Market Trends of Europe Used Car Financing Industry
This section covers the major market trends shaping the Europe Used Car Financing Market according to our research experts:
Online Purchase Has Gained Traction in Used Car Segment
Internet penetration has played the most crucial role in elevating the overall demand for used cars across Europe, which has ultimately elevated the demand for used car financing as well. The United Kingdom is among the leading countries with 83% smartphone penetration, followed by the Netherlands, Sweden, and Germany.
With the growing trend in technology, used car vehicle purchase through online sales has become the most preferred choice for customers over the past few years. Moreover, it provides additional facilities to monitor all the required documents, performance, and service records of the vehicle. This has proven much beneficial for consumers who can directly compare from a wide variety of choices and apply their desired filter to get the most relevant used car matching their choices.
Many new used car companies are entering the market and will continue to do so in the coming years. Companies are competing with the existing players by providing customized services, new fleets, and low-pricing strategies. Moreover, these online used car companies provide key fleets with options and filter to look through different OEMs, vehicle classes, and buying options. This has also helped consumers to check the respective buying options including financing rates, tenure, and down payment amounts for respective cars. For instance, in February 2022, Driverama announced the launch of online used car sales platform in Germany. The plan came when the company looked forward to expand its business potnetial in the German used car business. It announced that it will offer financing options as well for its available fleet.
Companies offering used cars in the market have partnered with financing companies in the region, including non-banking financial companies and banks, to offer better loan facilities for consumers. This has helped and contributed in boosting the market revenue.
Considering these factors, the demand for used car financing is expected to witness a significant growth during the forecast period.
United Kingdom to Lead the Front
The United Kingdom is among the largest automotive sector in Europe. The region is witnessing immense vehicle sales among both luxury and economic cars going to shift in consumer preferences towards owning luxury ones. Moreover, the region accommodates the used car landscape which is consistently witnessing immense growth over the years.
People are often seen opting for used car options to reduce the cost associated with a new car. They feel the advantages in taking ownership of a used car instead of a new one as it helps them to save more than 70% of their overall based on the car's condition.
Furthermore, the region has topped in internet penetration among European countries. Growing digitization and start-up with new business, models are promoting the used car financing market. Digitization helps to store, retain and retrieve data. Almost all information is in digital format. This reduces the capital resources required and reduces the problem of storing documents. Thus, these factors have been identified to drive the market for used car financing in the region.
Furthermore, the market is marginally hit by rising electric vehicle sales in the country. Used car consumers have showcased a reduction in the sales of the used car amid the government's mission of electric vehicle sales. This mitigated the consumer segment which resulted in the United Kingdom's used car transactions has fallen by -12.2% in Q3 of 2022 with 1,785,447 vehicles changing hands. In addition, this has been the second consecutive quarter of a decline in used car purchases amid the new car supply shortages hit. This has thus been identified as a key restrain for financing business over the short term.
Moreover, over the longer term used car segment is anticipated to accommodate electric vehicles which might revolutionize the business potential of the used car market.
