Used Car Market Likely to Enjoy Explosive Growth in Years to Come

North America accounted for the largest share in the used car market

The used car market will witness a CAGR of 8.7% between 2020 and 2030, primarily on account of the increasing rate of depreciation and the reduction in the average age of vehicle ownership. Moreover, the soaring popularity of car subscription services, growing penetration of e-commerce technologies, and burgeoning demand for off-lease vehicles by leasing car dealers, franchises, and offices will also facilitate the market growth, worldwide. Owing to these factors, the market size is expected to grow from 115.2 million units in 2019 to 275.3 million units by 2030.

The emergence of e-commerce and online technologies is one of the major growth drivers of the market. Used car owners are increasingly using online platforms to advertise their vehicles, as rapid urbanization, expanding internet connectivity, and advancements in the telecom industry facilitate information flow among people. The surging availability of used cars on e-commerce platforms smoothens the sales process and allows more stakeholders to buy and sell used cars online. As the supply side of this market has more weightage than the demand side, the surging internet penetration has made it easier for vehicle owners to advertise their used cars effectively. 

In 2019, the unorganized category accounted for a larger share in the used car industry, within the sector segment. The dominance of this category is attributed to the extensive presence of unorganized players in developing countries, such as India, Brazil, China, Thailand, and Mexico. Besides, the presence of a weak regulatory environment for used car purchases and sales will also contribute to the growth of the market in this category. However, the organized category will exhibit faster growth in this decade, due to the higher propensity of customers to purchase certified vehicles from authorized dealers. 

Currently, the used car industry is highly fragmented, due to the presence of several global players and unorganized players. Presently, the major players are focusing on facility expansions, product launches, and partnerships to march ahead of their competitors. For example, in June 2019, Group 1 Automotive Inc. unveiled AcceleRide, an online vehicle purchasing platform. This platform enables customers to purchase a new or used vehicle online. This e-commerce platform allows customers to upload their information digitally, without the need to visit a dealership ever. 

According to PS Intelligence, North America accounted for the largest share in the used car market in 2019. This is because the U.S. and Canada have the largest customer base for used cars, worldwide. Additionally, the increasing implementation of stringent government regulations supporting the creation of more-organized operations will help the market growth in the region. Moreover, the transforming retail scenario of used cars, on account of the ongoing digital revolution, will also boost the market growth in Canada and the U.S.

Whereas, the LAMEA used car market is expected to display the fastest growth in the foreseeable future, owing to the rising purchasing power of people in Mexico, Argentina, and Brazil. A surge in purchasing power has widened the growth opportunities for market players in these regional countries. In addition, the increasing number of partnerships among automotive OEMs, online retailers, dealerships, and financial institutions will also support the market growth in the region. For instance, partnerships help companies generate shared value through data, such as new model reselling patterns and customer preferences.  

Thus, the surging penetration of online and e-commerce technologies will propel the supply and demand for used cars, worldwide. 

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Rahul Gautam

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