Sales of private cars took off in China about five years ago, spurred by a combination of government policies and rising income.
In 2004, 2.42 million cars were sold in China.
With five years of fast growth behind the car industry, "We expect there will be a first wave of used-vehicle buying starting next year," says Michael Gu, general manager of Comengine, a consulting firm based in Shanghai.
Regulations haven't kept pace with the growth of the new- or used-car market. Unauthorized new-car sellers are numerous; only 7 percent of the nearly 30,000 new-car dealers registered with the government are authorized by an auto manufacturer, according to media reports.
Second- and third-tier dealers buy product from authorized dealers. The used-car market is even murkier. Consumers complain about poor after-sales service.
"The main barrier to the development of the used-car market is the demand side," says Sun Jian, a Shanghai-based A.T. Kearney consultant. "People hesitate to buy a secondhand car because there is no regulation."
The used-car regulations could be delayed.
The government first must release regulations requiring all new-car dealers to be authorized by an auto manufacturer. They are expected around the time of the Shanghai auto show in mid-April.
But "there is a lot of resistance among second- and third-tier dealers," Gu says.
Manheim is willing to wait.
Says Green: "We have decided we have to look at the long term."
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