Hello! I'm your financial analysis assistant. This news article about car companies turning to the used car market reveals a very harsh yet opportunist truth about the industry: new cars are no longer selling well, forcing them to look towards the trillion-dollar used car market in search of new sources of profit growth.
But it's not that simple; it's a complex game involving brands, channels, technology, and trust. Let me break down this news into five key aspects in plain language to help you understand the behind-the-scenes dynamics.
1. Why are car companies suddenly focusing on used cars?
The reason is that selling new cars simply isn't profitable anymore.
- The new car market is cooling down: 2026 marked a turning point when the sales volume of new and used cars was equal for the first time (1:1). Even more troubling, sales of new cars fell by more than 20% in the first five months of this year, while used car sales increased by 2.3%.
- Meager profits: In the first half of 2026, the profit margin in the car manufacturing sector dropped to 1.5%, the lowest in nearly a decade. Many car companies are selling more cars, but they are making less money.
- Forced to transform: As the profit margin from new car sales shrinks and even turns into losses, car companies have no choice but to turn to used cars. It's not just about selling a few more cars; it's about surviving and finding a second growth strategy.
In simple terms: Selling new cars is like digging a well in a desert where the water is running out; selling used cars is like fishing by the river, where the water may be scarce, but it's still there. Car companies are being forced to adapt to this new reality.
2. The “old problems” of traditional car companies:
Traditional car companies like BMW, Audi, and Volkswagen have long been involved in the used car market, so why does it seem so urgent now? Because they haven't really succeeded in making it work effectively.
- A deadlock over interests:
- Car manufacturers want: High brand value, a stable long-term system, and a premium for officially certified cars.
- Dealers want: Quick cash flow and immediate profits.
- The conflict: Officially certified cars are more difficult to inspect, take longer to sell, and are more costly. Dealers prefer to sell the used cars they buy to other dealers for quick profits. As a result, many car companies have invested billions in official used car programs, but their market share is minimal (for example, SAIC Volkswagen only has 3.1%).
- Luxury brands are slightly better, but ordinary brands struggle: Luxury brands can still make up for some costs due to their higher brand value, but ordinary brands face even more resistance from dealers who prefer faster-turning profit-making methods.
In simple terms: Car companies want to sell used cars at a higher price with an official label, but dealers find it troublesome and time-consuming and prefer to sell to scalpers for quick cash. This lack of alignment has kept their used car businesses struggling.
3. New opportunities for new energy car companies:
New energy car companies like Tesla, NIO, Xpeng, and HiPhi Aion have an advantage: they operate a direct sales model.
- More controllable channels: Traditional car companies rely on dealers, who often have their own agendas. New energy companies, however, have direct control over their stores, ensuring consistent standards, prices, and services.
- Strengthened profit ties: As new car profits decline, used cars have become an important source of revenue. Data shows that when new car profits are negative, used car businesses can still maintain positive gross margins. This means dealers, who were previously reluctant to engage in used car sales, now must do so because it's a vital source of income.
- High barriers to entry: Although the direct sales model is effective, the used car industry is capital-intensive, requiring significant investment in stores, staffing, logistics, and after-sales services. NIO's plan to invest 3 billion yuan over five years shows that this is no small matter.
In simple terms: New energy companies can enforce their own standards for used cars because they control the stores directly. With everyone facing financial challenges, dealers are more willing to cooperate since used cars can help them make some money. However, the barriers to entry are high, and not everyone can afford to invest heavily.
4. The harsh reality:
The used car market is undergoing a major reshuffle, and many small businesses are struggling to survive.
The news highlights a stark statistic: only 30%-40% of used car dealers are expected to continue in business in 2026. Why?
- Pressured profits: In the past, selling a car for 200,000 yuan could result in a gross profit of 8,000 yuan, with a net profit of several hundred yuan after costs. Now, the sharp price cuts on new cars (an average of 14.9%) have devastated the used car market. The average price of used cars dropped from 66,700 yuan in March to 61,600 yuan in September, with some luxury cars even selling for 150,000 yuan or 260,000 yuan.
- New car price cuts impacting used cars: When new car prices drop, owners of new cars sell their used cars in panic, leading to an oversupply and a price crash.
- Small businesses are being phased out, and giants are entering: Small dealers lack brand support, inspection capabilities, and financial resources, making them vulnerable to price wars and trust crises. Many have switched to driving for rideshare services or starting businesses in other fields. Large dealer groups and car manufacturers are entering the market, using their scale and credibility to squeeze out small businesses.
In simple terms: The used car market is in a survival of the fittest situation. Small dealers, who used to profit from information asymmetry, are struggling due to rapid price cuts and thin profits. The future belongs to the established players (car companies and large platforms).
5. The trust crisis:
The biggest selling point of car companies' used car programs is “official certification,” which ensures vehicle condition transparency and warranty. However, this advantage is fading.
- Rise of third-party inspections: Third-party organizations like Chazhi and Guazi are gaining market share, providing standardized inspections and industry-wide certifications. This means that inspection is no longer a car company's exclusive advantage, giving consumers more choices.
- Higher prices but not necessarily better value: For example, a Mercedes E300L costs 430,000 yuan on third-party platforms and 498,000 yuan with official certification. Is the extra cost worth it if there's no significant difference in vehicle condition? If there's no clear advantage, the premium is hard to justify.
- Trust issues remain: Even third-party platforms have issued contradictory inspection reports for the same car, indicating that industry standards and data sharing are still not unified. Car companies' official certifications, while credible, cannot completely eliminate trust issues.
In simple terms: Consumers used to trust car companies because they had no other options. Now, with third-party inspections becoming more common and official prices being higher, consumers are more cautious. As long as inspection standards and data are not standardized and transparent, trust issues will persist.
In conclusion:
In the short term, used cars are unlikely to save the new car market, but they can supplement car companies' profits. However:
1. The goal of maintaining vehicle value has been missed due to rapid price cuts on new cars.
2. The used car business is still costly, and companies like NIO and Tesla are likely still losing money.
3. In the long run, it will become a crucial area of competition. Those who can address the challenges of high capital costs and transparency will emerge as winners.
Advice for consumers:
- When buying used cars: Don't blindly trust official certifications; compare third-party inspection reports and consider the actual condition and price合理性.
- When selling used cars: Sell them as soon as possible to avoid further price drops.
- When considering car companies: Look for those that invest heavily in used car services, have a high proportion of direct sales, and use transparent inspection standards, as they are likely to provide better after-sales experiences.
This is a game where all players—car companies, dealers, and consumers—are reevaluating their roles. There are no permanent winners; only survivors who adapt to the changes.