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Used Vehicle Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (Passenger Car, Commercial Vehicle), By Vehicle Age (0 to 05 Years, 06 Years to 10 Years, 10 Years and above), By Vendor Type (Organized, Unorganized), By Propulsion Type (ICE, Electric), By Market Type (Offline, Online), and Regional Forecast, 2020-2027

Region : Global | Format: PDF | Report ID: FBI104665

 

KEY MARKET INSIGHTS

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The global used vehicle market size, which stood at USD 1,710.75 billion in 2020, is expected to experience a steep decline due to the COVID-19 pandemic till 2022. The market growth, which will be sluggish in 2021 and the first half of 2022, is expected to show signs of recovery in the second half of 2022 as a result of the possible resumption of regular production and sales activities. The global used vehicle market size is projected to grow at a CAGR of 1.64% during the forecast period from 2020 to 2027 and is estimated to reach USD 1,917.35 billion by 2027.


A used vehicle is a second-hand vehicle sold through different outlets such as rental car market companies, online car portals, franchise car dealers, and leasing offices. Used cars have witnessed an increase in sales as the ownership of cars has come down to around 3-4 years. Decreasing ownership and rising advancements in digital technologies have improved the online purchasing experience of cars along with improved car subscription services. Further, automotive dealers are developing sales and marketing channels to boost the sales of vehicles. For instance, online sellers such as Alibaba Group, eBay, Vroom Inc., CarMax Business Services LLC, and TrueCar, among others, have made the market highly competitive. However, online sales channels face challenges such as limited face-to-face reviews and communication of the value of these products and services.


Rising Preference for Personal Transport amid COVID-19 to Stoke Growth


The coronavirus pandemic outbreak has left the automobile industry in a state of great chaos. After the outbreak, consumers have preferred to use personal transportation owing to safety and distance norms.  Also, the sudden financial downturn is likely to hinder the purchase of new vehicles, resulting in commuters choosing second-hand vehicles. Therefore, the market for used cars is on the rise during the pandemic. According to the Society of Indian Automobile Manufacturers (SIAM), the used vehicle segment share in the auto industry is about 18%. However, sales during the pandemic are on the rise, estimated to be around 4.4 million units, while sales of newly registered passenger vehicles dropped by 3 million units to 2.7 million for the first time since 2017. This shows that the COVID-19 pandemic has surged the market growth owing to the risk and safety factors.


LATEST TRENDS


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Developments in Online Retail Platforms to Propel the Adoption of Used Vehicles


Developments and benefits from online retail platforms such as reduced haggling and transparency in the vehicle-buying process, availability of photos and data for consumers, amplification of value propositions, simplification of financial processes, and the introduction of end-to-end digital purchasing are likely to drive the market. For example, there are almost 5 million visitors to CarTrade.com every month owing to the ease of availability of different vehicle models on the website. Furthermore, the growth in such online platforms is expected to grow enormously owing to the increasing penetration of the internet.


DRIVING FACTORS


Depreciation Factor to Augment Demand for Used Vehicles


Depreciation is a critical factor that favors the shift towards used vehicles from new vehicles. For instance, the depreciation rate is almost 30% in the first year itself of the car purchased. The high depreciation rate of new cars will undoubtedly influence the mindset of consumers choosing high-value vehicles, which makes purchasing second-hand vehicles an added value-for-money choice. Following this, the acceptance of second-hand cars in society is also increasing.


People are as passionate and happy about buying a used car as they are about a new car. Additionally, the availability of a variety of brands to choose from at comparatively lower prices than new vehicle prices is also likely to boost the demand for these vehicles. For instance, the depreciation rate for passenger cars is 15%, whereas, for commercial vehicles, the rate goes up to 30% in India. Recently, the Finance Ministry of India announced higher depreciation rates (30% on passenger cars, 45% commercial vehicles) on vehicles purchased between 23rd August 2019 and 31st March 2020, along with the deferring increased registration fees for vehicles.


Increased Demand for Pre-owned Luxury Cars to Boost Market Growth


The ownership duration of ordinary cars has been reduced from 6 years to 4 years and the ownership period of luxury cars has also seen a dip. With careful evaluation, patience, and a little effort, buyers can own a well-maintained luxury car at a price substantially lower than a new car. For instance, the price of a used luxury car is almost 50-60% lower than a new luxury car. The listing of pre-owned luxury cars on online platforms is also increasing. For instance, according to OLX, an online selling platform in India, 1.6 million used luxury cars were listed on its website during January-April 2018.


All these factors associated with used luxury cars are likely to increase the demand for this type of vehicle.


RESTRAINING FACTORS


Unorganized Regulations and Lack of Standardization to Restrain Growth


The primary restraint for the used vehicles market growth is the lack of standardization of the market. Standardized rules and facilities such as the provision of insurance, quality checks, maintenance, and roadside assistance are lacking and hampering the market for used cars. The unorganized market structure in developing countries is also becoming a major restraint for the growth of this market. Independent and unorganized sellers sell vehicles without any kind of warranty and product standardization, making buyers hesitant about buying pre-owned vehicles and hindering the growth of the market.


SEGMENTATION


By Vehicle Type Analysis


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Passenger Cars Segment Dominated in 2019


Based on vehicle type, the market is segmented into passenger cars and commercial vehicles. The passenger car segment dominated the market in 2019. Used cars with added reliability and quality have changed customers’ attitudes and have thus increased passenger vehicle sales.


The commercial vehicle segment is anticipated to show significant growth owing to the increased sales of SUVs in developing and developed countries such as China, India, and the USA.


By Vehicle Age Analysis  


0 to 5 Years Segment to Grow at a Faster Pace Backed by Quick Vehicle Changeability Position of Consumers


Based on vehicle age, the market is segmented into 0 to 05 Years, 06 Years to 10 Years, and 10 Years and above. The 0 to 05 Years segment is projected to grow at a faster pace over the forecast period as vehicles in this ownership period are available at cheaper rates, with up to 30% to 40% of a new vehicle’s market price. These factors are expected to fuel the growth of the segment during the forecast period.


The 06 Years to 10 Years segment is anticipated to show significant growth in the market. Increasing demand for these vehicles in developing countries is expected to lead to the growth of this segment during the forecast period.


The 10 years and above segment is expected to show slow growth in the market as the demand for 10 years and above vehicles is very low. Consumers usually prefer vehicles that are used for about 5 to 10 years. Commercial vehicles are sold after a wide span of usage and they have a higher resale value as compared to passenger cars to sell. 


By Vendor Type Analysis


Organized Segment Held the Largest Market Share in 2019 Fueled by Franchised Dealers


Based on vendor type, the market is segmented into organized and unorganized. The organized segment held the largest used vehicle market share in 2019. The rising number of franchised dealers in the market is boosting the growth of the organized segment.  Also, the entry of new players with the latest retail models is also likely to boost the demand for this type of vehicles. These factors are expected to fuel the growth of this segment during the forecast period.


The unorganized segment is estimated to display an unsteady growth trajectory in the market owing to the lack of sales coupled with the risk of warranty and standardization issues related to the selling of used vehicles. Also, there is an absence of consumer protection in the unorganized market, which is creating reliability issues for this market segment.


By Propulsion Type Analysis  


ICE Segment Dominated in 2019 Supported by the Increased Number of Used Petrol Cars


Based on propulsion type, the market is segmented into internal combustion engine (ICE) and electric. The ICE segment held the largest market share in 2019 as the supply and demand for used petrol cars is gaining traction in the market owing to tightening regulations on diesel vehicles in some regions. Additionally, these cars require less maintenance compared to electric vehicles. Hence, the ICE segment is expected to dominate the market during the forecast period.


The electric segment is anticipated to exhibit a higher CAGR during the forecast period. These vehicles enable efficient transportation using advanced electric drivetrains and cause lower vehicle emissions, which are some of the factors fueling the growth of this segment. 


By Market Type Analysis  


Offline Segment Dominated in 2019 Backed by Conventional Mode of Physical Purchases


Based on market type, the market is segmented into offline and online. The offline segment held the largest market share owing to the typical customer behavior of purchasing used cars through conventional offline channels such as physical dealership outlets.


However, the online segment is anticipated to exhibit a higher CAGR during the forecast period. Developments in online tools have made the market more competitive by providing a variety of options for sellers and car buyers. Also, the ease of availability of information such as vehicle specifications, prices, and reviews, among others, are fueling the growth of this segment.


REGIONAL INSIGHTS


Asia-Pacific Used Vehicle Market Size, 2019 (USD Billion)

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Asia Pacific is expected to hold the largest share of the market over the forecast period owing to the increasing demand for these vehicles in China. Also, increasing sales in countries such as India and other Asian countries are contributing to the growth of the market in this region.


North America is anticipated to show significant growth in the market. This growth can be attributed to the increased sales of used vehicles over the past few years.


The market in Europe is characterized by the rising demand for used passenger cars and commercial vehicles. Moreover, the increased sales of used electric vehicles in the region owing to the stringent emission norms are anticipated to drive the growth of the market in this region over the forecast period.


KEY INDUSTRY PLAYERS


Alibaba, AutoNation Inc., and Scout24 AG are the Leading Players in the Market


Key players in the market include Alibaba, AutoNation Inc., Hendrick Automotive Group, TrueCar, Inc., and Scout24 AG, among others. The majority of the market players are focused on enlarging their customer base to increase the sale of this type of vehicles. For instance, Alibaba brings hundreds of millions of products to consumers in more than 40 different major categories, including machinery, consumer electronics, and clothing. AutoNation is one of the Fortune 500 companies, with more than 300 branches in 18 states around the world, employing more than 21,000 workers, and has proudly sold and provided serviced vehicles to more than 12 million satisfied customers.


LIST OF KEY COMPANIES PROFILED:



  • Alibaba.com (Hangzhou, China)

  • Group 1 Automotive Inc. (Texas, United States)

  • Asbury Automotive Group (Georgia, United States)

  • Hendrick Automotive Group (North Carolina, United States)

  • AutoNation Inc. (Florida, United States)

  • LITHIA Motor Inc. (Oregon, United States)

  • CarMax Business Services, LLC (United States)

  • Scout24 AG (Munich, Germany)

  • Cox Automotive (Georgia, United States)

  • TrueCar, Inc. (California, United States)

  • eBay Inc. (California, United States)

  • Mahindra First Choice (India)

  • Maruti Suzuki India Limited (India)

  • Vroom (United States)

  • OLX (India)


KEY INDUSTRY DEVELOPMENTS:



  • October 2018 – AutoNation Inc. announced a strategic investment in Vroom, an online car retailer, of USD 50 million. This will help both companies to form a strong, mutually beneficial partnership. This will also help AutoNation to be an early leader in the automotive e-commerce domain.  

  • January 2020 – CarMax Business Services, LLC has partnered with Edmund, a digital automotive leader, with an investment of USD 50 million for a minority stake in the company. This will help CarMax Business Services to be an omnichannel service, which will provide customers the power to buy cars from in-store, home, or through both channels.  


REPORT COVERAGE


An Infographic Representation of Used Vehicle Market

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The used vehicle market research report covers a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the current market trends and highlights key industry developments. In addition to the aforementioned factors, this industry report delivers an in-depth market analysis of several factors that have contributed to its growth over recent years.


Report Scope & Segmentation

















































  ATTRIBUTE



  DETAILS



Study Period



  2016-2027



Base Year



  2019



Forecast Period



  2020-2027



Historical Period



  2016-2018



Unit



  Value (USD Billion) and Volume (Thousand Units)



Segmentation



By Vehicle Type



  • Passenger Car

  • Commercial Vehicle



By Vehicle Age



  • 0 to 05 Years

  • 06 Years to 10 Years

  • 10 Years and above



By Vendor Type



  • Organized

  • Unorganized



By Propulsion Type



  • ICE

  • Electric



By Market Type



  • Online

  • Offline



By Geography



  • North America (The US, Canada, and Mexico)

  • Europe (The UK, Germany, France, and Rest of Europe)

  • Asia Pacific (China, Japan, India, South Korea, and Rest of Asia Pacific)

  • Rest of the World



Frequently Asked Questions

Fortune Business Insights says that the global market size was USD 1,710.75 billion in 2020 and is projected to reach USD 1,917.35 billion by 2027.

In 2019, the Asia Pacific market value stood at USD 1,215.27 billion.

Registering a CAGR of 1.64%, the market will exhibit low growth in the forecast period (2020-2027).

The organized segment is expected to be the leading segment in this market during the forecast period.

The depreciation factor is expected to augment the demand for used vehicles and will be the key factor driving the growth of the market.

Alibaba, AutoNation Inc., and Scout24 AG are the major players in the global market.

Asia Pacific held the largest share in the market in 2019.

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Used Vehicle Market  Size, Share and Global Industry Trend Forecast till 2026
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