Used Cars/Second Hand Cars Market, 2031
The global used cars market size was valued at $1.4 trillion in 2021, and is projected to reach $2.6 trillion by 2031, growing at a CAGR of 6.5% from 2022 to 2031.
A used car is a second-hand vehicle that is available for resale. Various outlets such as franchise and independent car dealers, rental car companies, auctions, private seller, and leasing offices sell used cars. There is a lower rate of car ownership among millennials owing to high cost of vehicles and maintenance cost of personal cars. In addition, millennials are inclined toward cutting costs on cars, and thus majorly opt for used cars to travel. In addition, a lot of people are not able to buy new cars due to high cost, which boosts the sales of the used cars in the market. This also makes way for different investments by industry participants to establish their dealership network in the Used/Second hand cars market.
E-commerce players have made use of digital transformation to increase their footprint in their respective markets. E-commerce breaks down geographic barriers for companies and allows sales in places that can be challenging to reach with traditional models, owing to which used cars market players across the globe are shifting their focus to online sales channels. Owing to all these factors, the growth of internet-based sales is expected to propel the demand for used cars during the forecast period.
The used car market trends that are becoming increasingly popular in the automotive industry is includes increasing investment by operating players. Leading players in the market are concentrating on boosting investments for company growth and fortifying their competitive position. For instance, in December 2020, Volkswagen, a well-known automaker with headquarters in Germany, announced the launch of two new locations in Bengaluru and Ahmedabad, expanding its network of digitally connected used cars dealerships in India. The manufacturer also maintained its plan to open 21 of these showrooms, which will sharpen its focus on investments in the second-hand cars market.
The unorganized cars industry currently dominates C2C sales and has a sizeable portion of the market in most nations. It also lacks inventories. Unorganized companies have long dominated the secondhand cars market in nations such as Mexico, India, China, and Brazil. Contrary to these unorganized companies in developing nations, organized players offer free servicing and free towing at the dealership along with the growth of the used automobile industry in such nations. These services aid in bringing clients to their dealerships, thus fostering a relationship of trust between buyers and sellers.
South Korea is the seventh-largest exporter of automobiles and one of the top makers of automobiles. In addition, it imports and exports secondhand cars in significant quantities. Meanwhile, the coronavirus outbreak has boosted people's need for personal transportation, which is boosting the market for old automobiles. For instance, the used car market value in South Korea has increased by twofold over the past ten years, with roughly 3.7 million vehicles registered for transfer in 2019.
High new vehicle prices and affordability concerns, rise in demand for off-lease cars & subscription service by the franchise, leasing offices, and car dealers, and increasing investment by giant automakers in the market are the major factors that propel the used cars market growth. However, unorganized used cars sales and lack of regularization are the major factors that hamper the growth of the market. Furthermore, the advent of E-commerce and online technologies, a steady increase in organized/semi-organized sales in emerging countries, a surge in electric vehicle business across the globe, and demand for car-sharing services are the factors that are expected to offer growth opportunities for the market during the forecast period.
Car sharing has grown at a significant rate in recent years. The traditional round-trip model is not the only car-sharing model offered. Now, companies adding more flexible options such as free-floating, one-way station-based, and peer-to-peer car sharing. Car-sharing service companies are expanding their network every day owing to an increase in demand. In addition, these companies buy used cars to serve their customers. Furthermore, there has been an increase in the demand for personal transport owing to the surge in COVID-19 cases. Further, people who cannot afford to buy a car opt for car-sharing services. Thus, this rise in demand is observed to foster market growth.
The market segmentation is based on the vehicle type, propulsion, distribution channel, and region. By vehicle type, it is divided into hatchback, sedan, and SUV. As per propulsion, it is classified into ICE and electric & hybrid. Depending on distribution channel, it is categorized into franchised dealer, independent dealer, and peer-to-peer. Region wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific, which comprises China, India, Japan, South Korea, and the Rest of Asia-Pacific, has one of the most advanced automotive sectors across the globe. Rest of Asia-Pacific includes Australia, South Korea, New Zealand, and others. Countries such as China, Japan, India, and others in the region are highly developed in terms of infrastructure and automotive manufacturing facilities.
Asia-Pacific has been a region with constant developments that have higher growth opportunities due to its highest population and its developing countries. The regional growth is driven by India, China, and ASEAN countries observed as emerging countries in the global used cars market due to the availability of the highest number of customers.
In addition, the factors that drive the growth of the used cars industry include a rise in population, easy affordability, a surge in disposable incomes, low rate of vehicle ownership among millennials owing to the high cost of vehicles, and less ratio of population to cars.
Some leading companies profiled in the market report comprises Asbury Automotive Group, Inc., AutoNation, Inc., CarMax Business Services, LLC, Cars24 Services Private Limited, Carvana, Group 1 Automotive Inc., Hendrick Automotive Group, Lithia Motors, Inc., Mahindra First Choice Wheels Ltd., and TrueCar, Inc.
The leading companies are adopting strategies such as product launch, acquisition, and expansion to strengthen their market position. In January 2021, CarMax Business Services, LLC launched a love your car guarantee. This new offering gives customers the ability to take 24-hour test drives before committing to purchase. In addition, the company has extended its 7-day money-back guarantee to a 30-day money-back guarantee. The new offering is expected to pull more customers to its stores. In addition, in March 2021, Group1 Automotive Inc. expanded its business presence in the Massachusetts market with the acquisition of two Toyota dealerships. Further, these stores are expected to generate approximately $120 million in annualized revenue.
Key Developments
- In January 2022, The North Carolina-based auto dealer Hendrick Automotive Group has bought 13.61 acres in Bradenton for $7.2 million and will build a new dealership on the site.
- In March 2021, Group1 Automotive Inc. expanded its business presence in the Massachusetts market with the acquisition of two Toyota dealerships. Further, these stores are expected to generate approximately $120 million in annualized revenue.
- In January 2021, CarMax Business Services, LLC launched the love your car guarantee. This new offering gives customers the ability to take 24-hour test drives before committing to purchase. In addition, it has extended its 7-day money-back guarantee to a 30-day money-back guarantee. The new offering will pull more customers to its stores.
High new vehicle prices and affordability concerns
The high cost associated with new cars is the major factor that is expected to fuel the growth of the global used cars market. Prices range for cars increase periodically. This is due to the characteristics of the industry. Many companies position their cars in markets where they can turn a sufficient profit and keep their stock moving. Notably, too inexpensive cars would not cover the expenditures of manpower and supplies. Over the past few years, the automotive industry has been witnessing increased demand for advanced features in vehicles such as power steering systems, climate control systems, anti-lock braking systems, and others. This, in turn, has led to rising in the price of the new vehicles. Moreover, the price increase in 2019 led by mainstream passenger car segments, poses a sign of affordability challenges in the new cars market.
Moreover, new cars are typically outfitted with high-performance electronic systems, brakes, and engines that can withstand the demands at the expense of comfort, fuel economy, and storage compared with other cars for traveling. As a result, new cars can range in price from a few hundred dollars to several thousand. Hence, the upsurge in adopting new cars in other than developed countries, such as China and the U.S., is limited by high costs.
Furthermore, an increase in car prices is making its way back to the Used/Second hand cars market. Therefore, the automotive market has witnessed an increase in the number of sales for used vehicles as compared to new vehicle sales. This is anticipated to fuel the demand for used vehicles during the forecast period.
Rise in demand for off-lease cars & subscription service by the franchise, leasing offices, and car dealers
The rise in competition in the market and the threat of new entries are the factors that boost the growth of the used car dealership business. The reliable & add-on service/quality has changed the perspective of consumers toward the used vehicle business. In addition, franchised dealers with support from OEM involvement in certification and marketing programs, online inventory pooling, and access to high-quality contracts are in a strong position to benefit from the growth in the Used/Second hand cars market. Moreover, there has been a rise in the demand for vehicle subscription services in the last few years which allows consumers to use a vehicle on monthly basis by paying monthly fees, which include maintenance, insurance, and roadside assistance. Furthermore, rapid change in technology or the introduction of new models of vehicles at short intervals allows customers to sell or exchange their old vehicle for a new vehicle. Such value money benefit has led to the rise in growth of the used cars industry in the coming years.
Unorganized used car sales
The unorganized players in the market limit the market growth. In countries such as India, China, Thailand, Brazil, and Mexico, the unorganized players hold the larger share in the Used/Second hand cars market. In addition, the unorganized players do not offer any warranty on pre-owned cars. Moreover, few sellers also perform malpractices such as re-painting and dent removal for accidental vehicles to hide their damage and get a false inflated value, which creates fear among the buyers for buying used cars. Therefore, higher rate of malpractices and hold of the larger share of the market by unorganized dealers creates a threat for the growth of the Used/Second hand cars market. For instance, in a recent interview CEO of Mahindra First Choice, a leading used car sales company in India, said that unorganized players in the market pose threat to consumer protection. In India, the organized sector holds only a 12-15% market share whereas the margin of 8 to 10% is not equally rewarding compared to the U.S. market. Thus, unorganized players are creating a threat to the market.
Advent of E-commerce and online technologies
The advancements in technology such as the development of the internet, the use of e-commerce sites/applications to boost the demand for business, and the introduction of hybrid and electric vehicles has changed the buyer position in the Used/Second hand cars market. With the help of online technologies, consumers are becoming knowledgeable about the vehicle, its residual value, third-party profit margin, and others.
Moreover, rapid urbanization, the surge in internet connectivity, and developments in the telecom sector have allowed for a much-better information flow for people. These factors are being rapidly used by used car owners to advertise their vehicles and spread the details about them. This online platform has smoothly increased the sales process and enabled more stakeholders to sell and buy cars. The supply side of this market has more weightage than the demand side and transparency through knowledge has changed the dynamics and managed to turn customer intelligence to their advantage, thereby increasing the demand for used cars in the future.
Key Benefits For Stakeholders
- This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the used cars market analysis from 2021 to 2031 to identify the prevailing used cars market opportunities.
- The market research is offered along with information related to key drivers, restraints, and opportunities.
- Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
- In-depth analysis of the used cars market segmentation assists to determine the prevailing market opportunities.
- Major countries in each region are mapped according to their revenue contribution to the global market.
- Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
- The report includes the analysis of the regional as well as global used cars market trends, key players, market segments, application areas, and market growth strategies.
Used Cars Market Report Highlights
| Aspects | Details |
 Market Size By 2031 | USD 2.6 trillion |
 Growth Rate | CAGR of 6.5% |
 Forecast period | 2021 - 2031 |
 Report Pages | 302 |
 By Vehicle Type |
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 By Propulsion |
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 By Distribution Channel |
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 By Region |
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 Key Market Players | Carvana, Group1 Automotive Inc., Mahindra First Choice, TrueCar, Inc., AutoNation, Inc., cars24, Lithia Motors, Inc., Hendrick Automotive Group, CarMax Inc., Asbury Automotive Group, Inc. |
Analyst Review
The used cars market is expected to witness remarkable growth in the future, owing to the high cost associated with new cars. The key factors that drive the growth of the used cars market are the rise in demand for off-lease cars & subscription services by the franchise, leasing offices, and car dealers. However, the rise in maintenance issues related to used cars is anticipated to hinder the used cars market growth. Furthermore, the rising adoption of electric vehicles is expected to provide remarkable growth opportunities for players operating in the used cars market.
Nowadays, car sharing has expanded significantly. There are additional car-sharing options besides the conventional round-trip model. Companies are now offering solutions that are more flexible, like peer-to-peer car sharing, free-floating, and one-way station-based options. Due to a rise in demand, car-sharing service providers are constantly expanding their network. To better serve their consumers, many businesses also purchase pre-owned vehicles. In addition, the rise of COVID-19 cases has resulted in a rise in the need for personal transportation. Also, many without the means to purchase a vehicle choose car-sharing services. This increase in demand is thus expected to stimulate market expansion.
However, the seller is essential to the used car dealer because, without the owner's permission, the dealer cannot acquire vehicles to serve their consumers. If new car sales decline, the market will eventually run out of inventory. Also, the pandemic has severely disrupted the automotive industry. Consumers are predicted to favor private transportation in the wake of the outbreak. As the used car market is entirely dependent on replacement buyers, car owners selling their cars, and used car imports, there is a great deal of uncertainty about how much inventory will be available to meet demand. Thus, these issues are anticipated to limit market growth during the forecast period.
The top companies operating in the market include Asbury Automotive Group, Inc., AutoNation, Inc., CarMax Business Services, LLC, Cars24 Services Private Limited, Carvana, Group 1 Automotive Inc., Hendrick Automotive Group, Lithia Motors, Inc., Mahindra First Choice Wheels Ltd., and TrueCar, Inc.
The global used cars market was valued at $1.4 trillion in 2021 and is projected to reach $2.7 trillion in 2031, registering a CAGR of 6.5%.
Europe is the largest regional market for used cars.
The leading vehicle type is the SUV.
The upcoming trends of the used cars market include rise in demand for off-lease cars & subscription services by the franchise, leasing offices, and car dealers, and increasing investment by giant automakers.
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