Used Car Market to Cross USD 2.70 trillion by 2031 Driven by Rising Affordability and Online Growth

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Monday, May 27, 2024 at 2:26pm UTC

The Used Car Market is experiencing a boom fueled by several key factors. Rising affordability compared to new cars is a major driver, particularly as new car prices continue to climb. Additionally, the growth of online marketplaces has made it easier and more convenient for consumers to find and purchase used vehicles. Furthermore, a shift in consumer sentiment towards pre-owned cars, along with a growing preference for electric and hybrid vehicles, is contributing to the market’s expansion.

The used car market reached a valuation of USD 1.67 trillion in 2023. It is projected to surge to a staggering USD 2.70 trillion by 2031, reflecting a robust compound annual growth rate (CAGR) of 6.2% during the forecast period (2024-2031).

Used Car Market
Used Car Market

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Used Car Market Shows Signs of Recovery in 2023

The used car market bounced back somewhat in 2023 after a slump in 2022. This was primarily driven by an increase in re-registering domestic cars and changing ownership of previously imported cars within certain regions. However, the market hasn’t yet fully reached its pre-2021 peak.

An interesting trend emerged with imported cars. There’s been a rise in damaged vehicles coming from the USA and Canada. This is likely due to the exchange rate making it less profitable to import accident-free cars from those regions. In contrast, imports from Western Europe show a lower percentage of damaged vehicles.

Despite this, the overall number of used car transactions actually increased in 2023 compared to 2022. This indicates a healthy market for both new and used car sellers. Additionally, a shift towards electric cars is expected, which could impact the demand for older gasoline-powered vehicles, especially with the implementation of clean air zones in major cities. Consumer confidence also seems to be improving, as fears of further price hikes in the used car market subsided in 2023, potentially encouraging more purchases.

While there’s a positive trend, it’s important to note that national re-registrations of used cars, though up 31% in 2023 compared to 2022, haven’t yet reached 2021 levels. This can likely be attributed to disruptions caused by the Russia-Ukraine war in early 2022. A similar pattern is seen with previously imported cars being re-registered within the country.

Prominent key Players of Market

  • com
  • Cox Automotive
  • eBay Inc.
  • Scout24 AG
  • Asbury Automotive Group Inc.
  • AutoNation Inc.
  • Lithia Motors Inc.
  • Big boy Toyz Ltd LLC
  • Cars24 services private limited
  • Group1 Automotive Inc.
  • Hendrick automotive group
  • CarMax Business Services
  • Mahindra First Choice Wheels Ltd.
  • TrueCar Inc.

Used Car Market Booms on Affordability, Online Convenience, and Tech-Empowered Consumers

The used car market is flourishing due to a perfect storm of affordability and convenience. Budget-conscious buyers are flocking to used cars due to their significant price advantage over new models. Online marketplaces have revolutionized the buying experience, offering a vast selection of vehicles with a few clicks. This easy access is particularly appealing in developing nations where affordability is paramount. The rise of electric vehicles and shorter ownership cycles are increasing the availability of used cars, further fueling market growth. New online players are simplifying the buying process, attracting even more consumers. This shift has not gone unnoticed by traditional players. Recognizing the used car market’s potential, manufacturers and dealerships are investing in dealership networks and certified pre-owned programs. Technology plays a key role as well. Increased access to information empowers consumers, allowing them to make informed decisions about vehicle options, value, financing, and market prices. Transparency, readily available information, online sales channels, certified programs, and established dealerships are all working together to propel the used car market forward, with leading companies creating seamless online and offline buying experiences for customers.

Segment Analysis

By Fuel Type: Petrol vehicles continue to dominate the used car market due to their widespread availability and lower initial purchase price compared to diesel and electric options.

By Vehicle Type: Hatchbacks remain the most popular segment, particularly in developing nations, due to their affordability, fuel efficiency, and maneuverability in urban settings. SUVs are gaining traction due to their practicality, spacious interiors, and perceived safety features.

By Distribution Channel: Franchised dealerships hold a strong position in the used car market, offering benefits like certified pre-owned vehicle programs and easier access to financing options. However, independent dealers and online platforms are growing in popularity, providing consumers with more choices and potentially lower prices.

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Impact of the Russia-Ukraine War

The war disrupted global supply chains for new cars, leading to production slowdowns and shortages. Estimates suggest a 20-30% decrease in new car production in some regions. This limited the availability of new vehicles in the market, pushing consumers towards used cars, thereby inflating demand and potentially increasing used car prices by 5-10%. The war triggered a surge in fuel prices worldwide, making fuel-efficient used cars more attractive to budget-conscious buyers. This shift in preference further tightened supply and potentially pushed up prices of used fuel-efficient vehicles by an additional 3-5% compared to other used cars.

The Asia-Pacific Region Is Poised To Dominate The Used Car Market With Its Explosive Growth

This dominance stems from a confluence of factors. Firstly, giants like China and India boast a massive existing vehicle population, creating a constant stream of used cars entering the market. The rapid shift towards electric vehicles incentivizes owners to trade in their combustion engine cars for newer models, further fueling the pool of used vehicles. Affordability remains a key driver, particularly for first-time car buyers in developing nations within the region, making used cars an attractive option. Finally, government regulations like Indonesia’s odd-even traffic rule, which restricts older vehicles on the road, are expected to push car owners to sell their older cars, further boosting the supply of used vehicles in the region.

Recent Developments

  • TrueCar Gears Up for Digital Dominance (June 2022): TrueCar Inc.’s acquisition of Digital Motors signals their commitment to building a powerful online platform for car buying and selling.
  • Financing Boost for Indonesian Car Buyers (May 2022): GoTo-backed Bank Jago partnered with Carsome Indonesia, a leading used car marketplace. This collaboration aims to provide easier access to financing solutions for Indonesian consumers looking to purchase used cars.

Key Takeaways for the Used Car Market Study

  • Understand the significant growth trajectory of the used car market, projected to exceed USD 2.70 trillion by 2031.
  • Gain in-depth knowledge of the key factors fueling market expansion, including affordability, online platforms, and consumer shifts towards pre-owned vehicles.
  • Identify Asia-Pacific as the fastest-growing market due to its large vehicle population, rapid electrification, and affordability-driven demand.
  • Learn how technological advancements and online access empower consumers, influencing their used car buying decisions.
  • Gain insights into potential trends like the rising adoption of electric vehicles and their impact on the used car market.

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