How to break the "lemon effect" in the used car market

  On March 15, 2017, people visited the "Problem Auto Show" in Hangzhou. Information photo

  Xinhua News Agency (by Zhu Huiqing)

  According to the data released by china automobile dealers association, the total number of used cars traded in 2019 was 14,922,800, up 7.96% year-on-year. Despite the slowdown in growth due to the new car market, the momentum is still good. The insiders believe that compared with European and American auto markets, China’s used car market has great growth potential, but it is imperative to break the shackles of the "lemon effect", standardize the industry order, enhance market transparency, and form a virtuous circle, so as to truly activate its potential.

  Low industry integrity

  Cause consumers to resist inertia

  "Lemon effect" refers to the fact that under the condition of asymmetric information, inferior products will gradually replace good products, resulting in the market being flooded with inferior products. At present, the second-hand car market presents a prominent "lemon effect" feature. Consumers are not surprised by data fraud and shoddy flooding. Some second-hand car dealers are not ashamed, but instead "work hard" on fraud.

  Ms. Xu, a citizen of Qingdao, bought a car from a used car dealer the year before last. "The appearance is brand-new, and the salesperson ‘ Guaranteed ticket ’ Say the car is fine. " When she paid the vehicle insurance last year, she was surprised to find that the insurance cost rose sharply.

  Upon inquiry, it was found that the car had caused a major traffic accident and caused death, but neither the second-hand car dealership nor the sales staff told it truthfully. The original salesperson said on the phone that he had resigned and was unwilling to coordinate the handling. When she found the car dealership again, she found that people had already gone to the building.

  Coincidentally, Ms. Ma from Hebei bought a self-owned brand car. After driving for half a year, she found that there was actually water in the gearbox oil, and she suspected that she had bought a soaking car. Tested by the manufacturer, it is also confirmed that it is indeed a soaking car.

  According to the frame number of Ms. Ma’s car, the manufacturer found that a car sales company in Foshan had issued a statement. On June 8, 2018, affected by typhoon "Ai Yunni", 101 cars of the company were flooded, and the soaking cars were sold by the auction company. The disputes caused by these cars and all the consequences caused by them were borne by the auction company. Undoubtedly, some of these soaking cars have been repackaged and flowed into the used car market.

  "It doesn’t look special, and some of them are particularly new, but there is a big problem with the water car." A second-hand car dealer in Tianjin revealed that the soaking car would cause serious damage to the car engine and some internal electronic equipment. Even after many soaking cars are repaired, they will have faults such as short circuit and poor contact after a long time, and it is not easy to find out the cause of the fault, which has great security risks.

  The experience of two consumers is very representative in the dispute of buying a second-hand car. The reporter visited a number of second-hand car dealers and found that second-hand cars, such as accident cars and soaking cars, which have low consumer recognition and still have hidden dangers on the road after repair, are still rarely cared for even if they are sold below the market price, so bad businesses will take concealment or even deception to cover up the problem.

  In order to sell at a high price, used cars that have no problems are usually treated with tricks such as adjusting the watch and modifying the frame number, which is almost an open secret of the industry.

  The data of Beijing No.2 Intermediate People’s Court further confirmed the market chaos. From January 2015 to March 2018, the hospital concluded 25 cases of consumer rights protection caused by the purchase of used cars. Consumer litigation requests focus on the existence of fraud or breach of contract by car dealers, demanding cancellation or termination of contracts, etc.

  "The industry bottom line has been trampled on again and again." Liu Xin, a second-hand car practitioner in Tianjin, bluntly said that the second-hand car market originally relied on the trust relationship, but this relationship has long been broken. Jia Xinguang, executive director of china automobile dealers association, believes that the low integrity of the industry as a whole has triggered the inertia of consumers’ resistance. In the long run, it will form a vicious circle of embarrassment that it is difficult to buy a used car, sell a car and transform and upgrade the industry.

  "Black car dealers" are rampant

  Disrupt the order of the used car market

  In the mixed used car market, there are always "black car dealers". The "black car dealers" not only seek benefits by fraud, but even develop to buy and sell by violent means such as threats and intimidation, involving black and evil, seriously damaging the rights and interests of consumers and disrupting the order and trading environment of the used car market.

  Since last year, many cases related to used car business have been investigated nationwide. In these cases, in addition to the characteristics of long duration, large number of victims, and outstanding violence, there are several types of escalation that deserve vigilance:

  — — Under the guise of second-hand car trading, set up many obstacles and commit fraud. In June last year, the defendants Wang Moumou and Jin Moumou, who were prosecuted by the People’s Procuratorate of Jiangbei District, Ningbo City, were suspected of teaching criminal methods, fraud and forced trading in Jiangbei Court. According to the accusation of the public prosecution agency, since July 2016, this evil criminal group, relying on Ningbo Yinduo Second-hand Car Brokerage Co., Ltd., has published fictitious low-priced and high-quality car source information on the Internet to attract victims from all over the country to buy cars, and then deceived the victims to buy other high-priced "second-hand cars" on the grounds that the car has been sold and soaked in water. After the victims signed the contract and paid the deposit or handling fee, they charged the victims high fees or artificially created obstacles to pick up the car, thus illegally occupying the victim’s car deposit. In such cases, the second-hand car is even just a cover.

  — — Obtaining and selling illegal vehicles by illegal means, not only consumers are cheated, but also other parties involved suffer greatly. Xingqing district Public Security Bureau of Yinchuan City recently held a press conference to announce that it had traveled to six provinces and eight places for five months, found more than 80 victims, and successfully destroyed a 15-member evil criminal group headed by Liu Moumou, the boss behind Ningxia Aerospace Horse Automobile Trading Co., Ltd. The gang has been entrenched in the second-hand car market in Yinchuan for a long time, using illegal detention, extortion, fraud and other illegal means to trade second-hand cars for illegal profits.

  In terms of specific methods, the company illegally recovered the overdue vehicles of the loan company, seized the vehicles by the court, and sold such vehicles to customers. The customers bought the vehicles without knowing it, and then the vehicles were taken back by the loan company, losing all their money. To make matters worse, when the gang members were collecting and selling used cars, they used illegal detention, extortion and other illegal means to threaten and intimidate the car collectors and prevent them from collecting cars, which also caused losses to the loan companies.

  Wang Xiaoyu, vice president of Cheduoduo Group, said that the second-hand car market has been chaotic for a long time. Because most traditional second-hand car dealers started from soliciting customers on the street to earn the price difference, and the entry threshold was low, a large number of idle people entered, and in order to make quick money, illegal business, unfair competition and "black car dealers" were bred.

  At present, the illegal acts of "black car dealers" are rarely exposed. The reason is that "black car dealers" are mostly scattered individual operators or small businesses, lacking business qualifications, and the amount of fraud of buyers and sellers is low or it is difficult to prove, so that the police or industrial and commercial departments are difficult to accept. Buyers have no choice but to complain about "black car dealers" to the courts, consumers’ associations and other departments, but most users can’t afford the time cost and prosecution fees because of the weak situation, so they can only give up their rights protection. Therefore, "black car dealers" have no fear, and have become stubborn "psoriasis" over time, which has seriously affected the development of the used car industry.

  Establish a credit system

  It is urgent to improve the trading system.

  In 2019, the transaction amount of used cars in China was 935.686 billion yuan, a cumulative year-on-year increase of 8.76%, only one step away from one trillion yuan. For such a mass market, it is extremely urgent to establish and improve the second-hand car trading system and truly create a market environment with standardized management and efficient operation.

  According to the statistics of China Automotive Research Data Center, in 2018, there were 76.09 million vehicles in China at the peak of trading (5 to 9 years old). Once this potential breaks out, it will not only inject a shot in the arm into the current depressed automobile market, but also be expected to cultivate and grow into a stable economic growth point.

  To control the current chaos in the second-hand car trading market, it is necessary to improve the second-hand car trading system, strengthen the monitoring of the quality of second-hand cars, and disclose relevant information to consumers to avoid information asymmetry between consumers and car dealers; It is also necessary to strengthen the supervision of second-hand car enterprises, urge enterprises to fulfill their information disclosure obligations to consumers, fully respect consumers’ right to know, choose, fair trade and security, and safeguard consumers’ rights and interests.

  It is the voice of many people in the industry to explore and improve the soft environment of second-hand car market transactions and establish a unified national second-hand car quality traceability system. Yang Xiaojun, vice president and secretary general of Beijing Consumers Association, pointed out that there is a common and serious violation of consumers’ rights and interests in the second-hand car trading market in China, and the main reason lies in the opaque information of car condition. In the course of the reporter’s investigation, the disadvantages of difficult inquiry and verification of the real information of used cars have also been repeatedly "spit" by consumers.

  Wang Xiaoyu also said that except for some brand cars, maintenance records can be found in 4S shops, most repair shops do not keep electronic maintenance records, insurance companies do not disclose vehicle accident information, and traffic control departments do not provide overall vehicle information inquiry, so some car dealers dare to cheat recklessly. Facing the huge number of used cars, it is a feasible idea to establish an official and public comprehensive information inquiry system for used cars and an exclusive "electronic file" for each car. At the same time, it is necessary to promote the industry to expand its profit model and standardize the pricing of used cars by technical means. Due to the lack of feasible standards, the market pricing of used cars has always been more casual, and "one car, one condition and one price" is the norm. Wang Xiaoyu pointed out that there are "two over-dependence" in the used car industry: First, over-reliance on "old master" pricing, but the factors that really affect pricing include more than 2,000 dimensions such as vehicle information and usage characteristics, which are completely difficult to control by relying on experience; The other is a single transaction profit model that relies too much on earning the price difference. Car dealers are likely to hide the vehicle problems for the benefit, just to win high prices, which is not good for the healthy and long-term development of the used car industry. To this end, he suggested that the used car industry should realize reasonable pricing and establish a sound and diversified profit model, thus helping the used car trading industry to develop rapidly, healthily and sustainably.

  Taking honest management as the center can also encourage the industry to appropriately increase concentration. For a long time, small and medium-sized merchants in the used car market have occupied half of the country, "shooting a gun for a place" and not paying attention to honest management. Insiders suggest that the industry should be encouraged and supported to develop along three major trends: chaining, branding and e-commerce. From the experience of other industries, only by forming a certain business scale and volume can we pursue quality and reputation, establish word-of-mouth and brand effect, and it is easier to have the ability to coordinate information, and integrate advanced technologies such as big data and blockchain into the used car industry, realize online and offline integration, and resolve consumption pain points. (Reporter Mao Zhenhua)