Aug 9, 2021|
JD Auction to Open Bidding on Gas Station in Shanxi Province at RMB 27 Million Yuan
by Kelly Dawson
JD Auction has announced today that it will auction off a gas station in Yunchen City, Shanxi province on August 13—and the bidding price will start at RMB 27 million yuan, which has already drawn 1,500 onlookers, with some already signed up to participate.
The announcement comes only one month after JD Auction successfully auctioned a gas station in Shijiazhuang at a price of RMB 2,351,500 yuan.
Some may ask: Why RMB 27 million yuan? The answer is that in China, gas stations are good business. Statistics show that in the ten years from 2010 to 2020, the number of motor vehicles increased from 90.86 million to 372 million, with the total mileage of highways nationwide increasing from 4 million kilometers to nearly 5.2 million kilometers. Additionally, the total number of gas stations has reached 119,000, with about 50% privately owned.
Beyond the investment value, the effort, cost and time saved by buying such a gas station via auction has also boosted its value. For example, in order to open a gas station, one must apply to the local bureau of commerce for an “Approval Certificate for Refined Oil Retail Operations”—of which there are a limited number in any given city. Generally, ownership is transferred from person to person, as the opportunity to receive a new approval certificate is rare. Additionally, the right to use land for a gas station is very tightly restricted, with the necessary land requirement totaling an average area of more than 5 acres.
In the rare case when someone is able to obtain the necessary land usage rights and certificate of approval, the cost of building a gas station is 1-2 million yuan at minimum; plus the costs of a wide range of hardware including oil storage tanks, fuel dispensers, and more.
JD Auction’s listed gas station offering will include the right to operate refined oil, land usage rights, and a complete set of facilities including above-ground buildings, underground oil storage tanks, and oil pipelines.
Considering that the average urban gas station in China sells about 5 to 6 tons of gasoline per day and the net profit per ton of gasoline is about RMB 1,000 yuan, the average annual profit is about 1.5-2 million yuan (deducting labor, operation, transportation and storage costs). Those who have already signed up are surely factoring in these calculations.