China Used Car Industry White Paper Released: Significant Growth Potential Remains（Nov 5）

China Used Car Industry White Paper Released: Significant Growth Potential Remains

On November 2, DaSouChe Group (Nasdaq: DSC), an AI application infrastructure company for the used car industry, released the "China Used Car Industry White Paper (First Half of 2026)." The white paper shows that as of the first half of 2026, China's used car market annualized turnover rate was only 5.2% (i.e., used car transaction volume / vehicle ownership), significantly lower than the 8%-15% in mature markets such as the United States, Europe, and Japan. During the same period, the ratio of used car to new car transaction volumes was approximately 1:1, lower than the 2.4x in the United States and 1.9x in Europe. This indicates that, supported by a large vehicle ownership base and appropriate vehicle age, used car transaction volume still has significant upward potential.

Market Scale

According to data from the China Automobile Dealers Association, from January to June 2026, cumulative national used car transactions reached 9.7132 million units, a year-on-year increase of 1.50%, representing an increase of 143,100 units compared to the same period last year. Cumulative transaction value reached 638.530 billion yuan.

AI-Driven Circulation Efficiency

Regarding existing circulation bottlenecks, DaSouChe CFO Zou Qin stated that in the AI era, driven by data analysis and AI algorithms, breaking through the limitations of traditional geographic and personal networks, vehicle matching between dealers has shifted from "finding buyers through search" to "system intelligent matching," which will significantly improve transaction efficiency for cross-regional vehicle circulation.

New Energy Vehicles: Growth Engine

Notably, the white paper shows that the growth in used car transaction volume primarily came from new energy vehicles (NEVs). In the first half of 2026, NEVs accounted for 7.6% of used car transactions, up 2.4 percentage points year-on-year. NEV owners replace their vehicles noticeably earlier than internal combustion engine (ICE) vehicle owners, serving as an accelerating factor on the supply side.

However, the structural contrast remains stark. China Association of Automobile Manufacturers data shows that from January to September 2026, NEV new car sales reached 53.6% of total new car sales. Ministry of Public Security data shows that as of end-June, national NEV ownership reached 48.97 million units, accounting for 13.19% of total vehicle ownership, up 2.92 percentage points year-on-year. Yet NEVs still account for less than one-sixth of new car share in used car transactions.

Regarding the low penetration rate of NEVs in the used car market, DaSouChe believes this indicates significant growth potential for the NEV used car market, while also reflecting valuation challenges. Compared to ICE vehicles, NEV residual value performance is more susceptible to factors such as battery health, technology iteration, model price changes, and after-sales support, increasing the complexity of pricing and inventory management for dealers acquiring used cars.

Despite the low penetration rate, positive signals have emerged. DaSouChe data shows that in the first half of 2026, the retention rate of NEV used cars under three years old showed an improving trend year-on-year, with one-year, two-year, and three-year-old NEV retention rates increasing by 1.2, 3.5, and 0.7 percentage points respectively. The retention rate gap between one-year-old NEVs and ICE vehicles narrowed from 5.8 percentage points to 2.5 percentage points.

Price Trends and Dealer Profitability

From a long-term trend perspective, DaSouChe price monitoring data shows that the used car price index declined from 100 in the first half of 2022 to 76.9 in the first half of 2026, reflecting overall price pressure in recent years. During the same period, the new car price index fell to 88.8, with used car price declines approximately double those of new cars, making used cars a "magnifier" for new car price war pressure.

Brand residual value performance is also changing. The retention rates for domestic, joint venture non-luxury, and luxury brand used cars under three years old declined from 68.1%, 72.3%, and 76.8% in the first half of 2022 to 56.8%, 58.0%, and 60.8% in the first half of 2026, respectively. The residual value gap between different brand categories is gradually narrowing, with luxury brands facing particularly significant downward pressure. Meanwhile, the impact of vehicle condition on residual value is rising: in the 3-to-5-year-old segment, the retention rate difference between "excellent" and "fair" condition vehicles reaches 12-13 percentage points, making vehicle condition a more important factor than brand.

Dealer profitability is also under pressure, accelerating industry consolidation. According to DaSouChe sample data, in the first half of 2026, the dealer gross margin index fell from 100 in January to 85.6 in June, with the proportion of profitable dealers declining 10-16 percentage points year-on-year across all dealer scales.

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