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The global used car market is estimated to be worth USD 2,540.33 billion in 2027, exhibiting a CAGR of 6.7% between 2022 and 2027. The growth of the market depends on several factors, including the increasing number of new models of cars launched due to high competition, the declining ownership cycle of vehicles among urban consumers in emerging countries, and the excellent value-for-money proposition of used cars.
Overview of the Market Growth Analysis
The market analysis focuses on examining the trends, dynamics, and factors affecting the sales and prices of pre-owned vehicles. It involves evaluating market conditions, such as supply and demand, consumer preferences, and economic factors, to understand the performance of the market. The analysis helps in identifying popular car models, brands, and price ranges in the market. It provides insights into depreciation rates, average mileage, and maintenance costs for different types of used cars. The analysis can assist in predicting future trends and making informed decisions for buying or selling used cars.
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The declining ownership cycle of vehicles among urban consumers in emerging countries is notably driving the market growth, although factors such as an increase in the number of on-demand taxi operators may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, market trends and analysis, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The declining ownership cycle of vehicles among urban consumers in emerging countries is notably driving the pre-owned car market growth. The ownership duration of cars is shortened owing to new technological advances in automotive which attract customers to buy new cars. However, due to financial constraints, customers often sell their existing cars to dealers or online used car portals to use the funds raised for a new car purchase. Moreover, the easy availability of bank loans also facilitates the financing for new car purchases.
The factors determining the prices of used cars are the number of years the vehicle was driven, the distance driven, and the number of damages caused due to accidents and other faults. In India, having no major faults can fetch up to 70% of its actual price after one year of ownership and about 62% of its actual price after three years of ownership. Such convincing values encourage car owners to sell their cars at the earliest convenience to get back most of the car value. Hence, these factors will drive market growth during the forecast year.
Growing demand for car subscription services is an emerging trend in pre-owned used vehicle. The alternative to owning or leasing a vehicle is a car subscription. These consumers are allowed to use a car for an all-inclusive monthly fee, which includes roadside assistance, insurance, and maintenance. Such programs also allow the subscriber to change cars at a notice of a few days.
Several car options and services are provided by various auto manufacturers and Cox Automotive in major regions across the globe. For instance, Volvo's car subscription service is called Care by Volvo. Some of the other companies, such as Volkswagen, Hyundai Motor Co. Mahindra and Mahindra Ltd., also offer car subscription services. Additionally, consumers who find high-priced cars unaffordable due to their high cost of ownership or leasing prefer such car subscription services to get the experience of driving a luxury car. These services augmented the demand for these cars. Therefore, these factors will drive the car market trends during the forecast period.
Buying Strategies and Tips
The online car-buying market has become a significant aspect of the automotive industry, transforming the way consumers purchase vehicles. The US car market is a dynamic and influential sector with a diverse range of consumer preferences and affordability of automakers. Both the US used vehicle and the UK car market reflect the impact of digitalization on consumer behavior and industry practices. Online platforms not only serve as avenues for purchasing vehicles but also provide valuable resources for research, reviews, and price comparisons. Various channels, including Franchise, party sales, and auctions, present opportunities for buyers to acquire vehicles at competitive prices while leasing offices offer an alternative avenue for those seeking flexibility in ownership. Approximately 42% of all car sales in the United States are for used cars. In 2022, the average age of a used car sold in Europe was 7.2 years. The resale value of luxury vehicles drops by around 20% within the first year of ownership. Online platforms account for over 30% of used car transactions worldwide. Hence with the growing innovation and advancements to changing consumer expectations, the process of buying and selling car will undoubtedly continue to transform, shaping the future of the automotive marketplace.
The increase in the number of on-demand taxi operators is a major challenge impeding the pre-owned car market. Owing to the financial constraints of some users on-demand taxi services have emerged as a convenient alternative to purchasing a new car. On-demand taxi services provide convenient and comfortable means of transport as well as save time and energy on finding suitable parking. Moreover, unlike self-drive car rental companies, on-demand taxi operators need not maintain a fleet but rather be available to a potential customer through the means of mobile applications. The business model is flexible and easier to manage than self-drive car rental companies.
On-demand taxi operators are also focusing on introducing on-demand bike taxis to tap into more customer segments. Major on-demand taxi operators like Uber and Ola cabs also invest in advertisements spanning over mediums like digital, television, and print to increase their brand awareness. Hence, the above-mentioned factors will hinder the global market growth during the forecast year.
Future Outlook for the Market
Car dealerships play a crucial role in connecting buyers and sellers, contributing to the overall growth of the used vehicle market. The industry's evolution is reflected in the ever-changing landscape of new and used car prices. Investment considerations, inventory management, and a focus on distinctive features drive developments within the market. Geographic factors, such as Japan, Australia, and South Korea, contribute to variations in growth rates, sales channels, and pricing strategies. Specific vehicle types, such as SUVs and diesel models, impact sales volume and margin considerations.
Certification Programs and Warranties
When exploring the realm of used vehicle, certification programs, and warranties play a crucial role. Prospective buyers often seek assurance in the form of certification programs, ensuring that a used vehicle has undergone a thorough inspection and meets specific quality standards. Warranties, both manufacturer-backed and extended options, provide additional peace of mind by covering potential repairs and issues that may arise post-purchase. This added layer of protection can influence a buyer's decision when navigating the complex used vehicle industry. It involves evaluating market conditions, such as supply and demand, consumer preferences, and economic factors, to understand the performance of the used vehicle market.
Financing Options for Used Cars
Financing options is paramount in the used vehicle. Buyers often look for flexible financing solutions that accommodate their budget constraints. Whether through traditional lenders, credit unions, or dealerships financing is having diverse options allows individuals to tailor their financial arrangements to suit their needs. This aspect becomes particularly important when negotiating the terms of the purchase, and a comprehensive understanding of available financing options empowers buyers in the industry.
Factors Affecting Used Car Prices
Several factors come into play when determining the prices. Inspection results, negotiation skills, and the potential for trade-ins all contribute to the final pricing of a used vehicle. Additionally, the overall condition of the used vehicle prevailing market trends, and industry dynamics influence new car prices. Being aware of these factors helps buyers and sellers alike navigate the complexities of the used vehicles, enabling informed decision-making during the negotiation process. The concept of selection is crucial, ensuring a diverse range of vehicles to cater to different preferences, including the rising prominence of electric vehicles (EVs). The performance of global economies directly influences consumer confidence, purchasing power, and overall market dynamics within the automotive sector.
Inspection, negotiation, and trade-in are integral phases in the used vehicle purchasing process. A detailed inspection ensures that the used vehicle meets safety and quality standards. Negotiation skills come into play when discussing pricing, financing terms, and potential trade-ins. The trade-in process involves valuing a buyer's current vehicle as part of the transaction. These elements collectively shape the buying and selling experience in the industry.
The market forecasting report includes the adoption lifecycle of the pre-owned car market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Markets Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, revenue share, industry participants, new technologies and product/service launches, to enhance their presence in the pre-owned used vehicle.
Berman Auto Group - The company operates under one segment. The company under this segment offers certified second-hand cars and new cars under various ranges of prices. The key offerings of the company include various second-hand cars such as Nissan car, Ford Edge, Base AWD, and Nissan Armada.
The report also includes detailed analyses of the competitive landscape, popular models and brands in the used vehicle market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The compact car segment is the fastest-growing segment in the used vehicle. Compact-size car is a vehicle size class that is between sub and mid-size cars.
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This segment was valued at USD 767.15 billion in 2017 and will continue to grow until 2021. The segment in the market is driven by the increasing specifications of compact cars and the rising need for personal mobility. In the current scenario of increasing traffic congestion, these cars are easier to drive than large car. Also, they emit significantly fewer harmful gases and are, therefore, witnessing high adoption. Moreover, the fluctuating prices of fuel and the growing preference for fuel-efficient personal mobility solutions drive the segment in the global market. India is one of the largest markets in the pre-owned compact car segment. The improving quality offered by the organized sector drives the demand for the segment. These factors will boost the demand.
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APAC is estimated to contribute 41% to the growth of the global market. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the industry used vehicle during the forecast period.
APAC is home to some of the largest automotive markets in the world. In APAC, the high demand for four-wheelers, especially in China, is contributing to revenue generation in the regional market. In addition, the growing popularity retailing in emerging markets, such as India, is driving the growth of the regional industry. The structure and efficiency of dealership networks play a crucial role in the distribution and sale of vehicles, enhancing accessibility for consumers. Car ownership remains a significant milestone and aspiration, influenced by factors such as financial considerations, lifestyle choices, reliability and accessibility to public transportation alternatives. The Asia-Pacific region, encompassing countries like the Philippines, Italy, Thailand, Egypt, Malaysia, Indonesia, Mexico and Turkey, emerges as a dynamic and influential market with unique consumer preferences and regulatory environments.
The upcoming trend of fuel type, particularly the prevalence of petrol as a traditional fuel source, continues to be a significant consideration for consumers worldwide. In regions like Spain, understanding the unique dynamics of the automotive market, including government regulations and regulatory frameworks and consumer trends, is essential for industry participants
Online sales also contribute to the major portion of the organized sales in APAC. One of the prominent vendor type operating in the regional automotive e-retail market is Alibaba Group Holding Ltd. Alibaba offers used passenger car on its web portal. The vehicle sales and dealership network are transitioning from their traditional brick-and-mortar stores to online platforms for generating leads and increasing their customer base. The rising customer preference for online used-car portals, such as Quikr and OLX, to physical stores, has induced OEMs to introduce online portals for selling.
The automotive industry in APAC was adversely impacted in 2020 due to the COVID-19 pandemic outbreak. However, since 2021, automobile manufacturing has been recovering owing to the vaccination drives, which led to the control of the disease in the region. Also, companies have been increasing their sales and investing in electric vehicle production with supportive government initiatives. Thus, the growing sales of new cars drive the availability in the market. This consequently will boost the demand in APAC.
The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the global market as a part of the global automobile industry under the global automobiles and components industry. The parent market, the global automotive market, covers car companies engaged in the production of vehicles such as passenger cars, commercial vehicles, and all-terrain vehicles. The vehicle market, covering both new and used vehicles, reflects the diverse choices available to consumers, and the used vehicles and used market segments are vital components influenced by factors like vehicle history, condition, and pricing. Our market research report has extensively covered external factors influencing the parent market growth.
Used Car Market Scope |
|
Report Coverage |
Details |
Page number |
168 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.7% |
Market growth 2023-2027 |
USD 703.33 billion |
Market structure |
Concentrated |
YoY growth 2022-2023(%) |
6.18 |
Regional analysis |
APAC, North America, Europe, Middle East and Africa, and South America |
Performing market contribution |
APAC at 41% |
Key countries |
US, China, Germany, UK, and France |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
Alibaba Group Holding Ltd, Asbury Automotive Group Inc., AutoNation Inc., Autotrader Inc., Berman Auto Group, CarGurus Inc., CarMax Inc., Cars24 Services Pvt. Ltd., DriveTime Automotive Group Inc., eBay Inc., Group 1 Automotive Inc., Hendrick Automotive Group, Hertz Global Holdings Inc., Lithia Motors Inc., Mahindra and Mahindra Ltd., Penske Corp., Scout24 AG, Sonic Automotive Inc., Toyota Motor Corp., and TrueCar Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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