Used Car Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Used Car Market Trends & Growth Drivers

Growing Organized Sector Is Key Driver

• The used car market in developing countries, such as China, India, Brazil, and Mexico, has historically been dominated by the unorganized sector players. Most of the transactions have been made by individual people trying to buy and sell their car. Since the parties involves are individuals and not organizations, it has been hard to establish trust between the parties involved. This drives the market toward the organized sector, including OEMs and large automotive dealerships, such as Cars24 Services Pvt. Ltd., CarGurus Inc., CarMax Inc., and Carvana Co. With the involvement of OEMs and other organized increases, consumers are now more encouraged at buying second-hand cars due to the stronger sense of trust and reliability. These organizations, along with providing the used cars, also provide offers such as free towing and free services at the dealership to lure additional customers. These value-added services and benefits are helping the key organized players in the market increase their share and win the trust of the consumers, which is further expected to create demand in the market.
• Furthermore, Maruti Suzuki India Ltd., Mahindra & Mahindra Ltd., and Ford Motor Co. were among the first OEMs to enter the used-car market. Their entry has assured people of the quality of used cars and also helped attract reliable customers. The key purpose of OEMs to enter this market is to encourage the sale of new vehicles by providing exciting offers in exchange for used vehicles. Some automakers entered the market to tap into an additional revenue stream, for security in the phases of an economic slowdown, as the used car market is projected to be impacted less than the new car market. With the increasing penetration of the organized sector with certified used vehicles at competitive rates, along with financial services, warranties, and service guarantees, the used car market is projected to experience a huge boost.

Growing Demand in Emerging Economies Is Key Opportunity

• Emerging economies, such as India and China, have witnessed an increase in the disposable income of people. This has enabled a large stratum of the society, which was earlier not able to own a car, to have one now. This is because the used car market bridges the gap that exists between the willingness of people to possess a vehicle and the ability to pay for it. Thus, a whole new customer base emerged for used cars that cannot be tapped by the new car market as effectively. Due to the large population and a growing number of people with more disposable income in hand, emerging economies are expected to provide another boost to the used car market in the years to come.

Growing Environmental Concerns and Stringent Emission Norms Are Strong Restraints

• A major restraint for the used car market is the higher emissions from older cars, alongside the growing environmental concerns. The degradation of the machinery over time is the key reason older vehicles emit more pollutants than new ones. Moreover, the latter feature advanced technologies for emission reduction; hence both these reasons widen the gap between the emissions from used and new cars.
• The growing environmental concerns among the public and governments have led to the introduction of stringent policies to limit the age of used vehicles, thus providing a setback for the second-hand automobile dealerships. Government policies such as BS-6, Euro 6, and EPA Tier III norms and the doubling of car depreciation rates not only directly impact the used car market but also provide a negative view of used cars in the minds of people who might have preferred one.

Used Car Market Industry Outlook

Sector Insights

• The organized category is expected to grow at a significant CAGR, of around 9.2%, during the forecast period. A number of new car dealers are entering this industry and enticing clients with a variety of trade-in packages, due to the continually declining profitability in the new car market and the aging of vehicles on the road. As a result, it is becoming a more-significant and integral part of franchised dealer sales globally. With the approved programs of dealers, buyers are inclined toward dealer-certified vehicles.
• Furthermore, the organized category is projected to have significant growth as a result of the rising use of internet portals by both buyers and sellers in developed countries, such as the U.S., Germany, the U.K., and Japan.
• The unorganized category accounted for a major revenue share, of around 70%, in 2023. This is because of the presence of a large number of unorganized players in developing countries, such as India, Thailand, Mexico, Brazil, and China.
• Moreover, due to the weak regulatory environment around sales and purchases, these countries are expected to witness a high preference for unorganized players.

During the study, we analyzed two sectors:

• Organized (Faster-Growing Category)
• Unorganized (Larger Category)

Vehicle Type Analysis

• The medium category held the largest market share, of around 50%, in 2023. This is majorly due to the greater availability of less-driven, high-quality used automobiles and the rising purchasing power of consumers across developing countries.
• The small category will grow at a substantial CAGR, of 9.4% in the coming years. This is mainly due to the reduced cost and average miles driven on small vehicles coupled with benefits provided by dealers on small vehicles resulting in reduced average overall cost of the car.

Below are the vehicle types covered in the report:

• Medium (Largest Category)
• Small (Fastest-Growing Category)
• Large

Propulsion Insights

• The ICE category held the larger revenue share in 2023, based on propulsion. The demand for used ICE-based cars is substantial in the emerging economies in APAC and LATAM because of the rising average age of these vehicles. Currently, the average age of a car in China is 5 years, compared to 11 years in the U.S. and the U.K.
• Additionally, manufacturers and dealers compete for new customers in the market using a variety of strategies, including having an online presence and offering a wide range of products.
• Moreover, most of the second-hand cars available today contain an ICE, as it is the primitive technology, having been around for over a century.
• The electric category is expected to grow at the higher CAGR, of 9.1% during the forecast period. This is attributed to the rising government concerns over pollution, which presents opportunities for dealers of used electric vehicles. Further, as ICE cars are phased out, more electric variants will be bought and then bought again, as second-hand models.

The following propulsion are included in the report:

• Internal Combustion Engine (ICE) (Larger Category)
• Electric (Faster-Growing Category)

Sales Medium Analysis

• The offline category held the larger market share, of around 75%, in 2023. This is primarily a result of consumers' strong preference for buying second-hand cars from reputable dealers. Before purchasing a used automobile from a dealer, shoppers visit offices to take a test drive of the vehicle. Therefore, it is predicted that the offline category would dominate the market throughout the projected period.
• The online category is expected to grow at a significant CAGR, of 9.5% over the forecast years. The requirement to initially contact dealers has decreased as a result of digitization. Customers can readily engage and obtain information via a variety of media and devices, including smartphones and personal computers. Therefore, it is projected that the increasing internet usage and the simplicity of conducting research and buying online will fuel the rise of the online category during the forecast period.

Below are the sales media analyzed in the report:

• Offline (Larger Category)
• Online (Faster-Growing Category)

North America Is Largest Market

• North America held the largest market share, of around 50%, in 2023. This dominance is due to the increasing sales of used cars in the U.S. and Canada and the high cost of new cars in this region. To reach more customers, companies are expanding their dealership networks. Moreover, the regional market is predicted to grow considerably as a result of the rising usage of online tools for buying or researching used automobiles, availability of warranties on pre-owned vehicles, and a variety of purchase alternatives.
• The APAC used car market is the fastest-growing, advancing at a CAGR of 9.5% during 2024–2030. This is attributed to the rising demand for used cars in emerging economies, such as China and India, and the increasing number of organized companies offering used automobile trading services in the region.
• For instance, numerous Indian auto dealers provide a wide range of cutting-edge-technology-enabled solutions, such as mobile applications, online showrooms, which function as virtual showrooms; cloud-based lead management systems, Software and analytics to track sales success, and assistance with digital marketing.

The regions and countries analyzed for this report include:

• North America (Largest Regional Market)
  • U.S. (Larger and Faster-Growing Country Market)
  • Canada
• Europe
  • Germany (Largest Country Market)
  • U.K. (Fastest-Growing Country Market)
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia-Pacific (APAC) (Fastest-Growing Regional Market)
  • China (Largest Country Market)
  • Japan
  • India (Fastest-Growing Country Market)
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest and Fastest-Growing Country Market)
  • Mexico
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • South Africa
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

Used Car Market Share

The global used car market is fragmented with the presence of several key players. Key players in the global used car market are taking strategic measures to gain a competitive edge over their competitors, which range from mergers & acquisitions to business expansions and partnerships. Further, companies are focusing on improving their existing inventories and service offerings and working in collaboration with other market leaders to expand their reach. For instance, Asbury Automotive Group Inc. has acquired certain assets of Park Place Dealerships in an all-cash transaction worth USD 1 billion, excluding vehicle inventory. With this transaction, Asbury's geographic mix rose to 36% of the revenue derived from the Texan market, and its overall portfolio transformed to roughly half the Sales revenue generated from luxury brands.

Used Car Industry News

• In June 2023, Jardine Cycle & Carriage Limited and Carro, a car dealership active in Southeast Asia, entered into a collaboration. As per a joint statement by the companies, this collaboration offered Carro access to a wide range of high-quality used cars and enabled it to improve the digital offerings of Republic Auto. The alliance aimed to enhance the position of both the companies in the market, while offering customers better experiences.
• In August 2022, Lexus announced the launch of the Lexus Certified Programme in India. This strategic move by Lexus allows owners of Lexus vehicles to sell their automobiles at a higher resale value.
• TrueCar Inc. acquired Irvine, California-based Digital Motors. This acquisition is intended to materialize the plans of TrueCar to deliver a robust digital car buying and selling experience with its TrueCar+ marketplace. It allows buyers to have easy and transparent access to a national inventory of vehicles.