Would you buy a second-hand car from a pawnbroker?
- Source: Global Times
- [00:36 February 23 2010]
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Huaxiang second-hand auto trade market. Photo: jrj.com.cn
By Chen Dujuan
While we regularly hear of the number of new cars hitting Beijing's roads, there's less discussion of the second-hand auto market, which has also developed rapidly in recent years. However, the financial services aimed at second-hand auto merchants is far from caught up with the development of the auto market, so pawn shops featuring rapid financing and flexibility have taken the initiative to seize the market for future growth.
According to the Beijing Automobile Dealers Association, the sales volume of second-hand vehicles in Beijing in 2009 totaled 450,000. After November 2009, and especially as Spring Festival approaches, the traffic in the car market industry increases noticeably when people feel an urgent need to get a cheap car for the New Year. "Most of our capital is used for purchasing cars, because each day the consumers coming to buy cars is double the usual rate," said Cheng Jun, manager of Huilijingcheng Company, a second-hand auto dealer.
First pawn shop in second-hand car market
Bao Rui Tong Pawn Shop, the first corporate enterprise of its nature established in 1997, was the first to offer pawned second-hand vehicles in 2003 and also the first to open consultancy services at Huaxiang second-hand auto market at the South Fourth Ring Road in August 2009. Later it started an auto business in Yayuncun market and Zhonglian market at Sijiqing Bridge, Haidian district.
On January 26, the branch in Huaxiang market announced a series of preferential measures for small-and-medium-sized enterprises for all second-hand auto dealers in the aforementioned three markets. Guo Genshu, executive officer of the Auto Operation Center of Bao Rui Tong, pointed out that, "Through market surveys, it's found that 60 percent of dealers cannot satisfy development needs only with their own funds, and more than 40 percent of dealers have emergent demands for short-term funds at a high frequency."
New preferential policies
As a result, Bao Rui Tong recently launched three new terms of pawning, namely, 7 days, 15 days and 30 days. The person doing the pawning receives his money within one hour, and monthly interest was reduced from its original 4.7 percent to 2 percent as of January 2010.
Bao Rui Tong's auto business has increased by an average of more than 10 percent from the previous year. According to Jia Hongwei, manager of the Auto Operation Center of Bao Rui Tong, when they first entered Huaxiang market in mid-2009, only a few dealers came for consultancy, but business has grown rapidly since late 2009. Jia said the pawned goods are always put into the storehouse of the company, but Bao Rui Tong allows dealers to mortgage auto certificates while keeping the cars at their shops for viewing and selling.
Transactions
In November 2009, Bao Rui Tong handled a great deal of second-hand auto business, the biggest of which involved moving 26 autos for Wanyida Second-hand Auto Dealer, including Honda Accords and Audis, with a total market price of 3 million yuan. Later Bao Rui Tong completed the whole process of assessment, mortgage and loans in four hours and pawned these autos for 2.1 million yuan at a term of one month to gain capital to expand their auto supply. Mr. Wang, who refused to reveal his full name, said his company cooperated with Bao Rui Tong again in December, on a project involving more than 30 cars.
"We started the business with more than 100,000 yuan, but by November 2009 the scale of business in Huaxiang has exceeded 1 million," Guo said. Among the 500 dealers in Huaxiang market, 20 percent have sought more than 400 consultations with Bao Rui Tong. Around 70 percent of its auto pawn business is from the second-hand auto market.
