China's new rules on used-vehicle sales to hit recovery rates

China's new guidance on used-vehicle sales, to take effect on 31 May 2016, will result in lower recovery rates on auto loans and drive new car sales down, according to Moody's Investors Service. As the supply of used vehicles increases, and prices drop, buyers will have a wider selection, possibly choosing used over new. This follows our note last month highlighting that vehicle sales in China are predicted to be cut by half over the next five years due to its slowing economy and changing consumer attitudes, according to a report by McKinsey, while used car sales are set to explode over the next decade.

Haze is seen in the horizon as traffic builds up on a main road in Beijing, China. Photo; EPA, Rolex Dela Pena