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Auction of second-hand autos has huge market potential
Last Updated(Beijing Time):2009-09-23 09:53

By Zhang Xue

Such a mode of auction, for example, antique auction or property auction, has existed in our life for a long time, and to which people have experienced from curiosity to acquaintance. However, people still feel it a fangle if the subject is changed to be a second-hand auto. In fact, the second-hand auto auction is the most common mode for second-hand auto transaction in a mature market while it is not long in China. You may ask that how much a small auction hammer can do in the huge second-hand auto market.

It turns out that second-hand autos can also be auctioned.

"It is the auction that 'to upbear two sides with one hand'. It's on one side the second-hand auto source, on the other side the buyer." Li Bo, Business Manager of Beijing Zhonggu Auction Co., Ltd, believed that the auction course is not so complex like what lots of people imagined. The second-hand auction can be simply divided into such two procedures as trusting autos and joining the competition for purchase. A seller will entrust his/her auto to an auction company, and after understanding and evaluating the auto, the company will pre-exhibit the auto before official auction, showing the information about the auto manufacture date, base price and basic auto condition to the buyers, subsequently, the auto can be involved in the auction. And after knowing fairly well about the auto condition in the pre-exhibition, buyers can take participate in the competition for purchase in the auction day and the one with the highest bidding price will win the auto.

"Such a transaction mode is relatively public and transparent, I can set my heart at rest when buying, and the procedure is also very simple." Mr. Shi who took participation in the auction for the first time and won a second-hand Benz expressed with good feeling. Li Bo believed that the second-hand auto auction has its own advantage, which requires being open, fair and just; the auction company will not intentionally conceal the real auto information, meanwhile, such a transaction mode is very efficient, and the bargain price often appeals to both the seller and the buyer.

Auction companies play a role of wholesaler

Currently, the second-hand auto auction can only be considered in initial phase in China, lots of people feel unfamiliar to such a mode. But in a mature auto market, auction is the most common mode for second-hand auto transaction.
In the US, there exist 300-odd various second-hand auction companies, and about 40 percent of the transacted second-hand autos are disposed in the manner of auction annually. In Japan, large auction companies usually hold auctions for once to five times a week with 3,000 to 15,000 autos for each auction.

Auction is provided with obvious advantages, by the competition for purchase, a number of second-hand autos can be disposed collectively in the shortest time, and the benefit of clients can be maximized efficiently. "10-odd auction driveways are conducted at the same time, and 3,000 autos will be auctioned only within two hours. Can you imagine how shocked when you see such a scene for the first time?"

Data shows that annual transaction volume of second-hand autos in the US is around 40 million sets, more than double of the sales volume of new auto, and a huge industrial chain has shaped in mature second-hand auto market. In such an industrial chain, auction plays a key role in connection. "The auction transaction platform makes a mass of second-hand auto resource realize re-allocation efficiently, and makes the circulation of second-hand autos more smooth." And a smooth second-hand auto market can derive numerous relative industries and create considerable profit benefiting multiple parties. As introduced by Zhou Hang, in the US, the nationwide auction net of Manheim Auctions Inc. has driven the rising and development of such businesses as evaluation, testing, reorganization and outfit, logistics, financing and information consulting of a large number of second-hand autos.

The auction market's potential is promising

Statistics released by China Automobile Dealers Association shows that in the first half of this year, the transaction volume of the second-hand autos in 31 provinces, autonomous regions and cities reached 1.502 million sets, up 23.93 percent year on year. The scale of China's second-hand market is expanding, but the transaction volume of the second-hand autos transacted in the manner of auction still seems too trivial.

With over a decade of cultivation, the auction of second-hand autos is being recognized by more and more people. "Initially, the auction of second-hand autos is only in the bud, far from shaping an industry, but now it is developing towards a relatively large industry." Li Bo expressed. However, compared with mature markets, the second-hand auto auction in China's auto market can only be considered in the primary run-in phase.

Presently, aiming at the traits of current second-hand auto market, the auction companies like Beijing Zhonggu Auction Co., Ltd have conducted mass B2C businesses. However, Manheim Auctions Inc. still insists on B2B-lead auction mode after launching into Chinese market. Since this year, Beijing Manheim BAI Motor Vehicle Auction Company Limited has held 48 auctions with the transaction valued RMB41 million yuan, which only takes a very small proportion in Manheim's global businesses. Zhou Hang said frankly that the current development of China's second-hand auto market has determined that the functions and advantages of B2B auction has not yet been fully exerted, "What we are doing is to introduce Manheim's mature auction concept and mode, and we hope our effort can accelerate the development of the overall second-hand auto market."

Learning about the experience of mature markets, if the second-hand auto auction wants to truly grow up, the abundant second-hand auto resource in the upstream is indispensable. Over the past years' development, in China's auto market, the auto population has aggregated to a certain extent. The year of 2002 and 2003 are a peak in auto purchase, over the several years' usage, these autos will enter into the second-hand auto market gradually, which makes auction companies see a hope. Nevertheless, Li Bo also expressed that currently, the competition on auto source is quite fierce, the regular method for bargainers to dispose their second-hand autos is to sell them to auto brokers, "Lots of bargainers are unfamiliar with the auction, so what we need to do is to let more people know and choose the auction to dispose their second-hand autos."

Although China's second-auto auction industry just stands on the starting point, almost all insiders consider it has a huge potential; Li Bo believes that auction must be the largest industry in the second-hand auto market in future, "The reason why Manheim launched into China is just because of its promising potential." Zhou Hang reckoned that though presently, Beijing Manheim BAI Motor Vehicle Auction Company Limited only has a single auction driveway, they have reserved enough increase space for the future. 
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