BEIJING -- Used-car auction company Manheim has formed a joint venture in China, but slow release of regulations and unreliable statistics are slowing its growth.
On April 20, the Shanghai Manheim Guopai Motor Vehicle Auction Co. was officially established. The Chinese partner is Shanghai International Commodity Auction Co. Manheim has majority ownership.
"We will do business to consumer auctions (first). As the market grows and gets sustainable volume, we may focus on business to business," says Neville Green, general manager of Manheim's China operations and chairman of the new joint venture.
Manheim Guopai initially will operate only in Shanghai, though it will expand to other cities in the future, Green says.
The focus on sales directly to consumers is a change for Manheim, based in Atlanta. In the United States, Manheim holds auctions for wholesale buyers and sellers. It also repairs, reconditions and stores used cars. The company, which has 135 auction sites worldwide, handled more than 10 million used vehicles in 2005, including 5 million sales.
Green hesitated to predict Manheim's anticipated business volume in China, however.
One problem is the slow release of new regulations. Last October, the government released regulations governing used-vehicle sales, with a six-month transition period. Regulations on auto leasing have still not been published, Green says.
Determining the actual size of the used-vehicle market in China is also difficult because statistics are not reliable, he says. For example, in 2005 official figures said there were between 2 and 2.8 million used-vehicle transactions, but that did not include all markets, Green says.
"I do think coming to terms with reliable publication of new- and used-car data is essential," Green says. "I'm not getting any kind of feeling there is a concerted effort to come out with it."
Still, China's used-vehicle market is potentially very large. Manheim forecasts China's used-vehicle market will be 6 million cars by 2010, including buses, trucks and cars.
In 2005, new-vehicle sales were 5.0 million. That is forecast to grow by up to 15 percent this year. Of that, 3.1 million were cars.
Private car sales only took off in China about five years ago, spurred by a combination of rising incomes and government policies. Chinese consumers tend to keep cars for five or six years.
"We expect sometime in 2007 the individual used-car market volume will become substantial," says Michael Gu, general manager of Comengine, a consultancy in Shanghai.
But Gu already is seeing a trend of people considering buying a used car as a second car for family use. They hesitate because of a dearth of reliable secondhand car dealers.
Says Gu: "I think a lot of people will consider buying from Manheim because it is a big reputable company."
You may e-mail Alysha Webb at [email protected]