Used Car Dependability on the Decline in China

The reliability of used cars in China is regressing, according to a J.D. Power study released Thursday. The finding underscores the challenges for lenders seeking to increase their penetration into the second-hand market.

J.D. Power’s 2018 China Vehicle Dependability Study tracks the number of problems experienced per 100 vehicles (PP100) on 30- to 48-month-old vehicles and noted a “minor regression” over the last three years.

The country’s industry-wide vehicle dependability score dropped to 145 PP100 in 2018 compared with 141 PP100 in 2016. Between 2010 and 2015 the industry dramatically improved dependability scores but continued improvement has proven harder.

For example, the gap between domestic and international brands remains flat year over year at 30 PP100 (167 PP100 domestic and 137 PP100 international).

“The deceleration of improvement indicates that the automotive industry has been entering into a critical time frame when even tiny progress requires great effort,” Jeff Cai, general manager of auto product at J.D. Power China, said in a press release. “Frequently reported problems are the hardest to resolve for multiple reasons; however, given that what each customer experiences with vehicle dependability will very likely affect future repurchase intentions, automakers and dealers have to work together to figure out these recurring problems as soon as possible.”

Many executives at the Auto Finance Summit Asia noted the difficulties in entering the used-car financing space in China. One of the significant challenges is finding accurate vehicle valuations for pricing and transparent data to convince consumers they aren’t buying a lemon.

David Gaynoe, vice president of global sales and marketing for Cox Automotive’s RMS Automotive, noted that BitAuto is an excellent resource for online classifieds like an AutoTrader for China.

“The fact is that when you sell as many new cars as you have in China in the past five to seven years, it’s only going to lead to a massive used car marketplace,” Gaynoe said during a presentation at the conference. “We’re excited to get in early on that and shape what it’s going to look like.”