This study aims to analyze various facets of the global used vehicle market, offering insights to aid in understanding market growth over the forecast timeline.
Market Overview
The used vehicle market has steadily gained prominence since the 2008 recession and continues to grow at a rapid pace. Multiple factors contribute to this industry's ongoing success, including better financing options, favorable policies, increased industry player involvement, urbanization, and higher disposable incomes. North America is expected to remain a dominant force in this landscape; however, the Asia Pacific region is projected to register a significantly high CAGR over the forecast period. As the global automotive sector gravitates towards more environmentally friendly vehicles, this trend is expected to create opportunities for those unable to afford new vehicles, opting instead for economical used or pre-owned vehicles.
Key Findings
• The global used vehicle market was valued at over USD 1.5 trillion in 2021.
• The average age of a used vehicle in the US is 11.8 years.
• In 2020, 40.4 million used vehicles were sold in the US compared to 14.5 million new vehicles.
• The top-selling used car brands in the US are Toyota, Honda, and Ford.
• The Asia Pacific region is expected to account for a significant market share over the forecast period.
• The average mileage of used cars sold in the US is 68,000 miles.
Growth Drivers
Affordability and Need for Private Conveyance The International Organization of Motor Vehicle Manufacturers (OICA) states that the automotive industry contributes about 4% to the global GDP, with an estimated CAGR of 20.78% by 2028. This data highlights the increase in global car ownership, with a sizeable share accounted for through used car ownership, poised for further expansion by 2030. However, the launch of new entry-level cars boosts demand, directly affecting used vehicle sales. While the average ownership time of new cars has decreased significantly compared to the past decade, the used car segment presents numerous options for first-time buyers who find it safer to buy second-hand cars until they are proficient daily drivers.
Franchise Dealers Offering Better Financial Schemes Competitive pricing has been a significant advantage for companies operating in the used vehicle market. The market benefits from key industry participants amplifying their investments by setting up new dealership networks for used vehicles. Online sales of pre-owned cars remain a critical
growth factor. Research reveals that while financing options for new cars are abundant, they are relatively expensive for used vehicles, making it difficult to find adequate financing options, potentially hindering market growth. However, the increase in consumer spending on lifestyle choices and a flourishing import-export scenario is expected to benefit the used vehicle market significantly. Franchise dealer prevalence, due to better financial schemes, has created favorable conditions for used car sales. Several online used car selling platforms, such as Vroom and Fair, have partnered with OEMs to ensure the reliability of their certified used vehicle programs, proving advantageous for this market.
Compact Passenger Cars Segment Leading, SUVs Following Compact or entry-level cars are expected to account for the largest volume share in the used vehicle market, in line with growing consumer preferences for economic and compact passenger cars. From the supply-side perspective, high production rates and significant inventories have been a preference for most franchise owners, leading to better supply chain management of these cars. SUVs have also been on a profitable growth trajectory, offering spacious and compact attributes compared to premium vehicles. The distribution network and residual value for SUVs are relatively high, contributing to their rising demand.
Key Market Players Involved in Used Car Dealerships Automotive industry operators often keep new vehicles at the core of their business. Recently, even the biggest automakers have recognized the potential and market worth of used vehicles. Global auto giants are now actively involved in used vehicle dealerships due to the intense competition and shifting consumer behavior regarding car purchases. Several new entrants are adding to the fragmented nature of used vehicle market competition. While most participants tend to be unorganized local companies, strategic partnerships are likely in the future. New product segments are being launched by newly formed partners and established players. Premium car companies continue to leverage the market potential of their used cars. Luxury brands like Mercedes and Audi have their used car dealerships, generating substantial revenue. Used passenger cars enjoy a significant share in the global market, leading to several brands' networks specifically for used cars, such as Toyota's U Trust and Maruti Suzuki's True Value. Mainstream companies are also investing in strategic expansion through collaboration activities.
Growth Challenges
Adoption of Ride-Sharing Trend Ride-sharing, though economical for consumers, poses a concern for used car dealers and financiers. If ride-sharing dominates the private transportation market, fewer owners during a car's lifespan will result in lower transaction volumes for the used vehicle market. However, the COVID-19 pandemic has shifted attitudes towards private conveyance over public transport, increasing traction for used vehicles, especially in developing economies, due to their affordability. The
temporary negative impact of financial disparities on new vehicle sales will benefit the used vehicle market.
Regional Growth Opportunities
Used Car Market in Asia Pacific North America is expected to account for a significant share of the global used vehicle market over the forecast period due to the extensive presence of used vehicle dealers, favorable economic growth, available financing, and the popularity of SUVs and trucks. Additionally, the price of used cars in this region is relatively cheaper than new vehicles. Conversely, the Asia Pacific region is expected to register significant growth over the forecast period due to higher disposable incomes, booming population, urbanization, increasing car popularity, and better financing options.
Key Market Players – Used Vehicle Landscape Key companies in the global used vehicle market include True Car, Droom Technology Pvt Ltd., CarMax Inc., Penske Automotive Groups, Lithia Motors, Pendragon PLC, and Emil Frey Classics AG, among others. To gain a competitive edge, established industry players are focusing on new product launches, partnerships, collaborations, acquisitions, and alliances.
Recent Developments
• In 2020, Volkswagen announced a collaboration of Das WeltAuto with other reputed used car platforms.
• In December 2019, Group1 Automotive Inc. announced their acquisition of two Lexus dealerships to expand their presence in New Mexico.
• In December 2019, HELLMAN & FRIEDMAN LLC entered a contract to buy AutoScout24 to provide value-added marketing solutions and digitize its business models.
Regional Classification of the Global Used Vehicle Market
• North America: U.S., Canada
• Europe: Germany, France, Spain, U.K., Italy, Russia, Rest of Europe
• Asia Pacific: China, Japan, India, Southeast Asia, Rest of Asia Pacific
• Latin America: Brazil, Mexico, Rest of Latin America
• Middle East and Africa: GCC, South Africa, Rest of Middle East & Africa