Used Vehicle Market Trends, Size, Growth, Challenges and Forecast 2031
Tags: usedvehiclemarket
Published: 2024-05-30 08:35:52

The used vehicle market has steadily gained prominence since the 2008 recession and continues to grow at a rapid pace. Various factors contribute to this industry’s ongoing success, including better financing options, favorable policies, greater involvement of industry players, urbanization, and higher disposable incomes. While North America is expected to remain a dominant force, the Asia Pacific region is projected to register a significantly high compound annual growth rate (CAGR) over the forecast period. As the global automotive sector shifts towards environmentally friendly vehicles, used or pre-owned vehicles offer an economical alternative for those unable to afford new vehicles.

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Used Vehicle Market Overview

Key Report Findings

The global used vehicle market was valued at over US$1.5 trillion in 2021.
The average age of a used vehicle in the U.S. is 11.8 years.
In 2020, 40.4 million used vehicles were sold in the U.S. compared to 14.5 million new vehicles.
The top-selling used car brands in the U.S. are Toyota, Honda, and Ford.
The Asia Pacific region is expected to account for a significant market share over the forecast period.
The average mileage of used cars sold in the U.S. is 68,000 miles.
Growth Drivers

Affordability and Increased Need for Private Conveyance

According to the International Organization of Motor Vehicle Manufacturers (OICA), the automotive industry contributes about 4% to the global GDP, with this figure projected to grow at a CAGR of 20.78% by 2028. This data highlights the increasing global car ownership, with a substantial share attributed to used car ownership, which is expected to expand further by 2030. While the launch of new entry-level cars boosts demand, it can also impact used vehicle sales.

Despite a decline in the average ownership time of new cars compared to the past decade, the used car segment remains appealing to first-time buyers seeking reliable and affordable options until they become proficient daily drivers.

Franchise Dealers Offer Better Financial Schemes

Competitive pricing is a significant advantage for companies operating in the used vehicle market. Key industry participants are amplifying their investments by establishing new dealership networks for used vehicles. Online sales of pre-owned cars remain a critical growth factor. However, research reveals that financing options for new cars are more accessible and affordable compared to used vehicles, which can hinder market growth prospects.

Increasing consumer spending on lifestyle choices and a flourishing import-export scenario are expected to benefit the used vehicle market. Certified used vehicle programs offered by franchise dealers provide better financial schemes, creating favorable conditions for used car sales. Several online platforms, such as Vroom and Fair, have partnered with OEMs to ensure the reliability of their certified used vehicle programs, further enhancing market growth.

Compact Passenger Cars Lead, SUVs Follow

Compact or entry-level cars are expected to account for the largest volume share in the used vehicle market, aligning with growing consumer preferences for economical and compact passenger cars. High production rates and significant inventories also favor better supply chain management of these vehicles.

SUVs, known for their spacious and compact attributes compared to premium vehicles, are on a profitable growth trajectory. Their distribution network and residual value are relatively high, contributing to increased demand.

Key Market Players Indulge in Used Car Dealerships

Automotive industry operators have traditionally focused on new vehicles. However, major automakers now recognize the potential and market worth of used vehicles. Global auto giants are actively involved in used vehicle dealerships, driven by intense competition and changing consumer behavior towards car purchases.

Several new entrants add to the existing fragmented nature of used vehicle market competition. While many of these participants are unorganized local companies, strategic partnerships are likely in the future. New product segments are being launched by both new partners and established players. Premium car companies, including Mercedes and Audi, have their own used car dealerships, generating significant revenue. Brands such as Toyota’s U Trust and Maruti Suzuki’s True Value also focus on used cars, with mainstream companies investing in strategic expansion through collaborations.

Growth Challenges

Adoption of Ride Sharing Trends

Ride sharing, an economical mode of transportation for consumers, poses a concern for used car dealers and financiers. If ride sharing dominates the private transportation market, it could result in fewer owners per car’s lifespan, leading to lower transaction volumes for the used vehicle market. However, the COVID-19 pandemic has shifted attitudes towards private conveyance, increasing the demand for used vehicles, especially in developing economies where they are more affordable.

Regional Growth Opportunities

Asia Pacific to Gain Traction

North America is expected to account for a significant share of the global used vehicle market over the forecast period, attributed to the extensive presence of used vehicle dealers, favorable economic growth, availability of financing, and the popularity of SUVs and trucks. The price of used cars in North America is relatively cheap compared to new vehicles.

The Asia Pacific region is expected to register significant growth over the forecast period due to higher disposable incomes, booming population figures, urbanization, increasing popularity of cars, and better financing options.

Key Market Players

Key companies in the global used vehicle market include True Car, Droom Technology Pvt Ltd., CarMax Inc., Penske Automotive Groups, Lithia Motors, Pendragon PLC, and Emil Frey Classics AG. Established industry players are focusing on new product launches, partnerships, collaborations, acquisitions, and alliances to gain a competitive edge.