Used cars are the second-hand vehicles that are available for resale. A number of outlets, such as independent car dealers and franchise, rental car companies, private party sales, auctions, and leasing offices sell used cars. The sales of the used cars have increased in the recent years as the car ownership has come down to around 3 to 4 years. Rising advancements and decreasing ownership in digital technologies have developed the online purchasing experience of cars.
COVID-19 Impact on Used Cars Market
The outbreak of COVID-19 across the globe has moderately impacted the global used cars market growth. This is majorly attributed to the growing preference of people for a cheaper option of investing in used cars during the economic recession of the coronavirus pandemic than spending huge money for brand new cars in markets such as UK, US, China and others. Besides, the sales of used cars have been steadily rising owing to a supply & demand imbalance of new cars and semiconductor chip shortage during the COVID-19 crisis.
Additionally, the pandemic has enforced many companies in the used cars market to adopt new strategies and methods of operations, such as making use of the online channels for the used car sales, which has positively impacted the market. For instance, according to CNN, the sale of Carvana increased to about 37% in the year 2020 compared to 2019. Also, Small online used cars’ sellers such as Shift.com and Vroom.com saw significant increase in their sales during the pandemic.
Used Cars Market Trends and Developments
The companies operating in the global industry are adopting several growth strategies and business tactics such as partnerships, collaboration, business expansion, and product launches to obtain a leading position in the global industry, which is predicted to drive the global used cars market growth in the upcoming years.
For instance, in January 2020, CarMax, Inc., the leading retailer of used vehicles in the United States, invested and entered into a partnership with Edmunds, the most influential & popular automotive research sites across the globe. CarMax invested around $50 million to acquire a minority stake in the company. This strategic partnership further strengthens CarMax’s new omni-channel experience, which allow customers to buy a car on their terms from in-store, home, or an impeccably integrated combination of both.
In October 2020, Skoda Auto, a Czech automobile manufacturer, entered into the used car market in India with the ‘Certified Pre-Owned Program.’ The company is offering a manufacturer-backed warranty to the cars/vehicles certified by Skoda after 160 plus points of restoration and quality inspection.
In December 2020, Asbury Automotive Group, Inc., the largest automotive retail & service companies in the US, announced the launch of ‘Clicklane,’ a communications technology ecosystem that empowers customers for a true online car-selling and buying experience. Asbury has the ability to enhance the car selling/buying experience across its store base and also entering into new markets by focusing on the pre-owned vehicle business.
In April 2021, AutoNation, an American automotive retailer, announced the expansion of its used cars business and completed the acquisition of 11 more dealers. The company recorded strong first-quarter net income as compared to the previous years. AutoNation is planning to expand its used car-only business, ‘AutoNation USA’ to more than 130 stores by 2026.
Forecast Analysis of Global Market
The global used cars market is projected to witness an exponential growth during the forecast period, owing to the increasing number of organized used car dealers in the developing countries across the globe. In addition, consumers can now avail certified used cars due to the entry of mainstream OEMs in the second-hand cars market, which is expected to boost the market’s growth by 2028. Conversely, the lack of financing facilities for used cars for transactions is expected to hamper the market growth in the projected timeframe.
The depreciation in resale value of new cars and vehicles is the significant factors estimated to bolster the growth of the global market in the coming future. According to a latest report published by Research Dive, the global used cars market is expected to garner $1,970.0 billion during the forecast period (2021-2028). Regionally, the North America region is estimated to dominate in the global industry by 2028, owing to the presence of well-established infrastructure in the organized segment of used cars market in the region.
The key players functioning in the global market include Group 1 Automotive, Inc., TrueCar, Inc., Asbury Automotive Group, Inc., Lithia Motors, Inc., THE HERTZ CORPORATION, AutoNation, Inc., Pendragon PLC, Cox Automotive, CarMax Business Services LLC, and Hendrick Automotive Group.