The global used car market size was valued at USD 1,503 billion in 2021. It is projected to reach USD 2,755 billion by 2030, growing at a CAGR of 6.17% during the forecast period (2022-2030). A vehicle driven previously but still in working condition for resale is referred to as a used car. Various outlets such as franchise and independent car dealers, rental car companies, auctions, private party sales, and leasing offices sell used cars. The average number of cars millennials purchase has decreased because of the high auto ownership and upkeep expense. Additionally, millennials are more likely to choose used automobiles over new ones while traveling because they want to minimize expenses.
Additionally, the high cost of new cars prevents many people from purchasing them, which increases the demand for older cars. This opens the door for various investments by sector players to set up their dealership networks in the market. The market for used automobiles is expected to develop due to factors like the high price of new cars, worries about affordability, and increased demand from franchises, leasing offices, and car dealers for off-lease cars and subscription services.
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High Vehicle Prices and Affordability Concerns
The demand for cutting-edge car features, like power steering, climate control, anti-lock braking, and others, has grown over the last few years. This has caused the cost of vehicles to grow as a result. Additionally, rising car costs are returning to the used market. As a result, the car market has seen more used car sales than new vehicles, which is expected to enhance demand for the market.
Rising Demand for Off-Lease Cars and Subscription Service
The danger of new entrants into the market and increased competition are the main drivers of the used vehicle dealership industry's expansion. Consumer perceptions of the used car industry have evolved due to the reliability and added services/quality. The demand for car subscription services, which allow users to use cars monthly for fees covering maintenance, insurance, and roadside support, has surged. Additionally, customers can sell or trade in their old car for a new one with the rapid advancement of technology or the quick launch of new vehicle models. The future growth of the used car market can be attributed to benefits like value for money.
Unorganized Used Car Sales
Unorganized competitors hamper the expansion of the used car industry. The messy businesses dominate the used car industry in nations like Mexico, Brazil, Thailand, China, India, and China. Furthermore, the unorganized players do not provide any kind of warranty for used cars. Additionally, some vendors use dishonest tactics like repainting and dent removal on accident-damaged automobiles to conceal their damage and obtain an artificially inflated value, which makes potential buyers doubtful of purchasing secondhand cars. Therefore, the increased rate of fraud and the larger market share held by unorganized dealers pose a threat to the expansion of the used car market.
Growing E-commerce and Online Technologies
Due to technology improvements like the internet, e-commerce websites and apps, and hybrid and electric automobiles, the buyer's position in the market has changed. Consumers are learning more about the car, its residual value, third-party profit margin, and other topics using online technologies. Furthermore, improvements in the telecom sector, internet connectivity, and rising urbanization have enabled people to access information much more effectively. Used car owners use these elements for advertising their cars and sharing information about them quickly. The sales procedure has been streamlined on this internet platform, making it possible for more stakeholders to sell and acquire cars.
The global used car market is segmented by vehicle type, fuel type, and distribution channel.
Based on vehicle type, the global market is bifurcated into hatchbacks, sedans, and SUVs.
The SUV segment is the highest contributor to the market and is expected to grow at a CAGR of 7.8% during the forecast period. SUV is a sports utility vehicle and is often categorized according to the size of the car, such as full-size SUV, compact SUV, and sport coupe SUV. Used SUVs include Toyota Fortuner, Hyundai Creta, Maruti Vitara Brezza, and Nissan Kicks. SUVs are the most sought-after models in the new and used car markets. The primary characteristics that drive the market demand for SUVs include higher ground clearance, simple access and exit, high engine power, off-road capability, improved visibility, and superior safety. Additionally, SUVs are popular because of their roominess, safety, and off-road ability, among other things.
The majority of offline and online sales channels report higher sedan vehicle sales. As a result, an increase in the used sedan industry is anticipated during the next few years. Sedans are renowned for being comfortable and opulent. The demand for sedans is increasing due to comfort, a smoother ride in cities, more excellent boot room, lighter weight, better speed, and fuel efficiency. In addition, the industry is seeing an increase in demand for electric vehicles due to tighter emission regulations. Most sedan-style electric cars are readily available due to their low cost and accessibility.
Based on fuel type, the global market is bifurcated into petrol, diesel, and others.
The petrol segment owns the highest market share and is expected to grow at a CAGR of 7.9% during the forecast period. A petrol car uses a spark-ignited internal combustion engine. It is designed to run on petrol and similar volatile fuels. The majority of cars on the market today are powered by gasoline. Additionally, a large portion of the petrol vehicles is used cars. The price of these fuel-type vehicles is reasonable compared to diesel and other cars. Some of the most popular gasoline-powered vehicles sold worldwide are the Ford F-150, Honda CR-V, and Toyota RAV4. The elements that drive the desire for petrol cars in the used car market are low prices, less engine noise compared to diesel, and greater market availability.
The growth of the diesel segment in the market is boosted by the trend of automobile rental services and the expansion of taxi services. The internal combustion engine in a diesel vehicle heats the air in the cylinder due to mechanical compression, which ignites the fuel. In addition, these vehicles use less fuel than those that run on gasoline and other fuels. Some examples of diesel vehicles highly favored in the used automobile market include the BMW X7, Honda CR-V diesel, and Honda City diesel. However, the main obstacles to the growth of the diesel fuel type in the used car market are the rise in demand for electric vehicles and the tightening of pollution regulations.
Based on distribution channels, the global market is bifurcated into franchised dealers, independent dealers, and others (private sales, offline, online).
The franchised dealer segment is the highest contributor to the market and is expected to grow at a CAGR of 8.9% during the forecast period. A franchised dealership that sells new and used vehicles to customers is known as a franchised dealer. Moreover, private used vehicle dealer businesses like Cars24, Ture, Inc., AutoNation, Inc., and others provide multi-brand dealerships in the used car market. The growth of franchised dealers, particularly in the market, is fueled by several factors, including accessibility to the vehicle, pre-owned certified vehicles, immediate vehicle delivery, and brand trust. The main market trends for franchised dealers also include negotiating prices, various product testing, the growth of internet infrastructure, and post-sale services.
Independent dealers are dealerships that operate independently and aren't connected to any particular brand or manufacturer. This kind of dealer can be found in the neighborhood and sells vehicles from several automakers. Instead, they go by names like Phillip's previously owned cars, Marle's used cars, and Bob Walker's Used Cars. Additionally, the elements that fuel the expansion of independent dealers in the used automobile industry are affordability and ease of access to financing. In the used automobile market, reduced prices and the need for fewer legal documents may present a chance for independent sellers.
Asia-Pacific Dominates the Global Market
The global used car market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
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Asia-Pacific is the largest global used car market shareholder and is expected to grow at a CAGR of 9.3% during the forecast period. Asia-Pacific is experiencing a growth in demand for various vehicle types, from entry-level petrol to high-end diesel. The global market is significantly impacted by strict government rules concerning old cars, urbanization, rising fuel prices, and technical advancements in the used car industry. India, China, and ASEAN nations—considered emerging markets worldwide for used cars—are responsible for most of the regional increase. Increased population, simple affordability, rise in discretionary incomes, low vehicle ownership rates among millennials due to high vehicle costs, and a lower population-to-car ratio are further reasons driving the growth of the used automobile market.
Europe is anticipated to grow at a CAGR of 10.2% during the forecast period. Due to increased online automobile sales, Europe now accounts for 40% of the world's automotive market. The used car market trend has seen expansion due to its affordability. It is anticipated that the market for used vehicles in Europe will continue to dominate the industry while also experiencing considerable growth during the projection period. This is primarily because of the growing recognition of the advantages of shared mobility. Low prices and an increase in demand for cab-hailing services across Europe are the main drivers of the growth of the used automobile market.
North America is predicted to see a growth in demand for used automobiles compared to other regions because it has one of the highest rates of used car sales in nations like the U.S., Canada, and Mexico. Due to the high price of new cars, it is projected that the market for used vehicles in North America will expand significantly. Businesses in this area are growing their dealership network to reach more clients. Due to increased internet usage, online resources for buying or researching used cars, warranties offered on pre-owned vehicles, and various purchasing options, the North American used car market is anticipated to expand significantly during the forecast period.
LAMEA has the smallest market share for used cars, but it is anticipated to grow fastest during the forecast period. LAMEA has seen sustained economic growth over the past few years due to increased consumer disposable income and living standards. During the forecast period, it is anticipated that the adoption of used cars will increase due to economic growth in places like Latin America and Brazil. Additionally, the region's attitudes toward car ownership and the ongoing rise in demand for vehicle rental services present potential opportunities for the market.
List of key used cars market suppliers profiled