Cars
Commission sales gear up
By Shen Jingting (China Daily)
Updated: 2010-07-28 12:03
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Customers look at a secondhand BMW at a consignment store. [Zou Hong / China Daily] |
Beijingers find new way to sell and buy autos
Beijingers now have the option of selling their old cars or looking for used autos in consignment stores after some outlets started dealing in secondhand cars in a bid to tap into the city's huge market.
Unlike transactions at second-hand auto markets, where customers are paid as soon as they sell their cars to buyers at the markets, a consignment shop usually gives sellers their money only after their cars are sold.
"Our business is getting hot in the capital. Even during June and July, which are typically slack, we have been selling around 60 secondhand cars a month," said Zou Qiang, CEO of Beijing's first car consignment store - Joyje Secondhand Car Brokerage Co.
Zou owns a 12,000-sq-m exhibition hall in the Central Business District area where he displays around 140 cars. Brands include both high-end autos such as BMW and Mercedes-Benz as well as relatively low-end cars such as the BYD.
Car sellers put their vehicles on Zou's lot and wait for potential buyers. When buyers make up their minds to buy a vehicle, the company collects 2 percent of the selling price in commission and hands the rest on to the seller.
Prices on Zou's lot range from 10,000 to 2 million yuan. He insists they usually sell for around 10 percent less than the market price.
A 2007 BMW Z4, for example, is on sale for 468,000 yuan, 35 percent less than the 730,000 yuan it would sell for new.
"The price can be even lower, because we may help buyers to negotiate with the seller, until they hammer out a deal," Zou said.
He said cars do not hang around for long and usually sell within a month because of strong demand in the capital.
"In our store, the reasons why car owners want to sell their vehicles are varied. Some want to change cars. Some need to dispose of assets. Others are changing jobs and moving to other places."
However, while there are many reasons why people are selling, he said most buyers are looking for the same thing.
He said they are typically young, vigorous and passionate about driving cars.
Chen Ran (not her real name), is a 23-year-old recent university graduate who said she fell in love with a red Mazda 3 in a consignment store.
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"He didn't like the car and argued that it was only for girls, but I said to him, if you don't buy it for me, I will call my dad to finish the deal," Chen said.
She said she eventually got what she wanted - for 82,000 yuan.
Lee Yee, director of regional marketing at Amdocs, an international telecommunication company, said he plans to sell his BMW car through a consignment store.
"For foreigners like us, it's very complicated to go through all the procedures to sell your car at a market. Just drive your car to a consignment store and they will take care of the rest for you. It saves time," Lee told METRO.
"I want to change cars because I never drive the same car for more than three years. It's my habit."
Though the trade in secondhand cars through consignment stores is gradually becoming recognized by buyers, Luo Lei, deputy secretary-general of China Automobile Dealers Association, said its market share is still less than 5 percent.
"We see most people still making secondhand vehicle deals at car markets," Luo said. "Consignment car stores are only additional sales channels and I don't think the figure will change much in the next few years."
But he pointed out that a 5 percent market share can still give some entrepreneurs a good living.
"In 2009, around 450,000 second-hand cars were sold in Beijing. The number will increase this year. How much can you earn if you account for a 5 percent market share?"