China’s Used Car Sales Match New Car Sales for First Time in Five Months

In the first five months of this year, used car sales in China nearly matched new vehicle sales for the first time ever, driven by the expiration of purchase tax rebates that previously made new car purchases more costly.

According to data from the China Automobile Dealers Association presented at the 2026 China Used Car Conference, retail sales of new cars in China dropped over 20 percent to 8.15 million units compared to the same period last year. Meanwhile, sales of used vehicles increased by 2.3 percent, reaching 8.1 million units.

Vehicles aged three to six years represented 43.6 percent of total sales from January to May, up from 41.3 percent during the same period last year. Cars under three years accounted for 30 percent (up from 26.9 percent), while vehicles over ten years made up 10 percent, slightly down from 10.6 percent.

The reinstatement of purchase tax on new energy vehicles this year has driven up the costs of buying new cars, said Cui Dongshu, secretary-general of the China Passenger Car Association. Conversely, electric vehicles (EVs) that are used are exempt from the purchase tax, which enhances their price competitiveness and fuels growth in the used EV market, he added.

The EV segment has shown remarkable performance in both new and used car markets. In the first five months, new EV sales increased by 3.5 percent to 5.8 million units, while used EV transactions saw a significant jump of nearly 26 percent, reaching 685,400 units.

The development of China’s used vehicle market still faces hurdles. For example, falling prices for new cars impact the valuation and depreciation rates of second-hand cars. Additionally, the monthly penetration rate of EVs has exceeded 60 percent, decreasing market space for traditional fuel-powered cars and causing a sharp decline in their prices.

The resale value of electric vehicles in China declined to 45.2 percent in the first half of the year, down from 54.7 percent in 2023, according to a recent report by industry associations and data providers. Similarly, lease values for fuel-powered cars fell to 52.7 percent from 67.6 percent in 2022, indicating a deep restructuring of the used car pricing landscape.

The top three best-selling used compact cars from collaborations between Chinese and international automakers are the Volkswagen Lavida, Volkswagen Sagitar, and Toyota Corolla, none of which has reached a three-year resale value of 50 percent. For electric compact cars, the leading models by sales are the Volkswagen ID.3, BYD e2, and BYD Qin Plus, with the ID.3’s three-year resale value falling below 45 percent.