According to industry statistics, in the global automotive sector, only 10% of profits come from new car sales, while after-sales services account for as much as 50%. Parts and components contribute 10%, and used car sales make up 20%. Shanghai Volkswagen’s recent used car promotion in September is just the beginning. Industry insiders in Shanghai believe that this marks a new phase for the company and signals a broader shift in the market. The era of relying solely on new customer acquisition is over; now, the focus is on building brand loyalty, retaining existing customers, and expanding into new markets. As the market leader, Shanghai Volkswagen has taken the initiative in the second-hand car business, and competitors are expected to follow suit. This trend is now a major topic of discussion among industry professionals. Car manufacturers are facing new challenges, which are closely tied to the evolving dynamics of the entire automotive industry. During periods of rapid growth, one manufacturer's increase in sales didn’t necessarily mean another’s decline, as the overall market was expanding. However, once that stage passes, competition becomes more zero-sum — one company’s gain is another’s loss. Although China’s auto industry is still experiencing high growth, the slowdown in market expansion and the rise in competition have begun to reveal zero-sum characteristics. At this point, two trends are emerging: first, the profit center is shifting from new car sales to after-sales services; second, retaining old customers is more profitable than acquiring new ones. According to market analyst Jin Xuewei, the cost of winning a new customer is typically 16 times higher than retaining an existing one. Data shows that when older customers upgrade their vehicles, they often turn to Shanghai Volkswagen, ensuring not only a strong market share but also significant profits from after-sales services like repairs and maintenance. While dealers keep these figures confidential, global industry data supports the shift: 10% from new car sales, 50% from after-sales, 10% from parts, and 20% from used cars. In China, although new car sales remain the main profit driver, signs of a shift are becoming evident, especially in Shanghai. The used car market is growing rapidly. In 1999 and 2000, Shanghai traded over 50,000 and 63,500 used cars respectively, rising to 83,420 in 2001, and reaching 119,880 in 2002 and 144,700 in 2003. The annual growth rate exceeds 20%. In 2003, Shanghai issued 107,200 new car licenses, indicating a faster vehicle turnover. Experts predict that the used car market will expand rapidly in the coming years. By 2008, it is expected to match or surpass new car sales. Companies are increasingly focusing on second-hand car trading, with many adding "S" to their 4S shops to create 5S models. Guangzhou Honda, for example, plans to pilot used car transactions by the end of 2004, training staff and reconfiguring showrooms. Over 40 4S stores nationwide have participated in appraisal training, each employing two appraisers. The used car market in China still has a long way to go compared to developed countries, where second-hand car volumes are twice or even three times that of new cars. In the U.S., over 60% of cars on the road are used, and Americans change cars about 10 times in their lifetime. With such potential, the Chinese market is poised for significant growth. With the upcoming “Second-hand Vehicle Market Management Measures,” the market is expected to open up to both manufacturers and individuals. Auto companies are already planning how to capture a share of this booming sector. As one dealer manager put it, “Next year’s used car replacement war will be fierce.”

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October 03, 2025