Used Vehicle Market Share, Outlook, Size

The global used vehicle market has shown remarkable growth since the 2008 recession and continues to expand rapidly. This report delves into the various factors driving this industry's growth, offering insights to aid in market analysis over the forecast period.

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Market Analysis in Brief

The used vehicle market has witnessed significant growth since the 2008 recession and is currently expanding at a rapid pace. Several factors contribute to this industry's success, including improved financing options, favorable policies, increased involvement of industry players, urbanization, and higher disposable incomes. North America remains a dominant force in the market, but the Asia Pacific region is projected to exhibit a significantly high compound annual growth rate (CAGR) over the forecast period. As the global automotive sector increasingly focuses on environmentally friendly vehicles, more affordable options such as used vehicles are expected to become more attractive to those unable to afford new vehicles.

Key Report Findings

The global used vehicle market was valued at over US$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.

Toyota, Honda, and Ford are the top-selling used car brands in the US.

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 the Need for Private Transportation

According to the International Organization of Motor Vehicle Manufacturers (OICA), the automotive industry contributes approximately 4% to the global GDP, with an estimated CAGR of 20.78% by 2028. This growth highlights the increasing global car ownership, with a significant share accounted for by used cars, which is expected to expand further by 2030. Despite the launch of new entry-level cars boosting demand, used vehicles remain a popular option for first-time car buyers who prefer the safety and affordability of second-hand cars.

Franchise Dealers Offer Better Financial Schemes

Competitive pricing has been a major advantage for companies in the used vehicle market. Industry participants are increasing their investments by establishing new dealership networks for used vehicles. Online sales of pre-owned cars are a critical growth factor. While financing options for new cars are numerous, they are often expensive for used vehicles, posing a potential challenge to market growth. However, the rise in consumer spending on lifestyle choices and a flourishing import-export scenario is expected to benefit the used vehicle market. Certified used vehicle programs offered by franchise dealers, along with better financial schemes, create favorable conditions for used car sales. Online platforms like Vroom and Fair have partnered with OEMs to ensure the reliability of their certified used vehicle programs, which is advantageous for the market.

Market Segmentation

Compact Passenger Cars Lead, SUVs Follow

Compact or entry-level cars are expected to account for the largest volume share in the used vehicle market due to growing consumer preferences for economical and compact cars. High production rates and significant inventories also favor franchise owners, leading to better supply chain management. On the other hand, SUVs have seen profitable growth due to their spacious and compact attributes compared to premium vehicles. The high distribution network and residual value of SUVs contribute to their rising demand.

Key Market Players

Automotive industry operators traditionally focus on new vehicles, but the potential and market worth of used vehicles have recently been recognized. Global auto giants are now actively involved in used vehicle dealerships to address competition and changing consumer behavior. New entrants add to the fragmented nature of the used vehicle market, with many local companies likely to enter strategic partnerships in the future. Established players and new partners are launching new product segments. Premium car companies like Mercedes and Audi have established used car dealerships, generating significant revenue. Brands like Toyota's U Trust and Maruti Suzuki's True Value have dedicated networks for used cars. Mainstream companies are investing in strategic expansion through collaborations.

Growth Challenges

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, with social distancing increasing the preference for private conveyance over public transport. This trend is particularly beneficial for developing economies, where used vehicles are more affordable. The temporary negative impact of financial disparities on new vehicle sales is expected to favor the used vehicle market.

Regional Growth Opportunities

North America and Asia Pacific

North America is anticipated to hold a significant share of the global used vehicle market due to the extensive presence of used vehicle dealers, favorable economic growth, available financing, and the popularity of SUVs and trucks. Used cars in North America are relatively cheaper than new vehicles. The Asia Pacific region is projected to experience significant growth due to higher disposable incomes, a booming population, urbanization, increasing car popularity, and better financing options.

Key Market Players

Some 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. Established industry players focus on new product launches, partnerships, collaborations, acquisitions, and alliances to gain a competitive edge.

Recent Notable Developments

In 2020, Volkswagen announced a collaboration between Das WeltAuto and other reputed used car platforms.

In December 2019, Group1 Automotive Inc. acquired two Lexus dealerships to expand their presence in New Mexico.

In December 2019, HELLMAN & FRIEDMAN LLC entered a contract to buy AutoScout24, aiming 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