Many who have benefited most from China’s economic boom over the past decade have not been shy about flaunting their wealth — providing a boon in sales for luxury goods makers and high-end automakers such as Ferrari and Maserati. Times are changing though and amid the recent economic slowdown more and more ordinary Chinese are turning to the second-hand car market to meet their driving needs. Newly-married Ma Pengxiao is 25 years old, lives in Weinan, a small city in China’s northwestern province of Shaanxi, and is now a member of a growing band of Chinese who have just bought their first ever second-hand car. Ma used his own savings to pay a 13,000 yuan (US$1,945) deposit last August for a 2-year-old Ford Focus and has signed a loan agreement to pay off the remaining cost in monthly instalments. “My parents already spent a lot of money decorating my new house,” said Ma. “I couldn’t ask them to buy me a car.” The story sounds fairly typical so far but what makes Ma’s purchase different is that he never saw the physical car before buying it. Ma made the purchase via a mobile app called Uxin, a Nasdaq-listed second-hand car online marketplace that uses a virtual reality-based feature to generate a high-definition 360-degree panoramic image of a vehicle, allowing customers to see inside and out and zoom in. Electric car maker’s CEO talks China, Tesla and ping pong In 2018, online used vehicle sales in China were estimated at about 3.2 million units, according to research firm Analysys, which is roughly 23 per cent of the total used car market. Uxin’s competitors in the domestic market include Beijing-based Guazi and Taoche, which also use sophisticated apps with high-definition photos to sell used cars. The car was delivered to him around ten days after purchase and Ma was not disappointed, saying that the condition of the car — including some small scratches — had been accurately represented by the VR image. “I can't say I’m 100 per cent satisfied but this is the best car I can afford at my age,” said Ma. Ma’s purchase reflects the drastic change that has taken place over the past few years in the attitude of young Chinese people towards buying used cars. “Around five years ago, some young people would tell me purchasing a second-hand car was an embarrassing thing to do,” said Uxin founder and chief executive Dai Kun in a recent interview in Beijing. That has now changed and as of 2018, around 33 per cent of car buyers on Uxin were under 29 years’ old, according to a report by the Uxin Research Institute. This younger demographic is driving growth in the online second-hand car market in China. Taking Uxin as an example, between 2017 and 2018 people under 29 years’ old contributed 18 per cent more to sales, more than offsetting declines for some older age groups. The used car market as a whole, both online and offline, grew by 11.5 per cent year-on-year to 13.8 million units in 2018, according to the China Automobile Dealers Association (CADA). Although domestic second-hand car prices rose on an overall basis, this was due to higher quality models becoming available for sale rather than a supply shortage. Chinese electric carmaker Nio scraps Shanghai factory after losses double At the same time, the number of new cars sold in the country slid by 3.5 per cent to 27.8 million amid a slowing of the wider economy. China’s GDP grew at 6.6 per cent in 2018, the slowest pace since 1990, according to official data. “Although the second-hand market is sensitive to the macro-economy, it is more dependent on used car inventory,” said Luo Lei, vice president of CADA. “Plus, slowing growth in the economy tends to tilt people who originally wanted to buy a new car into the second-hand car market.” However, China’s second-hand car market is still in its infancy at this stage. In mature second-hand markets, more than 95 per cent of young people’s first cars are used ones, said Uxin’s Dai. Compared with most developed markets, which have been using cars for almost a century, China’s mass car market only got off the ground in the past few decades — but it has grown rapidly. In 2009, Chinese consumers bought more cars than any other country and became the world’s biggest automobile market. Last year, China bought 60 per cent more new cars than the US and 70 per cent more than the EU. Given that the supply of used cars is a function of how many new cars have been sold in recent years, the price of used cars will only go down when a big enough pool has been created. “As supply becomes more abundant, the price of used cars goes down and people see the cost benefits,” said Dai. Dai is a sea turtle — a Chinese term for those who studied overseas but then returned home. While he was a student in the UK, Dai saw that many students bought second-hand cars and this inspired him to start a similar business in China. Dai says he has never bought a new car himself, but has changed his vehicle almost every year. Tesla helps Shanghai record increase in foreign investment for 2018 “After you’ve had the cost benefit of buying a second-hand car, you cannot stop,” says Dai. In the US, annual used car sales have been about 10 million units higher than new car sales for several years now — according to COX Automotive. “China’s second-hand car market may still need 20 more years before it matures,” said CADA’s Luo.“It’s also culturally difficult for Chinese to buy more used cars than new cars because Chinese consumers still value ownership a lot.” Moreover, the Chinese authorities still do not treat cars as goods, meaning transfers of ownership are time-consuming and bureaucratic, says Tian Tian, a deputy director at CADA. “Treating cars as goods is essential to speed up the circulation of used cars,” said Tian.