Recently, the China Automobile Circulation Association released the “February 2025 China Automobile Depreciation Rate Report,” which reveals the current state of vehicle depreciation rates in the market. The report indicates that mid-sized and large vehicles have shown impressive depreciation rates, while the used car market faces dual challenges from price wars in the new car segment and industry transformations.
According to Lu Guangzhi, Deputy Director of the Used Car Information Department at the China Automobile Circulation Association, the used car market will continue to be affected by ongoing price adjustments in the new car market this year. This has led to a decline in the average transaction price of used cars compared to the same period last year, with market prices still on a downward trend. The drop in new car prices has lowered the barrier to entry, significantly impacting the used car market and resulting in a noticeable decrease in consumer demand for used vehicles.
Among various categories of vehicles, MPVs, mid-sized cars, and mid-sized SUVs have the highest depreciation rates, recorded at 59%, 55.8%, and 55.4% respectively. In contrast, compact cars, small SUVs, and mid-sized SUVs have lower depreciation rates, all below 51%, with compact cars having the lowest rate at just 48.8%. This data highlights the clear advantage that mid-sized and large vehicles have in terms of depreciation.
It is noteworthy that the depreciation rates of luxury brands have generally seen a slight rebound, attributed to several price reductions by some luxury brands in recent years. This has resulted in the decline of used car prices being less steep than the reductions in manufacturer suggested retail prices. Specifically, Honda and Toyota have depreciation rates of 57.3% and 56.3%, with increases of 0.7% and 1.2% respectively, indicating the continued recognition of Japanese brands in the domestic market.
However, the overall depreciation rate of domestic brands has seen a decline, with the Wuling brand experiencing the most significant drop, falling from 51.4% in January to 46.1% in February. Additionally, the depreciation outlook for domestic electric vehicles remains challenging. The China Automobile Circulation Association analyzes that the decrease in depreciation rates for domestic brands is closely linked to their market performance in brand strength, product quality, and overall reliability, all of which indirectly reflect on depreciation.
In the realm of new energy vehicles, the depreciation rates for plug-in hybrid vehicles and pure electric vehicles stand at 47% and 45.2% respectively. The stability of the plug-in hybrid vehicle depreciation rate is primarily supported by high-end models from domestic brands, while pure electric vehicles face significant pressure on their depreciation rates.
