The global online car buying market size was valued at USD 256 billion in 2021. It is expected to reach USD 722 billion by 2030, growing at a CAGR of 12.21% during the forecast period (2022-2030). The vehicle is bought end-to-end from online retail stores in the online car buying market. Online car-buying permits consumers to have enhanced price lucidity, the effortlessness of shopping from residence, and a digital payment procedure. Customers can endure the available offerings without difficulty and have rapid access to information related to the products and their prices. Consumers also can instantaneously access an extensive arrangement of accessible vehicles along with practice suggestions and recommendations with effortless benchmarking and cost comparisons with less or zero paperwork.
The online car markets also offer home deliveries of vehicles. The growth of the online car buying need is anticipated to be aided by factors such as OEMs moving to end-to-end online vehicle sales, an increase in third-party online platforms for private sellers and dealers, a rise in the number of active internet users, and a demand for car sharing services. However, unstructured pre-owned vehicle transactions and a lack of regularization are two problems that may impede the potential for expansion of the worldwide online auto sector.
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OEMs Focus on End-to-End Online Sales and Third-Party Online Marketplaces
Several original equipment manufacturers (OEMs) have been experimenting with online sales to provide their customers with a better online experience, including greater price transparency, the convenience of purchasing from home, and a digital payment mechanism. For instance, Volkswagen is launching a new line of electric automobiles at the same time as its new IT infrastructure, which is anticipated to significantly increase the possibility of online vehicle sales. Additionally, Britta Seeger, a member of the board of directors at Daimler who is in charge of marketing and sales, revealed in 2019 that the OEM anticipates selling 25% of its automobiles online by 2025.
European automakers, including Dacia, Volvo, Hyundai, Jaguar, Alpine, Mitsubishi, BMW, Land Rover, and Mini, are focusing their internet sales efforts on a few specific markets. The customer experience these online stores and platforms provide needs to be enhanced, while their adoption is currently limited. For instance, Hyundai and Audi only produce a few online-only versions. Many others only allow new cars to be purchased or do not offer a trade-in option. Additionally, the online sales share for most OEMs is still small but is predicted to increase soon.
Additionally, third-party online marketplaces give professional dealers and private sellers a forum to advertise their new and used cars to a sizable online audience. Customers can quickly browse the available options, get easy access to product details and prices, and instantly access various vehicles in stock. They can also get personalized suggestions and recommendations, benchmarking and price comparisons that require little or no paperwork, at-home trade-ins, and vehicle deliveries. The marketplace also offers merchants the option to charge for product promotion. The number of third-party marketplaces, platforms, and internet users are anticipated to increase significantly during the projected period.
Unorganized car sellers
The growth of the online automobile buying sector is hampered by unorganized companies. The unorganized businesses dominate the online automobile purchase market in India, China, Thailand, Brazil, and Mexico. Unorganized car sellers sell cars at comparatively lower prices as they do not offer any warranty on online pre-owned vehicles. This directly obstructs market growth. Furthermore, these sellers practice misconducts like re-painting and dent removal for accidental cars to cover their damage and obtain an inflated counterfeit price. This generates fright among the buyers looking for used vehicles leading to a limitation of market growth.
The Adoption of E-Commerce and Online Technologies
The buyer's position in the market has altered due to technological breakthroughs like the creation of the internet, the use of e-commerce websites and applications to increase demand for goods, and the advent of hybrid and electric vehicles. Consumers are learning more about the car, the on-road price of new automobiles, residual value, third-party profit margin, and others for pre-owned cars with the aid of online technology. Furthermore, improvements in the telecom sector, internet connectivity, and rising urbanization have enabled people to access information much more effectively.
Online car dealers increasingly use these elements to promote their vehicles and disseminate information about them. The sales procedure has been streamlined on this internet platform, making it possible for more stakeholders to sell and acquire cars. In this industry, the supply side dominates over the demand side, and transparency via knowledge has altered the dynamics and enabled businesses to use customer intelligence to their advantage, which is expected to boost online vehicle sales.
The global online car buying market is segmented based on vehicle type, propulsion type, category, and region.
Per the vehicle type, the fragments are Hatchback, Sedan, SUV, and Others.
The SUV section is predicted to have the highest shareholding, growing at a CAGR of 12.11%. SUV is generally a sports utility vehicle. These types of vehicles are categorized as per the size of the car, such as full-size SUVs, compact SUVs, and sport-coupe SUVs. Both new and used SUV vehicles are the most demanding vehicles in both the online and offline market. SUV vehicles offer certain features that separate these vehicles from the other types, such as higher ground clearance, easy entry & exit, high engine power, off-road capabilities, improved visibility, and better safety. Due to these factors, the SUV vehicle type segment of the online care buying market will likely witness rapid growth during the forecast period.
The sedan vehicle type segment holds the second largest market share. These vehicles witness higher online and offline sales as these cars provide comfort and luxury. These vehicles also offer features like soothing, better ride experience, higher leg space, lesser weight, improved speed, and better fuel economy. Due to these reasons, sedan vehicles will likely create growth opportunities in the market during the forecast period.
Based on the propulsion type, the online car buying market is fragmented into petrol, diesel, and others.
The petrol section is predicted to expand at a CAGR of 10.91% and hold the largest market share. Petrol cars generally contain a spark-ignited internal combustion engine specially developed to run on petrol and similar volatile fuels. Individuals worldwide prefer to buy patrol vehicles, which are inexpensive compared to diesel and other cars. As these cars are affordable, produce less noise, and are highly available in the market, these are preferred by people worldwide, leading to the growth of the online car buying market.
The diesel section will hold the second-largest share. Cars that are run on diesel use an internal combustion engine. In this type of engine, the detonation of the fuel is caused by the amplified temperature of the air in the container because of the mechanical density. As a result, these vehicles offer certain positive features like high performance, enhanced fuel efficacy, and higher availability leading to market growth.
Based on the category, the fragments are new and pre-owned vehicles.
The pre-owned vehicle section will likely hold the largest share, growing at a CAGR of 10.91%. Pre-owned cars are basically used or second-hand cars. These types of vehicles are preferred across the world as they are affordable. And so, with the increasing number of online users and digital shift by several dealers, the online car buying market is experiencing immense growth, especially in this segment.
The new vehicle section will hold the second-largest share. New vehicles are also preferred by a specific group of the public that has the affordability to buy new cars. Several digital retail platform developers offer additional discounts and 24*7 customer services for purchasing cars online. On the other hand, people also prefer to purchase online from the comfort of their homes, leading to market growth.
Region-wise, the online car buying market is segmented in North America, Europe, Asia-Pacific, and LAMEA.
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North America and the Asia Pacific will dominate the regional market
North America will command the market while growing at a CAGR of 10.51%. Due to the boom in online auto retail, the market for online automobile purchases in North America is expected to expand significantly in the following years. Businesses in this area are also growing their online dealership network to reach more clients. Due to increased internet usage, the availability of online portals for used and new car information, warranties offered for used cars, and various purchasing alternatives, the North American online auto buying industry is predicted to expand significantly during the projection period. Important market participants are implementing different techniques to increase their market presence.
They are partnering and collaborating with domestic players to gain a competitive edge and long-term business potential. In North America, the U.S. dominates the online car buying market since more sales of every vehicle type are made there than in any other nation. Additionally, it noted 2.4 times more pre-owned car sales in the U.S. than new ones. Further, the pandemic breakout increased demand for online pre-owned car transactions. For instance, the company Vroom, an online retailer of used cars, noticed an increase in demand.
The Asia-Pacific will likely hold USD 139 billion, growing at a CAGR of 14.12%. The region's rapidly increasing internet user base and the development of the automobile industry's technology have a significant impact on the expansion of the online market for buying cars. Due to its enormous population and the presence of developing nations like China and India, the Asia-Pacific region has seen continuous expansion. It offers more prospects for growth than any other region. India, China, and ASEAN nations are seen as rising global online vehicle buying markets due to the increase of internet users in the area, which is driving regional expansion.
In addition, factors including rising populations, simple affordability, convenience, and an increase in disposable incomes are fueling the growth of the online car-buying business. Auto merchants are focused on various digital platforms to take advantage of the rising internet user base to perform end-to-end online purchases. For instance, Nissan debuted Nissan@Home in December 2020, a digital platform that enabled customers to make all their purchases online, including test drives, finance arrangements, and more.