The global used vehicle market has witnessed significant growth since the 2008 recession and continues to expand rapidly. This report provides an in-depth analysis of the various factors driving this market's growth and offers insights into future trends over the forecast period.
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Market Dynamics
The used vehicle market has been growing steadily due to several factors, including better financing options, favorable policies, increased industry player involvement, urbanization, and higher disposable incomes. North America is anticipated to remain a dominant force in this market, while the Asia Pacific region is expected to exhibit a significantly high compound annual growth rate (CAGR) during the forecast period. As the global automotive sector increasingly focuses on environmentally friendly vehicles, there will be opportunities for those unable to afford new eco-friendly vehicles to opt for used or pre-owned cars.
Key Insights
Growth Drivers
Affordability and Increased 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 expected CAGR of 20.78% by 2028. This data highlights the increase in global car ownership, with a significant portion accounted for by used cars. While the launch of new entry-level cars can boost demand, it may also impact used vehicle sales. However, used cars remain a popular choice for first-time buyers, providing a wide range of options and affordability.
Franchise Dealers and Better Financial Schemes
Competitive pricing is a significant advantage for companies in the used vehicle market. Industry participants are increasing investments in new dealership networks for used vehicles, and online sales of pre-owned cars are critical growth factors. Although financing options for new cars are more abundant, they are often expensive for used vehicles, which can hinder market growth. Nevertheless, the presence of franchise dealers offering better financial schemes and certified used vehicle programs has created favorable conditions for the used car market.
Market Segmentation
Compact Passenger Cars and SUVs
Compact passenger cars are expected to hold the largest volume share in the used vehicle market, driven by consumer preference for economical and compact vehicles. High production rates and significant inventories have also contributed to this trend. SUVs, with their spacious and compact attributes, are on a profitable growth trajectory, benefiting from high residual value and a robust distribution network.
Key Market Players
Major automotive companies have recognized the potential of the used vehicle market and are actively involved in dealerships. New entrants and established players are forming strategic partnerships and launching new product segments. Luxury car brands like Mercedes and Audi have their own used car dealerships, generating significant revenue. Notable 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.
Challenges
Adoption of Ride-Sharing Services
Ride-sharing services pose a challenge to the used car market by reducing the number of car owners and transactions. However, the COVID-19 pandemic has shifted consumer attitudes, with more people opting for private transportation due to social distancing concerns. This has increased demand for used vehicles, particularly in developing economies where they are more affordable.
Regional Growth Opportunities
North America
North America is expected to account for a significant share of the global used vehicle market, supported by a strong presence of used vehicle dealers, favorable economic conditions, and financing availability. The popularity of SUVs and trucks also contributes to this growth. Used cars in this region are relatively cheaper than new vehicles.
Asia Pacific
The Asia Pacific region is projected to experience substantial growth, driven by higher disposable incomes, population growth, urbanization, and better financing options. The increasing popularity of cars and a booming population further support this trend.
Recent Developments
Regional Classification
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