Market Overview
The global used car market was valued at $1,749.1 billion in 2021, and it is projected to reach $2,980.2 billion by 2030, growing at a CAGR of 6.10% between 2021 and 2030. The growth can be attributed to the surging internet penetration coupled with the availability of information on online platforms; the rising demand for off-lease vehicles from franchises, auto dealers, and leasing offices; and the surging popularity of car subscription services.
In addition, the high price of new cars prevents many people from buying them, driving up the demand for used cars. Also, the establishment of dealership networks is now possible due to a variety of investments from industry players. Some of the other key factors, including worries about the affordability of new vehicles and the surging demand for subscription services are expected to boost the market growth.
Organized Sector Is the Major Revenue Contributor
The organized category accounted for a major revenue share in 2021. A number of
new car dealers are entering this industry and enticing clients with a variety of trade-in packages, due to the continually declining profitability in the new car market and the aging of vehicles on the road. As a result, it is becoming a more significant and integral part of franchised dealer sales globally. With approved programs of dealers, buyers are inclined toward dealer-certified vehicles. Furthermore, the organized category is projected to have significant growth as a result of the rising use of contemporary internet portals by both buyers and sellers.
Medium Vehicles Captured Highest Revenue
The medium category held the largest revenue share, of 38.3%, in the market. This is majorly due to the greater availability of less-driven, high-quality used automobiles and the rising purchasing power of consumers across developing countries. Whereas, the small category will grow at a substantial CAGR in the coming years. This can be primarily driven by the lower average cost of ownership and lower average mileage of smaller cars, as well as benefits offered by dealers for these cars.
The ICE category held a larger revenue share in 2021, based on propulsion. The demand for used ICE-based cars is projected to have substantial growth in emerging economies of APAC and LATAM because of the rising average age of vehicles. Currently, the average age of a car in China is 5 years, compared to an average age of 11 years in countries like the U.S. and the U.K. Also, manufacturers and dealers struggle for new customers in the market using a variety of strategies, including having an online presence and offering a wide range of products.
Whereas, the electric category is expected to grow at a higher CAGR during the forecast period. This can be mostly because of the rising government concerns about pollution levels, which present opportunities for dealers of electric vehicles. In truth, the industry has been steadily moving toward electric vehicles from conventional automobiles.
Growing Popularity of Offline Channel Among Consumers
The offline category held a larger share in 2021. This is primarily a result of consumers' strong preference for buying second-hand cars from reputable dealers. Before purchasing a used automobile from a dealer, shoppers visit offices to take a test drive of the vehicle and consider their choices. Therefore, it is predicted that the offline category would dominate the market throughout the projected period.
The online category is expected to grow at a significant CAGR over the next few years. The requirement to initially contact dealers has decreased as a result of digitization. Customers readily engage and obtain information via a variety of media and devices, including smartphones and personal computers. Therefore, it is projected that the increased internet usage and the simplicity of conducting research and buying online will further fuel the rise of the online category during the forecast period.
Rising Demand for Off-Lease Cars and Subscription Services
The industry is witnessing new market entrants and escalating rivalry. Consumer perceptions of used cars have changed as a result of reliability and additional services, which result in fuelling the demand for automotive subscription services. These services let users use automobiles on a monthly basis in exchange for fees that cover maintenance, insurance, and roadside support. Due to the rapid advancement of technology and the introduction of new vehicle models, customers can also sell or trade in their old car for a new one. Thus, the market for used cars in the future may provide advantages like value for money.
Increasing Penetration of E-Commerce and Online Technologies
Another important aspect influencing the used car industry is the development of the
internet and e-commerce technology. People can now communicate with one another considerably more effectively because of increased urbanization, expanding internet access, and advancements in the telecom industry.
Used car owners are using these elements to market their autos and share information about them quickly. This streamlines the sales procedure and makes it possible for more parties to sell and acquire used automobiles online. The widespread accessibility of internet connections has made it simpler for people to efficiently promote their used automobiles, boosting the overall supply.
Asia-Pacific is the Market Leader
The APAC used car market accounted for the largest revenue share, of around 34%, in 2021, and it is also projected to grow at the highest CAGR over the forecast period. This is attributed to the rising demand for used cars in emerging economies such as China, India, and other Asian countries; and the increasing number of organized companies offering used automobile trading services in the region.
For instance, some Indian auto dealers provide a wide range of cutting-edge technology-enabled solutions such as mobile applications, online showrooms that function as virtual showrooms, cloud services for lead management systems, the ability to track sales success, and assistance with digital marketing. Additionally, the level of development in the Indian used car industry offers lucrative opportunities for the customer base, which further helps to fuel the growth of the regional market.
North America Accounts for Higher Demand
The North American market is expected to witness significant growth in the coming years, due to the increasing sales of used cars in countries such as the U.S. and Canada, and the high cost of new cars in this region. To reach more customers, companies are expanding their dealership networks. Moreover, the regional market is predicted to grow considerably, as a result of rising internet usage, online tools for buying or researching used automobiles, warranties given on pre-owned vehicles, and a variety of purchase alternatives.
