Used car market

Market Size and Trends

The used car market is estimated to be valued at US$ 1.78 Trillion in 2024 and is expected to reach US$ 2.73 Trillion by 2031, growing at a compound annual growth rate (CAGR) of 6.3% from 2024 to 2031.

The used car market continues to be large and grow due to rising average age of vehicles on American roads and increasing new car prices putting pressure on consumers' budgets. The used car market has seen steady growth over the past decade. Several trends have been driving this market including increasing preference for personal vehicle ownership over public transportation due to ongoing pandemic concerns as well as advancing average age of vehicles. As new cars become increasingly expensive, many buyers are switching to the used car market resulting in a stable demand. Online used car sales and enhanced digital shopping experiences have also been beneficial in streamlining the used car buying process for many consumers.

Used Car Market Drivers:

High Population of Used Cars

With new cars becoming more expensive by the day due to various factors like rising input costs for manufacturers, increasing R&D expenses for developing new technology and strict emission norms, many customers are turning to used cars as a more affordable alternative. The used car market has been thriving as consumers who cannot afford expensive new vehicles are shopping more consciously within their budgets. Although used cars come with their own set of risks such as potential repair costs and reliability issues, still they provide the benefits of personal mobility at a much lower upfront payment compare to a new vehicle. Many trade-in and sell-off schemes offered by car makers are further boosting the supply of nearly new used cars into the market. Individuals who want to experience driving a car are also considering used cars as starting point before the big investment in a brand new car, helping vendors make profit from repeat customers as their financial position improves over the years.

Market Concentration and Competitive Landscape

The Preference for Luxury Brands

With rapid economic growth and increasing disposable income, more individuals today aspire to own luxurious brands that were once considered out of reach. While the high costs of buying a new luxury car deters many, the used car market has opened up new opportunities. Customers who want to fulfill their dream of driving a Mercedes, BMW, or Audi are now exploring the used luxury car segment. Such used vehicles that are just a few years old with low mileage provide the nearly new feel of a luxury brand at a much lower price point compared to a new model. Providing advanced features and comfort at a lower cost compared to new ones makes used luxury cars highly appealing to aspiring buyers. Dealers and online marketplaces that specialize in used luxury imports have proliferated, fueling demands further. Driven by human’s innate desire for status symbols, the market for used luxury cars will continue its northbound journey while opening up the high-end experience to a broader base.

Used Car Market Challenges:

Shifts in Transportation Preferences and Market Dynamics: The used car market faces several challenges. As more people explore alternate transportation options like ride-sharing and public transit, the demand for used vehicles may decline over time. Stricter emission regulations are forcing older, more polluting cars out of circulation earlier. Economic factors also play a role, as rising interest rates could discourage consumers from taking on loans to purchase used cars. Younger buyers increasingly prefer subscription-based options to ownership. These trends may put downward pressure on both sales volumes and average prices in the years ahead.

Used Car Market Opportunities:

Expanding Horizons in the Used Car Market: However, the used car market also presents many opportunities. As the cost of new cars rises faster than people's average incomes, many buyers find themselves unable to afford new vehicles and opt for cheaper, pre-owned options instead. As cars become more reliable with newer safety and infotainment features trickling down to used models, they appeal to a broader range of buyers.

Insights, By Vehicle Type- Affordability drives the dominance of hatchback

In terms of vehicle type, hatchbacks contributes the highest share of 49% in 2024 of the used car market owing to its affordable price point. As one of the most compact body styles available, hatchbacks offer practical cargo space without consuming too much real estate on the road. Their smaller engines and light-bodied designs allow hatchbacks to achieve superior fuel efficiency compared to other segments as well. This makes them an attractive option for used car buyers seeking low-cost transportation without compromising too much on utility. Hatchbacks also facilitate effortless maneuverability in congested urban driving environments due to their compact dimensions and nimble handling. The variety of hatchback models available across different brands allows users to find a used option that matches their lifestyle and budget needs. Overall, hatchbacks have found widespread adoption in the used car landscape due to their space-saving practicality and affordability over the long term of ownership.

Insights, By Fuel Type- Convenience fuels petrol's used car dominance

In terms of fuel type, petrol contributes the highest share of 43% in 2024 of the used car market owing to its widespread availability and proven reliability. Unlike other powertrains that require specialty fuels or lengthy charge times, petrol offers unparalleled convenience for users. Petrol stations continue to vastly outnumber alternatives like CNG or electric vehicle charging points across most cities and regions. This abundant refueling infrastructure makes petrol vehicles a dependable choice in diverse driving conditions. Mechanically, petrol engines are also simpler with fewer moving parts compared to other technologies. As a result, they tend to last long in used car applications with routine maintenance. Repairs and generic spare parts are easy to source, keeping ownership costs low over the years. Together, petrol's unbeaten convenience and accessibility have cemented its dominance among buyers seeking a practical yet hassle-free used car experience.

Insights, By Distribution Channel- Trust drives buyers to franchised dealers

In terms of distribution channel, franchised dealers contribute the highest share of 68% in 2024 of the used car market owing to the trust and reassurance they provide buyers. Official brand sellers are able to offer factory-certified pre-owned vehicles that undergo exacting quality checks and come with manufacturer warranties for added peace of mind. Being authorized retailers, franchised dealers also tend to employee trained sales professionals with in-depth product knowledge. They aim to nurture long-term customer relationships, addressing even post-sale issues promptly. Meanwhile, independent used car lots have varying quality standards and often overlook proper vehicle history documentation. This unpredictability puts off risk-averse buyers who want reliable vehicles. Franchised dealers further sweeten deals through certified financing options and trade-in facilities. The combination of credibility and value-added services from factory-trusted stores gives them an edge over informal players in the distribution landscape.

Insights, By End-use- Personal contributes the highest share of the market owing to the rising preference for second-hand vehicles

The personal segment, comprising of individual buyers of used cars for private use, accounts for the largest share on 73% in 2024 of the used car market in terms of end-use. This segment has been witnessing steady growth over the past few years owing to rising preference for pre-owned vehicles among consumers.

There are several factors that are driving the growth of used cars for personal use. Firstly, increasing vehicle ownership is fuelling the demand for affordable mobility options. With rising disposable incomes, many first-time buyers are opting for nearly new used cars which offer a good value proposition over brand new cars. Secondly, evolving perception towards used cars is boosting this segment. Earlier seen as a cheaper necessity, pre-owned vehicles are now being viewed as a strategic financial decision by many users. Several organized dealers are offering warranty and easy financing on certified used cars which is driving organizational purchases.

Furthermore, shorter replacement cycles followed by many upgrade-savvy users is leading to higher supply of nearly new used cars entering the market. This is attracting many cost-conscious and environmentally-driven users to switch from public transport to personal mobility through used cars. High GST rates on new cars compared to used cars is another factor propelling the personal segment. This differential makes used vehicles relatively more affordable for individual buyers.

Thus, the personal segment within the used car market is anticipated to continue experiencing strong growth over the coming years backed by cost benefits, evolving consumer mindsets and increasing supply of quality pre-owned vehicles. This will solidify its prominent position as the dominant end-use category.

Regional Insights

The North America represents the largest share in the used car market globally, dominating over 30% of sales worldwide. The sheer size of the country and number of registered vehicles in operation contributes significantly to resale volumes each year. Major urban centers like New York, Los Angeles, and Chicago have well-established used car dealers serving nationwide demand. Proximity to primary auto manufacturing hubs allows dealers easy access to trade-in stock while active online classifieds promote nationwide inventory distribution. The wide choice of makes and models appeals strongly to buyers, whether searching for affordable transportation or specialty vehicles. With over 250 million cars on American roads, a steady supply of trade-ins and off-lease returns sustains listings and competitive pricing across the secondary market.

A notable growth market rapidly emerging as a regional force is Mexico. As one of the top 10 automobile producing nations globally, Mexico experiences increasing vehicle ownership year over year. Rising incomes in metropolitan areas like Mexico City unlock consumer potential for used imports from the U.S. and domestic fleet vehicles reaching resale. Local dealers are well-positioned to tap growing demand, offering affordable stock close to major population centers. Cross-border commerce benefits both sides, with Mexican buyers accessing the vast selection from the large American market while U.S. dealers gain new Latin American customers. If economic and industry trends continue apace, With its growing middle class population and close proximity to U.S. supply chains, Mexico is on track to become one of the top five regional markets for used cars in the next ten years.

Market Report Scope

Key Developments

• In June 2023, Jardine Cycle & Carriage Limited, an investment company linked to Hong Kong's Jardine Matheson, teamed up with Southeast Asian car marketplace, Carro. Together, they plan to expand Carro's range of quality used cars and enhance the digital services offered by Republic Auto, as stated in a joint announcement. This partnership aims to strengthen both companies' market positions and improve customer experiences.
• In August 2022, Lexus, a subsidiary of TOYOTA MOTOR CORPORATION is a global automotive manufacturer headquartered in Toyota City, Japan, introduced the Lexus Certified Programme in India. This strategic move is designed to help current Lexus vehicle owners receive better resale values for their cars. Additionally, it aims to make Lexus models more accessible and affordable for potential buyers. By introducing this certified program, Lexus hopes to increase customer satisfaction and enhance the brand's presence in the Indian automotive market.
• In August 2021, Audi is a subsidiary of Audi AG, a German automobile manufacturer, specializing in luxury vehicles. revealed its intention to double the number of Audi Approved Plus showrooms from seven to 14 by the year's end, supporting the sale of pre-owned vehicles, alongside its existing network of over 40 workshops nationwide
• In August 2021, Mahindra First Choice Wheels (MFCW) is a subsidiary of Mahindra Group, one of India's leading multinational conglomerates. collaborated with CamCom, a company specializing in Artificial Intelligence (AI)-powered visual inspection solutions, to introduce AI-enabled car inspection services. This partnership allows Mahindra to assess vehicles and identify damages using advanced technology.

*Definition: The used car market refers to the industry where previously owned or leased vehicles are bought and sold. Cars in the used car market range from a few months old to over a decade old and come in varying conditions from like-new to needing repairs. Dealers, private sellers, and online marketplaces all participate in supplying the used car market with affordable vehicle options for consumers looking to purchase cars at a lower price point than new cars.

Market Segmentation

• Vehicle Type Insights (Revenue, USD TN, 2019 - 2031)
  • Hatchbacks
  • Sedan
  • Sports Utility Vehicle
  • Others
•  Fuel Type Insights (Revenue, USD TN, 2019 - 2031)
  • Petrol
  • Diesel
  • Hybrid/Electric
  • Others
• Distribution Channel Insights (Revenue, USD TN, 2019 - 2031)
  • Franchised dealer
  • Independent dealer
  • Others
• End-use Insights (Revenue, USD TN, 2019 - 2031)
  • Personal
  • Commercial
• Regional Insights (Revenue, USD TN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Arnold Clark Automobiles Ltd.
  • Asbury Automotive Group Inc.
  • AutoNation Inc.
  • Autotrader
  • AutoScout24
  • Universal Motor Agencies
  • CarMax Inc.
  • Carvana
  • Cox Automotive Inc. (Autotrader)
  • Emil Frey AG
  • Group 1 Automotive Inc.
  • Inchcape Group
  • Lithia Motors Inc.
  • CarMax Business Service LLC
  • Asbury Automotive Group
  • AutoNation Inc.
  • eBay Inc.
  • Big Boy toyz
  • VROOM
  • Others