Used Cars Market by Vehicle Type (Hatchback, Sedans, SUV, and Others), Fuel Type (Petrol, Diesel, and Others), Distribution Channel (Franchised Dealer and Independent Dealer), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021-2028

Global Used Cars Market Analysis

The global used cars market forecast is projected to be $1,970.0 billion in the 2021-2028 timeframe, growing from $1,179.8 billion in 2020, at a healthy CAGR of 6.8%.

Market Synopsis

The depreciation of new vehicles in terms of resale value after a period of time is a key driving factor that is expected to augment the demand for used cars and increase the growth of the used cars market size.

However, the lack of capital required for maintaining used cars and lack of regulatory measures in the sale and transfer of ownership of the used car are predicted to hamper the market growth.

According to the regional analysis of the market, the Asia-Pacific used cars market share is anticipated to grow at a CAGR of 7.6%, by generating a revenue of $546.7 billion during the forecast period.

Used Cars Overview

The global used cars market comprises passenger cars from different segments such as sedan, SUV, hatch back, and others that operate on fuels such as petrol, diesel, and others. Used cars are sold mainly through two distribution channels: organized (franchise dealers) and unorganized (individual sellers).

Covid-19 Impact on Used Cars Market

The Covid-19 impact on used cars market has been moderate. To satiate the ulterior motive of people to buy a car, during the economic recession of the pandemic, they preferred a cheaper option of investing in used cars than shelling out big bucks for brand new cars in markets such as US, UK, China and others. In addition to this, the used car sales have been steadily rising due to a supply and demand imbalance of new cars because of the coronavirus crisis and semiconductor chip shortage that are used in automobiles.

The coronavirus pandemic has enforced the companies in the used cars industry to adopt new methods of operation such as the use of online channels for the sales of used cars and it has positively impacted the used cars market. Carvana’s sales, which sells only used cars online, increased 37% in the year 2020 as compared to 2019, according to CNN. Small online used cars’ sellers such as Vroom.com and Shift.com also saw significant increase in their sales. These factors have positively impacted the global used cars market.

The Depreciation in Resale Value of New Vehicles is a Major Driving Factor That is Expected to Augment the Demand for the Used Cars Market

Depreciation of resale value of new cars is a critical factor in people not opting for new cars. Edmunds.com Inc., an American online resource for automotive inventory and information, stated that the depreciation rate is about 23% in the first year of a purchased car. The low resale value of of a new car definitely affects the consumer's willingness to choose the high value car, which makes the purchase of a used car a more practical solution. As a result, the global acceptance of used cars is increasing and the number of used cars buyers has increased significantly. These factors are expected to aid the growth of used cars market in the forecast period.

To know more about global used cars market insight and drivers, get in touch with our analysts here.

The Lack of Financing Facilities for Used Cars to Restrain the Market Growth.

The lack of financing or expensive financing options such as loans from organized sector banks for used cars in many countries are anticipated to hamper the market growth. In addition to this, there is a lack of market standardization in terms of registration of used cars by the independent car dealers and regulatory measures related to operating life of the vehicle for preventing environmental damages such as air pollution in developing and undeveloped countries such as in Africa, which can restrict the market growth in the forecast period.

The Increasing Number of Organized Dealers in Developing Countries is Expected to Create Opportunities for Used Cars Market

The advent of organized players in the market in developing nations is expected to aid the growth of used cars market in the forecast period. With the entry of mainstream original equipment manufacturers (OEMs) in second-hand cars market, consumers can avail certified used cars that assure quality, trust, and better customer experience in the franchise dealerships during the purchase of used cars. Along with credibility, organized players also follow guidelines by the original car manufacturing companies and the government for handling used cars along with prevention of environmental pollution.  These are positive used cars market trends and expected to act as facilitators in the growth of the used cars market during the forecast period.

To know more about global used cars market trends, get in touch with our analysts here.

Source: Research Dive Analysis

The SUV sub-segment is predicted to have a dominating share in the global market as well as attain the fastest growth and register a revenue of $790.2 billion in 2028, growing from $444.9 billion in 2020 during the forecast period.
The augmenting need for premium vehicles in the developed nations, the growing acceptance for SUV and the increasing disposable income of the population are estimated to propel the growth of the SUV subsegment in the forecast period. As per the International Energy Associations article published in 2019, "Growing preference for SUVs challenges emissions reductions in passenger car market", nearly half of the cars sold in the United States and one-third cars sold in Europe are SUVs. These factors are expected to aid the growth of this subsegment.

Source: Research Dive Analysis

The petrol sub-segment is estimated to have a dominating market share in the global market and register a revenue of $915.1 billion in year 2028 with a healthy CAGR of 6.8% during the forecast period. 
Petrol cars are more affordable as compared to its counterparts that utilize diesel as fuel; this makes petrol vehicles suitable for base variant cars for a price sensitive buyer, aiding the growth of petrol subsegment. These factors are expected to aid the growth of this subsegment.
The others sub-segment is estimated to have the fastest growing market and register a revenue of $472.6 in year 2028 with a healthy CAGR of 7.2% during the forecast period. 
The other fuels incudes cars that run on electricity, hydrogen, ethanol etc. As per the Global EV Outlook 2021 of the International Energy Agency (IEA), a Paris-based autonomous intergovernmental organization established in the framework of the organization for Economic Co-operation and Development, electric car registrations increased by 41% in 2020 in comparison to year 2019, despite the pandemic-related worldwide downturn in car sales in which global car sales dropped 16% in the year 2020. Around 3 million electric cars were sold globally (4.6% sales share), and Europe overtook the People’s Republic of China (“China”) as the world’s largest electric vehicle (EV) market for the first time. These factors are expected to positively impact the growth of others subsegment in the forecast period.

Source: Research Dive Analysis

The independent dealer sub-segment is anticipated to have a dominating share in the global market and surpass $1181.60 billion by 2028, with an increase from $719.8 billion in 2020. The advantages such as independent dealers have a large supply of used cars and have a wide variety of used cars in terms of age of used cars are factors expected to aid the growth of independent dealers subsegment in the forecast period.
The franchised dealer, sub-segment of the global used cars market is projected to have the fastest growth and register a revenue of $788.4 billion during the analysis timeframe, growing at a healthy CAGR of 7.2%.  The advantages of buying a car from the franchised used car dealers such as presence of regulatory measures for registration of used vehicles by the government and implementation of the guidelines issued by the car manufacturers for the prevention of environmental pollution, high quality service, and not a favorable experience during used car buying process are factors expected to aid the growth of used car subsegment in the forecast period.

Source: Research Dive Analysis

The Market for Used Cars in North America to be the Most Dominating

The North America used cars market generated $404.2 billion in 2020 and is projected to register a revenue of $654.6 billion by 2028. The North America region is expected to dominate the global used cars market in the forecast period due to its well-established infrastructure in the organized segment of used cars market. As per the “National Automobile Dealers Association” an American trade organization representing nearly 16,500 franchised new car and truck dealerships in 2020, 33% of the used vehicles were sold through organized sector. These factors are expected to aid the growth of used cars market in the North America region during the forecast period.

The Market for Used Cars in Asia-Pacific to be the Fastest Growing

The Asia-Pacific used cars market generated $309.8 billion in 2020 and is projected to register a revenue of $546.7 billion by 2028, along with this the market of Asia-Pacific region is growing with a healthy CAGR of 7.6% in the forecast period. The rapid urbanization and increasing demand   for mobility in the developing markets such as India and China, with increased per capita income of the population, has resulted in the populations upgrading from two wheelers to four wheelers. Moreover, used cars are comparatively cheaper than the new cars, and hence can be afforded by the masses too. These factors are expected to aid the growth of used cars market in the Asia-Pacific region and make it the most lucrative region in the forecast period.

Competitive Scenario in the Global Used Cars Market

Agreement and acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading used cars market players are Group 1 Automotive, Inc., Asbury Automotive Group, Inc., TrueCar, Inc, Lithia Motors, Inc., AutoNation, Inc, THE HERTZ CORPORATION, Pendragon PLC, CarMax Business Services LLC, Cox Automotive and Hendrick Automotive Group

Porter’s Five Forces Analysis for the Global Used Cars Market:

• Bargaining Power of Suppliers: The suppliers in the used cars market are high in number. Several companies are working on new methodologies such as E-commerce of used cars to gain the major market share. 
  Thus, the bargaining power of suppliers is moderate.
• Bargaining Power of Buyers: Buyers demand cost-effective services. This increases the pressure on the used cars’ providers to offer the best service in a cost-effective way. Thus, buyers can choose the most convenient service that best fits their preference. 
  Thus, the bargaining power of buyers is high.
• Threat of New Entrants: Companies entering the used cars market are adopting technological innovations such as sales through E-commerce, automart for used cars to customize products for attracting clients. The initial investment in the used cars is moderate.
  Thus, the threat of the new entrants is moderate.
• Threat of Substitutes: There is no alternative product for used cars solutions. 
  Thus, the threat of substitutes is low.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is rather intense, especially between the global players including Group 1 Automotive, Inc. Asbury Automotive Group, Inc.  Companies in the used cars do acquisitions to gain major market share. 
  Therefore, competitive rivalry in the market is high.