| A06429 | Pages: 266 | Apr 2021 | 15650 Views | ||
| Author(s) : Pranav Padalkar , Sonia Mutreja | Tables: 124 | Charts: 59 |
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Pandemic disrupted the entire world and affected many industries.
Get detailed COVID-19 impact analysis on the Used Cars Market
Request Now !The global used cars market was valued at $828.24 billion in 2019, and is projected to reach $1,355.15 billion by 2027, registering a CAGR of 8.3% from 2020 to 2027. By vehicle type, the SUV segment was the highest revenue contributor in 2019, accounting for $338.61 billion, and is estimated to reach $533.39 billion by 2027, registering a CAGR of 7.80% during the forecast period.
The impact of COVID-19 has been widely visible across all the automotive industry around the world. Although there are some industries that are struggling due to the pandemic, the automotive industry has seen a huge fall in demand for new cars during the lockdown period and it is also due to travel restrictions. However, the used car market has seen a huge jump in sales due to reason such as fall in income, shortage in money, and increasing preference for private cars to maintain social distancing which is expected to affect the used car industry positively during the COVID-19 outbreak globally. As the new cars industry suffered and came to a halt, the used car industry emerged during the pandemic, owing to the growth of online sales of the used cars.
A used car is the second-hand vehicle that is available for resale. Various outlets such as franchise and independent car dealers, rental car companies, auctions, private party sales, and leasing offices sell used cars.
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There is a lower rate of car ownership among millennials owing to high cost of vehicles and maintenance cost of personal car. 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 market.
Factors such as high cost of new vehicles, concerns regarding affordability, rise in demand for off-lease cars & subscription service by the franchise, leasing offices, and car dealers are observed to boost the growth of the used cars market. However, unorganized sales of used cars and lack of regularization hamper the growth of the global market. Moreover, advent of e-commerce & online technologies, steady increase in organized/semi-organized sales in emerging countries, rise in electric vehicle business across the globe, and demand for car sharing services are expected to offer lucrative opportunities for the growth of the used cars market.
Countries had to temporarily slowdown the demand for old and new vehicles owing to COVID-19 pandemic across the globe. Moreover, the economic slowdown across the globe has affected the consumer that results in decrease in sales of cars but due to the risk of infection and for maintaining social distancing people across the globe have started avoiding public transport. Moreover, majority of the people across the globe are planning to buy cars post lockdown. For instance, according to cars24 report, consumers prefer to use private cars and less public transportation; therefore, there is a shift in preference from cabs and public transport to private vehicles. Although there are some automotive companies that are struggling due to the pandemic, the used cars market has seen a huge jump in sales in some countries due to reason such as fall in income, shortage in money, and increase in preference for private cars to maintain social distancing, which is expected to affect the used cars industry positively during the COVID-19 outbreak.
The used cars market is segmented the basis of on vehicle type, fuel type, distribution channel, and region. On the basis of vehicle type, itis divided into hatchback, sedan, and SUV. On the basis of fuel type, it is classified into petrol, diesel, and others. On the basis of distribution channel, it is fragmented into franchised dealer, independent dealer, and others. On the basis of region, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
The key players operating in the used cars market include Asbury Automotive Group, Inc., AutoNation, Inc., Big boy Toyz ltd, CarMax Business Services, LLC, Cars24 services private limited, Group1 Automotive Inc., Hendrick automotive group, Lithia Motors, Inc., Mahindra First Choice Wheels Ltd., and TrueCar, Inc.
Over the past few years, the automotive industry has been witnessing increased demand for advanced features in vehicles such as power steering system, climate control system, anti-lock braking system, and others. This in turn has led to rise in price of the new vehicles. Moreover, price increase in 2019 led by mainstream passenger car segments, poses a sign of affordability challenges in the new market. Furthermore, increase in vehicle prices is making its way back to the used market. Therefore, the automotive market has witnessed an increase in number of sales for used vehicles as compared to new vehicle sales, this is anticipated to fuel the demand for used vehicles in the near future.
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The rise in competition in the market and the threat of new entries are the factors that boost the growth of the used cars 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 cars market. Moreover, there has been a rise in the demand for the vehicle subscription services in the last few years which allows consumers to use a vehicle on monthly basis by paying a monthly fees, which includes maintenance, insurance, and roadside assistance. Furthermore, rapid change in technology or introduction of new models of vehicles at short intervals allow customers to sell or exchange their old vehicle with a new vehicle. Such value for money benefit has led to the rise in growth of the used cars industry in the coming years.
The unorganized players in the used cars 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 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 cars market. For instance, in recent interview CEO of Mahindra First choice, a leading used cars sales company in India said that unorganized players in the used cars 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 used cars market.
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The used cars dealer is dependent on the seller because the dealer doesn’t get cars to cater to their customers unless owner doesn’t sell it in the market. If the sales of the new cars decrease, the market will be short of supply after some time. Further, pandemic has placed the automotive industry at great disruption. In the aftermath of the pandemic, the consumers are expected to prefer private conveyance. Therefore, the used cars market is completely dependent on the replacement buyer, car owner to sell their vehicle, and used cars import that creates lots of uncertainly in terms of getting supply to cater to the market demand. Thus, these factors are expected to hinder the growth of the used cars market in the near future.
Advancements in technology such as the development of the internet, use of e-commerce sites/applications to boost the demand for business, and introduction of hybrid and the electric vehicle has changed the buyer position in the 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, 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 cars owners to advertise their vehicles and spread the details about them. This online platform has smoothly increased the sales process and enables 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 carss in the future. Steady increase in organized/semi-organized sales in emerging countries and surge in electric vehicle business across the globe.
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Currently in most of the countries the unorganized car business has a significant amount of shares, which further does not have inventory and dominance over C2C sales in unorganized manner. The market for used carss in countries such as Mexico, India, China, and Brazil has always been dominated by unorganized players. Unlike these unorganized players in emerging countries, organized players are providing free servicing and free towing at the dealership, along with the used carss business expansions in countries. These services help in attracting customers toward their dealerships and building trust between buyers and sellers. For instance, TrueCar, Inc. has launched TrueCar Military. TrueCar Military offers exclusive incentives and benefits for active duty service members of the U.S. armed forces, veterans, military retirees, and their families. Moreover, there is an increase in demand for electric vehicles owing to rise in need for pollution control systems and implementation of stringent emission standards. Such rise in need of vehicles eventually leads old vehicle owners to sell their vehicles in the market which further boosts the growth of the used carss market.
Car sharing has grown at a significant rate in the recent years. The traditional round-trip model is not the only car-sharing model offered. Now, the 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 increase in demand. In addition, these companies buy used carss to serve their customers. Furthermore, there has been an increase in the demand for personal transport owing to 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 the market growth.
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Key Benefits For Stakeholders
Key Market Segments
By Vehicle Type
By Fuel Type
By Distribution Channel
By Region
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A used car is commonly known as a pre-owned vehicle, or a second-hand car, which has been used previously by one or more retail owners. Used cars are sold through a variety of outlets, including franchise and independent car dealers, rental car companies, leasing offices, auctions, and private party sales. Some car retailers offer "certified" used cars, and extended service plans or warranties to increase the sales.
The used cars market is segmented on the basis of mode of vehicle type, fuel type, distribution channel, and region.
The used cars market is analyzed on the basis of its prospect and future growth rate. The report highlights numerous factors that influence the growth of the global used cars market, which include market forecast, drivers, restraints, opportunities, and role of different key players operating in the market.
The factors that drive the global used cars market include higher new vehicle prices and affordability concerns, and rise in demand for off-lease cars & subscription service by the franchise, leasing offices, and car dealers.
However, unorganized used cars sales and lack of regularization hamper the growth of the global market. Moreover, advent of e-commerce & online technologies, steady increase in organized/semi organized sales in emerging countries, and growth in electric vehicle business across the globe and demand for car sharing services are expected to offer lucrative opportunities for the growth of the global used cars market.
Among the analyzed regions, Asia-Pacific is the highest revenue contributor, and is anticipated to remain dominant during the forecast period, followed by LAMEA, North America, and Europe. This growth is attributed to proactive development and rise in disposable income.
A. The global used cars market was valued at $828.24 billion in 2019, and is projected to reach $1,355.15 billion by 2027, registering a CAGR of 8.3% from 2020 to 2027.
A. majority of the people across the globe are planning to buy cars post lockdown. For instance, according to cars24 report, consumers prefer to use private cars and less public transportation; therefore, there is a shift in preference from cabs and public transport to private vehicles
A. The report sample/ company profile section for used car market report can be obtained on demand from the website.
A. Factors that drive the global used cars market include higher new vehicle prices and affordability concerns, and rise in demand for off-lease cars & subscription service by the franchise, leasing offices, and car dealers
A. The key growth strategies adopted by the used cars players includes innovations, merger, product launch, investent, joint venture, partnership and business developments with the increased RnD expenditure.
A. The company profile section for used car market report can be obtained on demand from the website.
A. Among the analyzed geographical regions, currently Asia-Pacific is dominating the market with the highest revenue in the global market. However, the same region is expected to grow at a higher rate during the forcast period, predicting lucrative opportunities .
A. others by distribution channel type is the most influencing segment growing currently in the used cars report.
A. others by distribution channel type is the most influencing segment growing currently in the used cars report.
A. The U.S and China has are key matured markets growing in the global used car market
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