Used Vehicle Market Analysis, Dynamics, Forecast and Supply Demand 2031

The used vehicle market has been steadily gaining prominence since the 2008 recession and continues to grow at a rapid pace. A variety of factors contribute to the ongoing success of this industry, including better financing, favorable policies, increased involvement of industry players, urbanization, and higher disposable incomes. While North America is expected to remain a dominant force, the Asia Pacific region is projected to index a significantly high compound annual growth rate (CAGR) over the forecast period. As the global automotive sector gravitates towards more environmentally friendly vehicles, this trend is expected to create options for those who cannot afford new vehicles, driving demand for used or pre-owned vehicles.

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Used Vehicle Market: Key Report Findings

The global used vehicle market was valued at over US$1.5 trillion in 2021. In the United States, the average age of a used vehicle is 11.8 years, and in 2020, 40.4 million used vehicles were sold compared to 14.5 million new vehicles. The top-selling used car brands in the U.S. are Toyota, Honda, and Ford. The Asia Pacific region is expected to account for a significant market share over the forecast period, with the average used car mileage sold in the U.S. being 68,000 miles.

Growth Drivers: Affordability and Greater Need for Private Conveyance

According to the International Organization of Motor Vehicle Manufacturers (OICA), the automotive industry contributes about 4% to the global GDP and is estimated to grow at a CAGR of 20.78% by 2028. This data highlights the increase in global car ownership, with a significant share accounted for by used car ownership. However, the launch of new entry-level cars is boosting demand, which can directly affect used vehicle sales.

The average ownership time of new cars has decreased compared to the past decade. Despite this, the used car segment remains attractive to first-time buyers who prefer the safety of second-hand cars until they become proficient in daily driving.

Franchise Dealers Aim to Offer Better Financial Schemes

Competitive pricing is a significant advantage for companies operating in the used vehicle market. This market receives strong support from key industry participants who are amplifying their investments by setting up new dealership networks for used vehicles. Online sales of pre-owned or used cars are a critical growth factor for the global used vehicle market. Although financing options for new cars are abundant, they are often expensive for used vehicles, which can hinder market growth.

Increasing consumer spending on lifestyle choices and a flourishing import-export scenario are expected to benefit the used vehicle market. Certified used vehicle programs and franchise dealer prevalence, due to better financial schemes, have created favorable grounds 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, which is advantageous for this market.

Compact Passenger Cars Segment to Lead, SUVs to Follow

Compact or entry-level cars are expected to account for the largest volume share in the used vehicle market, aligning with growing consumer preferences for economical and compact passenger cars. High production rates and significant inventories of compact cars also benefit franchise owners by enabling better supply chain management.

Conversely, SUVs have been on a profitable growth trajectory due to their spacious and compact attributes compared to premium vehicles. The high distribution network and residual value for SUVs are significant factors driving their demand.

Key Market Players Indulge in Used Car Dealerships

Automotive industry operators traditionally focused on new vehicles, but recent years have seen major automakers recognizing the potential and market worth of used vehicles. Global auto giants are now actively involved in used vehicle dealerships to address increasing competition and shifting consumer behavior.

Several new entrants are adding to the existing fragmented competition in the used vehicle market. While most of these participants are unorganized local companies, strategic partnerships are likely in the future. New product segments are being launched by both newly formed partners and established industry players. Even premium car companies are leveraging the market potential of their used cars. Luxury brands such as Mercedes and Audi have their used car dealerships, generating substantial revenue.

Used passenger cars have particularly enjoyed a greater share in the global market, leading to networks specifically launched for used cars, such as Toyota’s U Trust and Maruti Suzuki’s True Value. Mainstream companies are investing in strategic expansion efforts through collaborations.

Growth Challenges: Adoption of Ride Sharing Trend

The rise of ride-sharing, though economical for consumers, poses a concern for used car dealers and financiers. If ride-sharing dominates the private transportation market, it will reduce the number of owners a car has over its lifespan, leading to lower transaction volumes in the used vehicle market. However, the COVID-19 pandemic has shifted attitudes, with social distancing increasing the preference for private conveyance. Used vehicles are gaining traction, especially in developing economies, due to their affordability. The temporary negative impact of financial disparities on new vehicle sales will likely benefit the used vehicle market.

Growth Opportunities Across Regions

Used Car Market to Gain Traction 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. The Asia Pacific region is expected to see significant growth, driven by higher disposable incomes, booming population, urbanization, increasing popularity of cars, and better financing options.

Key Market Players in the 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. To gain a competitive edge, established industry players are focusing on new product launches, partnerships, collaborations, acquisitions, and alliances.

Conclusion

The global used vehicle market is on a dynamic growth trajectory, driven by affordability, increased need for private conveyance, and strategic industry efforts. With North America and Asia Pacific leading the way, the market is set to achieve significant expansion, offering numerous opportunities for industry players and consumers alike.