Chinese automakers are rushing into the certified used-car business as new-car profits collapse, but the move is colliding with a market where used-car prices are falling faster than the brands can prop them up.
GAC Aion's premium Hyptec brand recently launched its own certified used-car program, "Hyptec Aion Yuexiang Used Cars," joining a list that already includes Tesla, Xpeng, Li Auto, Nio, Lexus, BMW, SAIC Volkswagen, FAW Toyota and GAC Trumpchi, according to a report from the Chinese outlet Huxiu.
The push comes as China's new-car market shrinks. In the first five months of this year, domestic new-car retail sales fell more than 20 percent year on year to 8.148 million units, while used-car transactions rose 2.3 percent to 8.095 million units, Huxiu reported. New-energy vehicles accounted for 47.5 percent of new-car sales in the period, and used new-energy vehicle transactions jumped 25.7 percent.
The financial pressure is acute. In the first half of 2026, average profit margins in China's vehicle manufacturing sector fell to 1.5 percent, the lowest in a decade, according to the report. That has pushed automakers across segments - luxury, joint-venture, domestic, startup and commercial - to look for new revenue in used cars.
Old business, new players
Traditional automakers have been in the certified used-car game for decades. BMW launched its first certified used-car program globally in 2003, and Audi and Mercedes-Benz followed in China in the mid-2000s. By 2018, Audi's certified used-car network covered 207 cities with 471 dealers. BMW's certified used-car sales in the first four months of 2021 nearly doubled year on year.
But non-luxury brands have struggled. SAIC Volkswagen has invested more than 2 billion yuan (about $282 million) in certified used cars since 2022, yet its market share in the segment stands at just 3.1 percent, Huxiu reported. GAC Trumpchi's budgeted used-car trade-in subsidies were often diverted by dealers to new-car promotions instead.
The core problem is a conflict between automakers and dealers. Automakers want to protect brand resale values and build long-term systems; dealers need cash flow and current profits. Certified used cars carry high per-unit costs and turn over slowly, while dealers have historically preferred to wholesale trade-in vehicles quickly to independent used-car dealers for fast cash.
New-energy automakers, most of which sell through direct or agency models, may sidestep some of that channel conflict. By 2025, China had 26,260 independent sales channels for new-energy vehicles, up about 21 percent year on year, with direct sales models accounting for more than half, according to the report.
Dealers are warming to the business as new-car profits evaporate. In the first half of 2025, the number of registered used-car dealership companies rose 73.2 percent, and 96 of the top 100 dealer groups were used-car operators. Used-car revenue among dealer groups' main businesses rose 124 percent compared with 2024, Huxiu reported.
Heavy assets, falling prices
Yet the used-car business remains asset-heavy. Staff, showrooms, logistics, warehousing and after-sales infrastructure all require significant investment. Nio, when it entered the used-car market in 2021, planned to spend up to 3 billion yuan (about $423 million) over five years.
The original goal of these programs was to support resale values, especially for electric vehicles. A 2021 report showed three-year-old BEV (battery-electric) used cars retained only 39.6 percent of their original value, compared with about 60 percent for comparable gasoline cars. Plug-in hybrids retained 53.1 percent.
But new-car price cuts are undermining that mission. In 2025, the average used-car transaction price fell from 66,700 yuan (about $9,400) in March to 61,600 yuan in September. In the first five months of 2026, 82 new models saw price cuts averaging 14.9 percent, and the average used-car price in May was 65,600 yuan, down 2,300 yuan from April. Cars under 30,000 yuan accounted for 28.6 percent of transactions.
The profit squeeze is brutal. A used car sold for 200,000 yuan (about $28,200) might yield 8,000 yuan in gross profit, but after interest, reconditioning, labor, rent, marketing, taxes and after-sales costs, net profit could be under 600 yuan, according to Huxiu's calculations. Average profit margins in the used-car trade have fallen from 20-30 percent around 2015 to about 4 percent today.
Independent dealers are feeling the pain. One Guangzhou used-car dealer told Yicai that his goal for 2026 was simply "to stay alive," and some dealers have reportedly turned to driving ride-hailing cars or running barbecue stalls. Even large dealer groups are struggling: Yongda Auto's used-car volume fell 13.6 percent in the first half of 2025, while Zhongsheng's per-vehicle used-car revenue dropped 33.4 percent.
After more than two decades of effort and billions in investment, traditional automakers have failed to stop the erosion of resale values. By the first half of 2026, the average three-year resale value for gasoline cars had fallen below 50 percent, to 46.07 percent. The used-car chessboard, Huxiu concludes, will not be settled by simply switching business models.
