Premium car brands eye China's secondhand market

By Edward Taylor and Jan Schwartz

BEIJING (Reuters) - Strong demand for new automobiles in China has laid the foundations for the next leg of business for carmakers BMW , Audi and Mercedes-Benz: the second-hand premium car market.

China's auto market is the world's biggest and is set to grow between 8 percent and 10 percent this year, fuelled by increasingly affluent buyers, who use them for the daily commute, with some opting for luxury brands as a status symbol.

"We are ramping up the second-hand sales business. We have 290 dealers who offer certified pre-owned Audis," Rupert Stadler, chief executive of Volkswagen's premium brand, Audi, said during the Auto China show in Beijing.

"Cars that would normally have been sold on within families are increasingly coming back to dealers, offering an opportunity for additional revenue from the after-sales business," Stadler said.

The amount of business clinched by some Chinese dealers points to substantial future growth, auto executives said.

"A top dealer in the United States sells 2,500 cars, in Germany between 600 and 800 cars," Stadler said. "In China, we have some dealers that sell between 1,500 and 3,000 cars."

Audi, which expects China to contribute 40 percent of its sales by 2020, plans to train 40,000 to 50,000 new sales staff a year by 2017 to meet growing demand for brand-new and used cars, he said.

Rival German carmaker 4:BMWG plans to train 25,000 people this year to work on dealerships in China, partly due to the rising potential of used cars.

"Used cars are still a relatively small part of the business," said BMW board member Ian Robertson. "In Europe, for every new car sold, a dealer will also sell an old one. Here, the ratio of new and used cars is that you only sell one used car for every 10 new cars."

Mercedes-Benz maker 4:DAIGn is also eyeing the second-hand car business in China, with plans to open 100 new dealerships this year and set up showrooms in 40 new cities.

"The secondhand car market is growing, and we are investing, together with our dealers," said Hubertus Troska, Daimler board member responsible for greater China.

In 2013, China's auto sales grew 13.9 percent to 21.98 million vehicles, with the luxury passenger segment outperforming the overall market, registering 20 percent growth.

Mercedes-Benz's sales in China, excluding Hong Kong, rose 11 percent to 228,000 in 2013 and it has plans to sell more than 300,000 cars a year by 2015.

(Editing by Lee Chyen Yee and Clarence Fernandez)