EV Price Cuts Shake Used Car Market, Intensifying Dealer Pressure and Polarization

Recently, new energy vehicle (NEV) manufacturers such as Tesla, Xiaomi, and Zeekr have successively lowered prices or introduced favorable financing policies, triggering a new round of price wars that have significantly impacted the used car market. Although national used car transaction volume reached 4.822 million units in Q1 2024—up 4.66% year-over-year, with March alone seeing a 37.73% month-over-month increase—dealers are widely grappling with the dilemma of "higher sales volumes but lower profits." Frequent price cuts on new vehicles have led to situations where the acquisition prices for certain used cars exceed the retail prices of equivalent new models. As a result, dealers who stockpiled inventory earlier are now facing immediate losses upon acquisition, forcing them to accelerate inventory turnover, strictly control stock levels, and adopt a more cautious approach to purchasing used vehicles. Growth in the passenger vehicle segment has been sluggish, with only a 0.88% year-over-year increase in Q1. Sedan sales declined, while MPVs and SUVs gained greater consumer preference, reflecting a shift in household demand toward larger, more spacious vehicles. Driven by government trade-in incentives, the share of nearly new vehicles (those under three years old) in the market has risen, continuously improving the supply structure. However, official price reductions on NEVs have directly depressed their residual values in the used car market. Some dealers report that 2024 model-year NEVs acquired at the end of last year turned from profitable to loss-making after manufacturers slashed prices by RMB 20,000; despite multiple subsequent price adjustments, these vehicles remain difficult to sell. Heightened consumer hesitation has also extended the average turnover period for some fuel-powered models from 20 days to over 40 days, significantly reducing dealer operational efficiency. In terms of pricing trends, the overall used car price index has stabilized, though significant divergence persists across brands and models: Chinese-branded vehicles lead in price appreciation, followed by modest gains for German and Japanese brands, while Korean, American, and French brands have seen declines. MPV prices have dropped noticeably year-over-year, whereas SUV and sedan prices have slightly rebounded. Dealers must further enhance the precision of their inventory management to navigate these evolving market dynamics.