The used car market refers to buying and selling of pre-owned or previously owned vehicles. Used vehicles are generally cheaper than new vehicles and provide buyers with an affordable option of vehicle ownership. Factors such as rising costs of new vehicles, increasing average age of vehicles and availability of loan finance for used cars have supported the growth of used car segment.
Used Car Market is expected to be valued at US$ 1.78 Trillion in 2024 and is projected to reach US$ 2.73 Trillion by 2031, growing at a compound annual growth rate (CAGR) of 6.3% by 2031.
Key Takeaways
Key players operating in the used car market include CarMax, AutoNation, Penske Automotive Group, Group 1 Automotive, Sonic Automotive among others. The used car market is dominated by franchised new car dealerships and independent used car dealers.
Growing economic prosperity in developing countries is fueling automobile ownership. Rising disposable income levels are enabling more individuals to purchase used vehicles. This growing demand from developing markets will drive Used Car Market Demand.
Technological advancements are enabling convenient car buying experiences. Features such as online inventory listings, vehicle history reports and financing options are enhancing transparency and improving used car transactions. Online used car sales platforms are gaining traction.
Market Trends
The rising popularity of subscription-based used car ownership models where consumers pay a monthly fee to use a vehicle is a growing trend in the industry. This provides the flexibility of short-term usage without long-term ownership commitments.
To attract millennial buyers, used car dealers are focusing on enhanced digitalization of sales processes and service offerings. Virtual/online vehicle showrooms, digital inventory catalogues and end-to-end online purchase journeys are being implemented.
Market Opportunities
There is significant opportunity to increase used car sales in rural and smaller town markets in developing countries through expansion of online purchase platforms and reliable doorstep delivery options.
Asset-light franchising models where independent dealers leverage recognized brand names and dealer network support without substantial capital investment represent an avenue for future growth.
Impact of COVID-19 on Used Car Market Growth
The COVID-19 pandemic has greatly impacted the used car market. During the pre-COVID times, the used car market was growing at a healthy pace owing to rising disposable incomes and preference for personal mobility solutions. However, the pandemic slowed down economic activities and restricted people's movement via lockdowns globally. This significantly reduced the demand for used cars in 2020.
With job losses and pay cuts, people postponed their used car purchase plans due to financial constraints. Supply was also restricted as auction houses and dealerships remained closed during the lockdowns. This created a large inventory pile up with dealerships. However, with markets reopening and lockdowns easing, the demand has slowly started reviving in 2021. More people are now preferring personal modes of transport like used cars over public transport due to safety concerns.
The used car demand is expected to grow further in the upcoming years on the back of low interest rates on auto loans and availability of affordable finance options. The long term impact of the pandemic is that more people will shift to personal vehicle ownership instead of public transport and shared mobility solutions. Overall, with economic activities restoring and vaccination drives ongoing, the used car market is set to make a strong recovery and surpass pre-COVID sales levels in the forecast period.
Geographical Regions with Highest Used Car Value Concentration
The United States represents the largest used car market in terms of total value, accounting for over 30% of the global used car sales revenue. This is attributed to rising affordability along with availability of a wide range of used car options at competitive prices. Other major car markets like China and Western European countries including Germany, UK and France also contribute significantly to the global used car revenue pool. The high demand, large fleet size and presence of major auto hubs make these regions concentrate a major share of the total used car market worth.
Fastest Growing Regional Market
The used car market in Asia Pacific region outside countries like Japan and South Korea is expected to grow the fastest during the forecast period. Countries like India and Indonesia are witnessing rising aspirations among the expanding middle class for car ownership. As new cars remain unaffordable for majority, the demand for budget used cars is surging rapidly. The presence of large youth population also promotes individual mobility needs. With improving economic conditions and stable growth outlook, the APAC region will drive the global used car sales at a higher pace compared to mature markets.
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About Author:
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc. (https://www.linkedin.com/in/money-singh-590844163)
