China’s Impact on New-Vehicle Market Shakes Pre-Owned Segment

Mexico has always had a variety of vehicle brands,  giving the Mexican consumer broad options regarding their needs in different segments. Purchasing decisions in volume segments have mostly been price-driven and based on abrand’s reliability. In the last few years, Mexico’s new vehicle market has become very competitive due to the entrance of several Chinese brands into our country and their outrageous marketing strategy and pricing that are convincing customers to try their vehicles. There are still several reservations and doubts in the market about product quality, durability and brand’s confidence. Technology, innovation, and design, accompanied by the already mentioned competitive pricing, are some of the factors that are making Mexican consumers consider buying these newly arrived Chinese brands. 

Effective marketing and positive user experiences will be crucial to define how quickly these new brands instill confidence and position themselves as top of mind for Mexican consumers. Also, after-sales service and availability of spare parts will impact consumer trust and acceptance.

As an expected result, more options will be available for Mexican consumers, where brands’ new vehicle market share will be affected. This fact will make traditional manufacturers  implement several strategies to regain their position, and one of them will surely be to lower prices against their new segment competitors. 

The pre-owned market has been stable throughout the years. Value guides for used cars have been precise for years. There have been only two times when they have not been useful: when Kavak arrived in the market and the guides overvalued the used vehicles, and during the COVID pandemic when there were fewer new vehicles than the market requirement due to the scarcity chips, which resulted in the sale price of pre-owned vehicles increasing so much they were sometimes valued higher than when they were bought new. Today, the entrance of these new Chinese automobile brands into the Mexican market will again have several impacts on the pre-owned vehicle industry in Mexico because of the changes being observed in the new vehicle market.

As a result, we can forecast some potential scenarios and trends that we can expect will shape the future of pre-owned vehicles in Mexico. The influx of affordable new Chinese vehicles is driving down prices of traditional brands’ vehicles in the market due to increased competition, and lower prices for new vehicles will exert downward pressure on the prices of pre-owned vehicles, as buyers might prefer new cars if the price difference is minimal. Consumers might be more willing to trade in their older vehicles for new, affordable Chinese models, or for the repriced models of traditional brands,  affecting the same models in the pre-owned segment, leading to a more dynamic pre-owned industry.

With more brands and models available, the market for pre-owned vehicles might become more segmented, with a wider range of attractive prices and vehicle types. There might be a rise in niche markets for specific types of vehicles, such as luxury pre-owned cars, compact city cars, or older classic models. Increased competition might push traditional manufacturers to improve the quality and value proposition of their vehicles, both new and pre-owned. As time goes by, new (mostly Chinese) electric vehicles also will be available for consumers that will broaden the already existing options, giving  lower-income families the opportunity to own these new-technology vehicles.

This impact has already been seen in other markets where Chinese vehicles have arrived earlier. Today, Chinese vehicles are widely accepted in many African countries due to their affordability and adaptability to diverse terrains. The pre-owned market for these vehicles is also growing, supported by a robust network of dealerships and spare parts availability. Like Africa, Chinese vehicles have found a favorable market in various South American countries. Affordability and the availability of after-sales service are also key factors driving this growth. In Europe, Chinese brands have made significant inroads, particularly in the electric vehicle market. Consumers are gradually warming up to Chinese vehicles due to their affordability and technological advancements.

Taking into consideration the world’s previous experience regarding pre-owned market development before and after the arrival of Chinese brands into their various cultures, we can predict how the used-car market will behave in the near future in our country.

We may infer that the future of Chinese pre-owned vehicles in Mexico looks promising, driven by affordability and increasing brand acceptance; however, regulatory conditions, economic factors, and consumer perception will significantly influence this trajectory. Lessons from other markets show that while initial resistance is common, consistent quality improvements and competitive pricing help Chinese vehicles gain acceptance over time. As Mexican consumers seek cost-effective alternatives, cheaper traditional brands and Chinese pre-owned vehicles could see substantial growth, provided that after-sales services and spare parts availability are adequately addressed.