The volume of used car transactions has surpassed that of new cars for the first time, signaling the arrival of the era of used cars?

For a long time, we have been saying that China's automotive market is not yet mature, with a key reason being that the used car market is still in its early stages. However, recent news that used car transactions have finally matched new car sales for the first time raises the question: Is the era of used cars finally here?

1. Used car transactions first matched new car sales
According to Yicai's report, as competition in the automotive industry intensifies, the landscape of both the new car and used car markets is undergoing dramatic changes. At the recent 2026 China Used Car Conference, a set of data garnered significant market attention: the ratio of new car consumption to used car transactions in China reached 1:1 for the first time.

Data shows that in the first five months of this year, domestic new car retail sales reached 8.148 million units, a year-on-year decline of over 20%. Meanwhile, used car transactions demonstrated a counter-trend upward trend, with sales volume reaching 8.095 million units in the same period, marking a 2.3% year-on-year increase.

From the perspective of used car age, the largest proportion of transactions involves vehicles aged 3 to 6 years, accounting for 43.6%, a 2.3 percentage point decrease compared to the same period last year. Vehicles aged 3 years or less account for 30%, up 3.1 percentage points year-on-year. Models over 10 years old make up 10%, down 0.6 percentage points from the previous year.

It is noteworthy that new energy vehicles have performed exceptionally well in both the new and used car markets. From January to May this year, cumulative sales of new energy vehicles reached 5.802 million units, marking a 3.5% year-on-year increase, with new energy vehicle sales accounting for 47.5% of the total new car sales. During the same period, cumulative transactions of used new energy vehicles totaled 685,400 units, a 25.7% year-on-year growth.

II. The era of used cars has finally arrived?
For years, the most vivid impression China's auto market has given the outside world is "fond of novelty and disdain for the old." Looking back at decades of data, the contrast is striking: the new car market has been booming, growing year after year, even becoming the world's largest single market at one point. But what about the used car market? It's like an overlooked child, always languishing in the shadows. Yet recently, a highly significant phenomenon has emerged: used car transactions have finally matched new car sales for the first time. Is the golden age of used cars about to arrive?

First, policy breakthroughs have loosened restrictions on used car circulation. Why has the used car market struggled to thrive in the past? The core issue lies in the "transfer restrictions" that acted as a binding constraint. Severe local protectionism prevented quality used cars from being sold out of the region while restricting the entry of vehicles from outside, effectively fragmenting what should have been a nationwide market into isolated, stagnant pools. But things have changed now. Have you noticed that with the deepening of national-level "streamlining administration and delegating powers" reforms, particularly the implementation of convenient policies like "cross-province handling" and "one-document processing" for the used car industry, the "invisible wall" once blocking circulation has been dismantled.

This is not merely a matter of simplifying procedures; it represents a typical reduction in "institutional costs." In the past, when a car needed to be transferred from a first-tier city to a third- or fourth-tier city, the cumbersome processes and hidden thresholds involved in ownership transfers and license plate changes alone could strip away all transaction profits. Now then? The threshold for circulation was rapidly lowered, instantly boosting the allocation efficiency of factor markets. With the smooth flow of vehicle sources, once the national large-market structure takes shape, the vitality of this market is naturally unleashed. It's like dredging the main channel in a stagnant river—how can the current not surge? Thus, policy dividends are the primary driver behind this market rally. Without this foundational institutional relaxation, other market responses would be as illusory as castles in the air.

Secondly, the shift in consumer spending injects momentum into the used car market. In recent years, as the price wars in the new car market intensify, consumer psychological expectations have grown increasingly complex. A newly purchased car today may face an official price drop tomorrow, and this anxiety over rapid asset depreciation has driven some rational consumers to reassess the value of used cars. Meanwhile, the accelerated replacement cycle of new energy vehicles has led to a swift influx of near-new cars into the market, further boosting consumer acceptance.

The iteration speed of new energy vehicles is comparable to that of electronic products, with many owners opting for replacements after just two or three years of use. This results in a large influx of "near-new" cars with excellent condition and high configurations into the secondary market. These vehicles offer the experience of a new car while avoiding the depreciation pit of an 80% discount at purchase, making them highly attractive to young consumers seeking cost-effective options. Thus, the internal competition in the new car market has, in turn, become a catalyst for the used car market.

Thirdly, as the industry matures, it is also reshaping the market landscape. We have always said that in a mature automotive society, the sales of used cars are far greater than those of new cars. Developed economies such as the United States and Europe often have more second-hand car transactions than new cars. Why? Because the competitive logic of the automotive industry has changed. In the past, everyone was competing to see who could sell more new cars, which was an era of land grabbing. Now then? With China's car ownership reaching this level, the market has entered a deep cultivation area. Competition is no longer simply about new car sales, but a value chain competition throughout the entire lifecycle.

This is like real estate development. In the past, everyone only focused on building and selling houses, but now everyone has to manage property management and second-hand housing transactions. The activity of the second-hand car market actually prolongs the lifecycle of automotive products and enhances the value thickness of the entire industry chain. For car companies, if your car has a high resale value and fast turnover in the second-hand car market, this itself is the best endorsement for new cars.

So, the rise of the second-hand car market marks that China's automotive industry has finally emerged from the extensive stage and begun to truly respect market rules and focus on asset transfer efficiency. This is not only a quantitative leveling up, but also a qualitative leap.

Fourthly, the development of the second-hand car market is still on its way. Although second-hand cars have made good progress, there is still a certain gap compared to developed economies. The second-hand car market is only a starting point at present, and there is still a lot of room for growth in the future. Our current second-hand car trading volume is on par with that of new cars, which sounds exciting, but from a global perspective, the second-hand car trading volume in mature markets in Europe and America is usually much higher than that of new cars.

What does this mean? This indicates that there is still a lot of room for optimization in our automobile circulation system, that there is still room for improvement in consumer trust in second-hand cars, and that our supporting services such as finance, insurance, and testing are not yet perfect. The current 1:1 ratio is more like a milestone rather than an endpoint. In the future, with the continued increase in car ownership, more car owners entering the replacement cycle, and the improvement of industry standardization, the second-hand car market still has a long way to go.

Therefore, the first time that the trading volume of second-hand cars has caught up with that of new cars is a key milestone in the development of China's automobile market, marking the acceleration of the era of second-hand cars. But we cannot be blindly optimistic because the development of the second-hand car market still has a long way to go. In the era of second-hand cars, although the curtain has been drawn, the excitement is still ahead.