After many years of boosting new car sales figures, China's motorists are increasingly wanting to upgrade, bolstering its fledgling used car sector.

Second-hand car sales totaled 2.7 million in 2006, according to the Ministry of Commerce, less than half that of the new car sales. Compared with developed countries, where used car sales are double or triple new car sales, China's used car market has a huge potential.

A survey by Sinotrust, a leading consulting company, shows China's new car owners keep their vehicles an average of 6.5 years, while 71.2 percent choose to purchase a new car after three to five years.

In Beijing, 170,000 used cars were sold in the first half and the ratio of used to new car sales reached 0.85:1, while two years ago, it was only 0.54:1, a CADA official said.
Xu Dong, deputy general manager of a Guangdong-based dealer, said used car sales would accelerate as 4S (franchise dealers in "sales, spare parts,service and surveys") and overseas used car dealers entered the market.

Li Xiaokuan, deputy director of market administration of the State Administration for Industry and Commerce, suggested manufacturers pay more attention to used cars sales. "Trade-ins could not only open up a new profit area, but also enhance their new cars sales."

He said China's used car sales rules had no restrictions on 4S dealers selling second-hand cars, and they should include the used car trade-in in their main business scope.

However the sector still faced problems, including dealer reliability, asymmetric information, lack of industrial standards, and contract problems.

Li said the industry and commerce administrative system had begun on monitoring dealers' credit worthiness. They would publicize the credit information, and restrict dealers business scope if they were found to have credit problems.