Owners of Nio (NYSE: NIO) vehicles can now sell their cars back to the company, while consumers can buy the pre-owned EVs under a service called Nio Certified, the firm said in a press release on Sunday. Nio further announced that it delivered 43,728 vehicles in 2020, more than doubling the number from the previous year. In the final quarter alone, it sold 17,353 cars.
As part of the new service, the EV maker provides vehicle evaluation and quotation to sellers, refurbishes the second-hand vehicles, and updates software and hardware before dispatching them to the new buyers. The firm said this “closes the service loop throughout the life cycle of Nio cars.”
While there are mature third-party marketplaces for conventional gasoline-fired autos in China, there have not been such a market for electric vehicles, which aren’t being sold for very long. Nio said it plans to invest RMB 3 billion (USD 463 million) into the service.
It might be money well spent. “The pre-owned vehicle business can be of high margin, serving as a new growth engine for Nio,” said Zhang Xiang, an auto analyst with a Ministry of Industry-affiliated think tank focused on new energy and connected vehicles.
Competitor WM Motor told KrASIA in August 2019 that it was planning to launch a second-hand car trading platform that would offer clients a channel to offload their vehicles when they are looking to purchase new ones. The company, which started to sell vehicles in late 2019, didn’t immediately respond to inquiries on whether the platform is already up and running. Tesla, which sold its Model S for the first time in 2012, runs a used-car marketplace on its own.
Stepping up client retention
Nio on Sunday also announced that it will offer repurchase benefits to retain clients. These include a 40% discount for battery upgrades, retention of the ES8 Founders Edition user status, and rebates for its Nio Pilot and autonomous driving packages.
It comes as rival Tesla kicked off sales of its Shanghai-made Model Y on Friday, at a price starting from RMB 339,900 (USD 52,402), lower than expected and undercutting local competitors. The new model received a warm response from Chinese buyers, according to South China Morning Post, which cited Chinese media saying that some buyers of Nio, Xpeng, and Li Auto reneged on their contracts, looking to switch to the Model Y instead.