One of the major drivers for the growth of the global used car market is a significant rise in the number of organized players, such as Cars24 Services Pvt. Ltd., CarGurus Inc., and CarMax Inc. The organized sector offers certified used vehicles at competitive rates, along with warranties and service guarantees. Due to these factors, the market is expected to grow from 115.2 million units in 2019 to 275.3 million units in 2030, at a CAGR of 8.7% during the forecast period (2020–2030).
Organized Sector Bifurcation To Grow at Higher Rate throughout Forecast Period
The used car market is classified into organized and unorganized, on the basis of sector. Of these, the organized classification is expected to grow at the higher pace during the forecast period, mainly due to the higher propensity of buyers to shop for certified vehicles from dealers. This makes certified programs an important differentiating factor for the players in the organized sector. In addition, the increase in the use of online portals by both sellers and buyers in developed countries, such as the U.S., Germany, the U.K., and Japan, is further expected to result in the strong growth of the organized sector category.
Further, the used car market, on the basis of vehicle type, is categorized into medium, large, and small. In terms of volume, the medium category held the largest share in the global market in 2019. This category’s growth is mainly driven by developing nations, due to the increased supply of less-driven, good-quality, second-hand cars, coupled with the surging purchasing power of customers in various emerging economies.
The internal combustion engine (ICE) propulsion type category dominated the used car market in 2019. With the increasing average age of ICE vehicles, this category is expected to witness significant growth in developing regions, such as Asia-Pacific (APAC) and Latin America, Middle East, & Africa (LAMEA). For instance, the average age of vehicles in China is currently ~5 years, whereas in countries such as the U.S., the average age of vehicles is ~11 years. Therefore, the ICE category will continue to dominate the used car industry during 2020–2030.
Globally, the LAMEA used car market is expected to witness the fastest growth during the forecast period. The market in the region is primarily driven by the increasing automotive production, coupled with the surge in the disposable income of people in emerging economies, such as Brazil, Mexico, and Argentina. Furthermore, in Middle Eastern countries, such as the U.A.E., the market is highly fragmented, as there are many unorganized players. Some of the biggest players in the market are AL FUTTAIM COMPANY LLC, Gargash Enterprises LLC, and The Elite Cars.
The COVID-19 pandemic has resulted in lower earnings and unemployment for many potential car buyers, thus reducing their purchasing power, and a slump in consumer confidence. The crisis has prompted many industry stakeholders to re-examine strategies and prepare for the industry's medium– and long–term growth.
Partnerships Are Strongest Strategic Measure Taken by Players in Market
Players in the used car market are consistently focusing on strategic partnerships and business mergers, to remain competitive in the market. For example, in December 2019, PenFed Credit Union, TrueCar Inc., and AB Volvo (U.S.) partnered on a private targeted incentive program that provides preferred pricing and other incentives for PenFed members. This offer provides PenFed Federal Credit Union members access to special prices, plus incentives across AB Volvo’s premium line-up of vehicles.
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Similarly, in October 2019, Motor1.com LLC partnered with TrueCar Inc. to offer TrueCar Inc.’s car-buying platform to its 10 million unique monthly users. The new Motor1.com Auto Buying Program, powered by TrueCar Inc., provides Motor1.com USA’s visitors with an efficient and transparent way to buy their next vehicle. The platform is accessible through various entry points on Motor1.com’s homepage, article pages, and new car reviews.
Some of the major players operating in the global used car market are CarMax Inc., Penske Automotive Group Inc., Lithia Motors Inc., Group 1 Automotive Inc., Droom Technology Pvt. Ltd., Pendragon PLC, Asbury Automotive Group Inc., Sonic Automotive Inc., Cox Automotive Inc., and AutoNation Inc.