their expectations for reliability and performance.
6. Chinese Used Car Market Offers Diverse Options
A car dealership needs diversity. That’s what the used car market in China can give you. Whether it be EVs, PHEVs, or REEVs, the Chinese used cars market has got it all. The Chinese used car market offers a wide variety of options, from compact sedans to SUVs and MPVs. This means that you can easily find cars to suit the needs and preferences of your customers.
7. High Demand for Used Cars in the Market
The global market for used cars is experiencing a significant surge. Consumers increasingly opt for more budget-friendly alternatives in the face of escalating living expenses and economic instability. This trend has created a robust demand for second-hand vehicles.
So, it will be a strategic decision for car dealerships to offer a wider selection of used car options. By doing so, dealerships can tap into a growing customer base seeking affordable transportation solutions. Dealerships can also potentially increase their overall sales volume.
Final Word: Should Car Dealers Import Used Cars From China?
Buying used cars from China can be very profitable for car dealerships. These cars are often much cheaper than those sold in other countries. They’re also high quality and come in many different styles. Dealers can make a lot of money selling these cars. They can also attract more customers.
If you’re looking to buy used cars from China for your car dealership, we can help. GuangcaiAuto is a trusted and reliable B2B and B2C provider of 60+ car brands.
All you need to do is find the best-selling cars and press order. Our efficient shipping, streamlined import, and after-sale support make sourcing an imported car inventory easier than ever.
Contact our sales team for more information, and don’t forget to explore our blog for the latest news and business tips on starting a car dealership.
