DSC Holdings Releases White Paper on China Used Car Market Trends
News related to:DSC Holdings · 4 min read
HANGZHOU, China, Nov. 02, 2026 /CourierPR/ -- DSC Holdings, the AI application infrastructure for China’s used car industry, has released its inaugural China Used Car Industry White Paper for the first half of 2026. The paper, leveraging the company’s flagship DaFengChe system, which holds over 90% market share in China’s used car dealer operating system market, provides a detailed analysis of the current state of the used car market in China.
According to the white paper, China’s used car transaction volume reached 9.71 million vehicles in the first half of 2026, marking a 1.5% year-over-year increase and equivalent to 98% of domestic new car sales, which fell 21.1% to 9.92 million. This used-to-new car ratio, which was roughly 0.74 for full-year 2025, reflects a decline in new car sales rather than a surge in used car demand. The annualized used car turnover rate, measured as annualized used car transactions as a percentage of the nation’s total vehicle population of 371 million, stood at 5.2%, compared to 8.1% in Japan, 8.5% in Europe, and 14.7% in the United States.
The white paper also notes that the used car market is being reshaped by intense new car price competition, particularly affecting the demand for near-new vehicles. The share of near-new vehicles in transactions fell from 28.2% in the second half of 2023 to 24.9% in the first half of 2026.
DSC's used car price index declined from a baseline of 100 in the first half of 2022 to 76.9 in the first half of 2026, a fall of 23.1%, roughly twice the 11.2% decline in DSC's new car price index over the same period. Brand premiums have compressed sharply, with the residual value gap between luxury and domestic brands narrowing from 8.7 to 3.9 percentage points, and the premium of non-luxury joint venture brands over domestic brands shrinking from 4.3 to 1.2 percentage points. Vehicle condition has become a more important pricing variable than brand, with three- to five-year-old vehicles in excellent condition retaining 12 to 13 percentage points more of their value than those in average condition.
Residual values of newer electric vehicles (NEVs) are improving, with the gap between one-year-old NEVs and comparable fuel vehicles narrowing from 5.8 to 2.5 percentage points. However, older NEV models still depreciate far more steeply, retaining only 11.6% of their value at eight years, compared to 27.9% for fuel vehicles.
The white paper also highlights that dealer margins are compressing, with the share of profitable dealers falling by 10 to 16 percentage points year over year across all size tiers. Among dealers selling fewer than 50 vehicles a year, only 28.7% were profitable, down from 40.7% a year earlier. Consolidation is under way, with dealers selling fewer than 50 vehicles a year falling from 70.3% of the dealer base in the first half of 2022 to 56.6%, while those selling more than 200 vehicles rose from 4.1% to 10.8%. Dealer performance now hinges less on brand than on smart procurement decisions, both which vehicles to buy and at what price, together with fast turnover and high capital efficiency, all of which require dealers to upgrade their operating methods.
NEVs accounted for 7.6% of used car transactions in the first half of 2026, up 2.4 percentage points year over year but still well below their 51.3% share of new car sales. With 48.97 million NEVs on the road, or 13.2% of the vehicle population, most of them less than five years old, a large wave of NEV supply is expected to enter the used car market over the next several years, shifting the used car mix away from joint venture fuel vehicles, which still account for 55.7% of transactions, toward domestic-brand NEVs.
Cross-city circulation continued to deepen, with the cross-city circulation rate rising from 35.3% in the first half of 2022 to 41.6% in the first half of 2026. Megacities Beijing and Shanghai saw outbound transfer rates of 68.6% and 71.2%, respectively.
DSC expects the market to remain in a relatively stable phase in the near term without significant movements in either direction. Supporting factors include shorter NEV replacement cycles, a growing pool of younger first-time buyers, with China's 533 million licensed drivers far exceeding its 371 million vehicles, and the gradual easing of new car price competition, which is expected to bring part of the diverted demand back to the used car market. Offsetting factors include scrappage-based trade-in subsidies that divert older vehicles from circulation. With brand premiums compressed, pricing is shifting from brand and model year toward the condition, specification, and battery health of each individual vehicle, and dynamic, data-driven pricing is becoming a basic requirement for dealers rather than a competitive advantage.