Used Vehicle Market
Global Industry Analysis (2017 – 2020), Growth Trends and Market Forecast (2021 – 2025)
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Growth of Used Vehicle Market Accelerates on Back of Affordability and Growing Need for Private Conveyance
The International Organization of Motor Vehicle Manufacturers (OICA) states that automotive industry contributes about 4% to the global GDP, which is estimated to surge at a CAGR of 20.78% by 2028. This statistical data points out the increase in global car ownership. Of the total size of car ownership market, a sizeable share is brought about by used car ownership and is poised for further expansion by 2030. However, the launch of entry level new cars is pulling the demand which can directly affect used vehicle sales.
While the average holding time of new cars has come down significantly compared to what it was earlier in the past decade, it remains a fact that the used car category presents a wealth of options in front of first timers who are aspiring car buyers but still find it safe to purchase second-hand cars till they get used to daily driving.
Thriving Trend of Ride Sharing May Constrain Used Vehicle Market
Ride sharing, though an economical mode of transportation for consumers, is playing out as a concern for used car dealers and financers. If ride sharing eventually dominates the private transportation market, there will be only a few owners during a car’s average lifespan, which will end up creating lower volume of transactions for used vehicle market. However, COVID-19 has caused 1800 change in the scenario.
Growing prominence of social distancing amid the pandemic situation is forcing people to incline towards private conveyance rather than travelling in public transport vehicles. Used vehicles are thus gaining traction especially in developing economies as they are available in market at affordable costs. The temporary negative impact of financial disparities on new vehicle sales will work in favour of used vehicle market in the near future.
Franchise Dealers Extend Strong Efforts to Present Better Financial Schemes on Used Vehicles
Competitive pricing has been a glowing spot for companies operating in used vehicle market. The market is receiving strong tailwind from key industry participants as they consider amplifying their investments in establishing new dealership networks for used vehicles. Online sales of pre-owned cars remain a critical growth factor for the global used vehicle market. Research reveals that the options for financing new cars are relatively high in number but the same is quite expensive for used vehicles, which makes it difficult to find adequate financing options. This can potentially hinder the growth of market.
Amidst other factors such as increasing consumer spending on lifestyle, and a flourishing import-export scenario, the growth of used vehicle market is significantly benefiting from a variety of certified used vehicle programs. The growth of franchise dealers due to growing availability of better financial schemes has created a favourable ground for pre-owned car sales. Several online used car selling platforms such as Vroom, and Fair have partnered with OEMs to ensure reliability to their certified used vehicle programs, which works to the advantage of market.
Compact Passenger Cars Leading Used Vehicle Market, SUVs Follow
Compact size or entry-level cars will have the largest volume share in used vehicle market. This is in line with growing consumer preference for economic and compact passenger cars. From the supply side perspective, high production rate and more significant inventory have also been preferred most among franchise owners, which can lead to better supply chain management of these cars.
On the other hand, SUVs have been on a profitable growth trail, with both spacious and compact attributes if compared to premium vehicles. The distribution network and residual value for SUVs are relatively high, which are the significant factors accounting for rise in their demand.
Key Market Players Indulge in Used Car Dealerships to Leverage Market Potential
Automotive industry operators more than often keep new vehicles at the core of their business. It was only recently when even the biggest automakers started realising the potential and market worth of their used vehicles. Global auto giants are now actively involved in used vehicle dealerships looking at the incessant competition and shifting consumer behaviour regarding car purchasing.
A number of new entrants are adding to the existing fragmented nature of used vehicle market competition. While a majority of these participants tend to be unorganised local companies, it is more likely that they will enter strategic partnerships in the near future. New product segments are being launched by such newly formed partners as well as established players in industry. Even premium car companies continue to put in efforts to leverage the market potential of their own used cars. Luxury car brands such as Mercedes and Audi have their used car dealerships in place that garner a sizeable revenue to respective companies.
Used passenger cars especially have been enjoying a greater share in the global market, which has eventually led to a number of brands’ networks specifically launched for pre-owned cars such as Toyota’s U Trust, and Maruti Suzuki’s True Value. Furthermore, mainstream companies are investing strategic efforts in expansion through collaboration activities. Volkswagen recently announced a collaboration of Das WeltAuto with some other reputed pre-owned car platforms (2020).
The report has profiled some of the top competitors in used vehicle market, which include True Car, Droom Technology Pvt Ltd, CarMax Inc, Penske Automotive Groups, Lithia Motors, Pendragon PLC, and Emil Frey Classics AG.