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Used Car Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

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  • 100 Pages
  • August 2022
  • Region: Global
  • Mordor Intelligence
  • ID: 5318574
The used car market was valued at USD 260 billion in 2021, and it is expected to reach USD 460 billion by 2027, registering a CAGR of over 10% during the forecast period (2022 - 2027).

The outbreak of COVID-19 affected the automotive industry significantly. With supply chain disruption and transportation halt, new additions to the used car inventory were not coming into the market. This reduced the number of models available for purchase, reducing the purchases. However, during the later stages of 2020 and 2021, the market started reverting to the pre-pandemic situation, increasing opportunities for the used car market worldwide.

The used car market across the world is growing rapidly. The main reason for the same has been the advent of organized players in the market in developing nations, which has taken care of the trust deficit plaguing the used car market in those countries for ages.

Factors such as a rise in income levels, increasing demand for luxury cars, shorter car ownership periods, booming import-export, and a growing preference for two-wheeler owners to upgrade to small and compact cars also drive the growth of the market.

However, a lack of financing or expensive financing options in many countries for used cars is expected to hinder the growth of the market. While finance for new cars is easy to obtain, used cars attract a higher rate of interest and are not sanctioned so easily. However, with the gradual growth in the organized sector, the market situation is changing. Major players, like Toyota, BMW, Maruti Suzuki, etc., have ventured into the used-car space in India.

Key Highlights

  • The market in emerging economies such as India is currently dominated by unorganized players who do not own an inventory but rather thrive on their own platform for C2C sales. They make revenue through commissions earned by facilitating the sale of used cars on their online platforms. However, the organized and semi-organized sectors are steadily catching up and are expected to occupy a considerable sale toward the end of the forecast period. The Asia-Pacific region is expected to be the largest market, followed by North America and Europe.

Key Market Trends

Strengthening of Online Infrastructure Positively Affecting the Used Cars Market

As the smartphone and internet penetration in emerging economies, especially in Asia-Pacific, is increasing, the used car market is getting more organized because used car retailers are using digitalization to make market offerings attractive. Facilities such as an enormous number of photos and videos on the online platform and easy online instant finance service are drawing more customers into buying used cars.

In the North American market, where the used car sale to new car sale ratio is almost 2 to 1, many new players such as Fair and Vroom are using artificial intelligence and Big Data analytics to differentiate their brand and offerings from conventional used car dealers. Major OEMs are now investing in the used car segment to ramp up their revenues.

Tech-savvy customers in the age group of 25-40 years are demanding features such as end-to-end transactions, doorstep delivery, digitalized recommendation on the basis of driving behavior and lifestyle of the customer, and digitalized test drives. Players in the market are providing flawless and smooth access to car specifications, performance reports, and inventory information to customers to assist them in making informed decisions.
  • Mercedes-Benz is using blockchain technology to store and maintain the maintenance history record of the carbon footprint of used cars in Beijing. 35% of a car’s carbon footprint comes from the manufacturer. Mercedes-Benz and PlatON are planning to store the entire lifecycle data of a vehicle.

Asia-Pacific is the Fastest Growing Market

China is the world's largest automobile market owing to the sheer volume of vehicles present in the country. The country registered a total of 20 million units of passenger vehicles sold just in 2020, with the total number of passenger cars present in the country numbered at approximately 282 million units by the same period. Owing to such a high number of vehicles present at disposal, the product influx for the used car market is immense in China. With the rapid electrification of the automotive industry in the country, the owners of internal combustion engine vehicles have begun to sell their existing vehicles to transition to electric mobility. This significantly increased the number of vehicles available for purchase in the used car industry, driving the potential for growth during the forecast period.

India is another major market for the used car market owing to the long operational life of vehicles in the country. In India, a pre-owned car purchase is driven by affordability. The majority of the customers are first-time car buyers. Thus, the preference for entry-level hatchbacks is high.
  • For instance, the average price of a used hatchback that has covered around 65,000 km is generally less than INR 3.5 lakh. Similarly, a premium hatchback that has driven the same distance costs less than INR 7 lakh. Maruti Suzuki, Hyundai, and Volkswagen are some of the preferred car brands in the country. Models like Alto, Wagon R, Swift, I10, and Grand I10 are some of the best models available in the used car market.

Competitive Landscape

The market for global used cars is fragmented. Major global players have the edge over other smaller players due to their superior business models and increased number of pre-owned car retail outlets. However, the market is dominated by small and unorganized regional players who are present in most nations. The growing organized and semi-organized sector is expected to bring in more revenue to the bigger organized players toward the latter half of the forecast period, thus, moving the market ever slightly towards a consolidated one. India, for instance, has an extensive network of used car sellers. These companies are trying to consolidate the unorganized used car segment toward a single umbrella of organized companies offering various services along with used cars as products.
  • Players such as Quikr, Honda Auto Terrace, Ford Assured, Toyota U-Trust, and Maruti True Value are in the process of expanding their outlets and operations within the Indian market. The unorganized sector occupied a major share of the total market in 2020.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

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Table of Contents

1.1 Study Assumptions
1.2 Scope of the Study
4.1 Market Drivers
4.2 Market Restraints
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1 By Vehicle Type
5.1.1 Hatchbacks
5.1.2 Sedan
5.1.3 Sports Utility Vehicle
5.2 By Vendor
5.2.1 Organized
5.2.2 Unorganized
5.3 By Geography
5.3.1 North America United States Canada Rest of North America
5.3.2 Europe Germany United Kingdom France Spain Rest of Europe
5.3.3 Asia-Pacific China India Japan South Korea Rest of Asia-Pacific
5.3.4 Rest of the World Brazil United Arab Emirates South Africa Other Countries
6.1 Vendor Market Share
6.2 Company Profiles*
6.2.1 Cox Automotive
6.2.2 Hertz Car Sales
6.2.3 PenskeCars
6.2.4 Emil Frey
6.2.5 Pendragon PLC
6.2.6 Arnold Clark
6.2.7 Carro
6.2.8 Maruti True Value
6.2.9 Mahindra First Choice Wheels
6.2.10 CarMax
6.2.11 AutoNation
6.2.12 Asbury Automotive Group

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Cox Automotive
  • Hertz Car Sales
  • PenskeCars
  • Emil Frey
  • Pendragon PLC
  • Arnold Clark
  • Carro
  • Maruti True Value
  • Mahindra First Choice Wheels
  • CarMax
  • AutoNation
  • Asbury Automotive Group