Used Cars Market Size, Share, Growth & Industry Trends [2031]

Report Description

The global used cars market size was USD 1.64 Tn in 2022 and is likely to reach USD 2.75 Tn by 2031, expanding at a CAGR of 5.9 % during 2023–2031. The market growth is attributed to the ­­rising awareness about the benefits of purchasing used cars.

Used cars are second-hand cars available for reselling by various independent car dealers, franchises, rental car companies, and car leasing offices. They are also referred to as pre-owned vehicles, and these cars have one or more previous owners. Some of the advantages of buying used cars are that they cost less than new cars due to depreciation.

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Depreciation is due to the usage of the car for longer miles. Used car valuation refers to the depreciation in the price of a particular car over a period of time. The car’s resale value depends on various factors such as the year of purchase, model, distance driven by the car, and the overall condition & operation.

Buying used cars is considered a cost-effective way. The benefits of buying used cars from certified sellers and retailers are that they provide transparency between purchaser and owner. Buying second-hand cars has similar advantages as original equipment manufacturers (OEM) in terms of quality.

The market report finds that the COVID-19 pandemic affected various industries including the used cars market. The implementation of lockdowns by governments across the countries hampered the demand for second-hand cars. The overall automotive industry was negatively affected due to fluctuation in the supply chain and reduced purchasing activities.

Used Cars Market Dynamics

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Major Drivers

The high cost of ownership for new cars is driving the used cars market. Rising demand for subscription services & off-lease cars by retailers and car dealers results in market growth. Advanced technology such as e-commerce platforms that allow online purchases with authenticity is boosting the market. The introduction of hybrid and electric cars, rising urbanization, and rising disposable income of consumers are projected to fuel the market.

Existing Restraints

The rising costs and maintenance issues regarding used cars are anticipated to restrain the market. Unorganized market players do not follow emission control standards & ownership regulations and often do not provide registration certificates of previous owners to new owners. Such malpractices of selling products with compromised safety and inefficient licensing is hindering the market.

Emerging Opportunities

Rising organized or semi-organized sales in numerous economies across the world are expected to create lucrative opportunities in the market. Increasing demand for car-sharing services and used electric vehicles is expected to create opportunities in the market. Furthermore, the growing popularity of e-commerce technology and increased internet penetration helps in high market revenue generation thus creating opportunities in the market.

Scope of Used Cars Market Report

The report includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Used Cars Market Segment Insights

Based on propulsion, the used cars market is divided into conventional, electric, and hybrid. The conventional segment is expected to expand at a significant growth rate during the projection period, as they are available at low costs as compared to new conventional cars. They also have low insurance costs than new cars.

The conventional segment offers multiple used car type options at affordable prices such as SUVs, mid-size, and compact cars. Moreover, reselling conventional cars is easier as compared to electric cars, which fuel the segment.

The electric segment is expected to grow rapidly in the forecast period due to the increasing consumer preference for used electric cars rather than new electric cars. The preference is increasing due to the higher price of new electric vehicles. Additionally, changes in electric vehicles tax credit guidelines have made used EVs eligible for credit. This further propels the segment.

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On the basis of fuel type, the used cars market is trifurcated into diesel, petrol, and others. The petrol segment is expected to register a robust growth rate during the projection period, due to the declining sales of diesel vehicles.

Petrol vehicles have few stringent regulations as compared to diesel vehicles, thus driving the segment. Furthermore, petrol cars offer fuel efficiency, strong performance, and refined engine which attracts a large customer base, which further boosts the segment.

Based on size, the market is divided into SUV, mid-size, and compact. The SUV segment is expected to expand at a significant growth rate in the coming years, as it offers size and space and is considered ideal by numerous buyers. SUVs have high demand, wide supply chain networks, and a high residual value, which propels the segment.

The compact segment is expected to grow rapidly in the forecast period, as they are mostly preferred for their compact size and economical support. Franchised owners prefer compact cars with high inventory and production rates. Affordable prices create high demand for compact cars, which further boosts the segment.

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On the basis of dealership, the global market is bifurcated into organized and unorganized. The organized segment is projected to register a considerable CAGR during the forecast period, due to the rising number of franchise dealers. New retail models and an increasing number of new entrants are driving the segment. In addition, customers prefer buying licensed cars over unorganized purchases, which further boosts the segment.
For instance,

• According to National Automobile Dealers Association (NADA), USA, franchised dealers earned high profits on used car sales as compared to independent dealers.

Consumer loyalty towards organized car dealers due to transparency and availability of licensed products is mainly driving the segment.

On the basis of distribution channel, the market is bifurcated into online and offline. The offline segment is expected to register a robust growth rate during the projection period, as consumers prefer conventional ways of purchasing cars directly from dealers. Customers can take a test drive of the cars while buying in offline mode, this helps them to analyze the car from their perspective which in turn is most likely to boost the segment.

The online segment is projected to grow at a rapid pace in the coming years, due to online competitiveness. Online competitiveness is created by innovative technological updates such as websites with enhanced user experience and easy-to-use mobile applications. These mobile applications have in-built filters to obtain desired results. Online mode of car purchasing also helps in comparing two sites or companies for better offers. Moreover, specifications such as reviews and prices are available online, which creates high sales and growth among dealers.

Online dealers empower modern customers to purchase online with advanced delivery options, end-to-end purchasing, and enhanced vehicle photos. Integration of advanced Artificial intelligence (AI) and machine learning technology helps car dealers increase their networking and consumer base. These factors propel the segment of the market.

In terms of region, the global used cars market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is expected to dominate the market during the forecast period, due to increasing product demand in countries such as China and India. The rising number of organized used car dealers with trading services in China is driving the regional market.

Certain Indian car dealers provide an array of tools with advanced technology such as mobile applications, virtual showrooms, lead management systems with cloud services, sales performance tracking, and digital marketing. Indonesia, Malaysia, South Korea, and other developing economies in the region are anticipated to have market growth potential.

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