Market Trends of Used Car Industry
This section covers the major market trends shaping the Used Car Market according to our research experts:
Strengthening of Online Infrastructure Positively Affecting the Used Cars Market
As the smartphone and internet penetration in emerging economies, especially in Asia-Pacific, is increasing, the used car market is getting more organized because used car retailers use digitalization to make market offerings attractive. Facilities such as an enormous number of photos and videos on the online platform and an easy online instant finance service are drawing more customers into buying used cars.
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. The consumer can compare a wide variety of options and apply their desired filter to find the most relevant used car that matches their criteria.
Many new used car companies are entering the market, and it will continue in the coming years. Companies compete with the existing players by providing customized services, a new fleet, and a low-pricing strategy. Companies will continue to focus on keeping themselves ahead based on value-added services provided to prospective clients, reducing service costs, and introducing premium and well-maintained vehicle models and features into their fleets to capture a significant share of the market.
- In May 2022, Indonesia-based omnichannel used car company Moladin, which is operating through offline and online sales, raised series B funding worth USD 95 million. In addition, funding will boost the company's automotive ecosystem and further help the company grows its dealer, agents, and customer network.
In the North American market, where the used car sale to new car sale ratio is almost 2 to 1, many new players such as Fair and Vroom are leveraging artificial intelligence and Big Data analytics to differentiate their brand and offerings from conventionally used car dealers. Major OEMs are now investing in the used car segment to ramp up their revenues.
Tech-savvy customers in the age group of 25-40 years are demanding features such as end-to-end transactions, doorstep delivery, digital recommendations based on the driving behavior and lifestyle of the customer, and digital test drives. Players in the market are providing flawless and smooth access to car specifications, performance reports, and inventory information to customers to assist them in making informed decisions.
- Mercedes-Benz uses blockchain technology to store and maintain the maintenance history record of the carbon footprint of used cars in Beijing. 35% of a car's carbon footprint comes from the manufacturer. Mercedes-Benz and PlatOn are planning to store the entire lifecycle data of a vehicle.
Asia-Pacific is the Fastest Growing Market
China is the world's largest automobile market owing to the sheer volume of vehicles present in the country. The country registered a total of 21.48 million units of passenger vehicles sold in 2021. The total number of passenger cars present numbered approximately 282 million units during the same period.
Owing to such a high number of vehicles, the product influx for the used car market is immense in China. With the rapid electrification of the country's automotive industry, owners of internal combustion engines have begun to sell their existing vehicles to make the switch to electric mobility. This significantly increased the number of vehicles available for purchase in the used car industry, driving the potential for growth during the forecast period.
India is another major market for the used car market owing to the long operational life of vehicles in the country. In India, a pre-owned car purchase is driven by affordability. The majority of customers are first-time car buyers. Thus, the preference for entry-level hatchbacks is high.
The second-hand car industry is poised to gain even more traction as the Jakarta government plans to broaden the odd-even traffic regulation that will take effect and limit vehicle age to a maximum of 10 years by 2025. After three to seven years of driving, many individuals sell their cars. Once the vehicle age restriction is in place, more individuals will sell their automobiles sooner.
There is also a tendency for cars to move from the Jakarta capital region to minor cities in Java or even outside of Java as they age. While individuals in Jakarta prefer to buy new or lightly used cars, residents in other parts of the country may consider purchasing an older model if the price is right. Approximately 300,000 used automobiles in Indonesia change hands every month. Considering the growth prospects in the Southeast Asian country's used car market, several major players from other regions are planning to start their operations in Indonesia. For instance,
- India's used-vehicle marketplace CARS24 launched its ASEAN foothold in Thailand in November and plans to follow up by entering Indonesia in the future. Thus, the aforementioned factors are expected to revive the used car market in ASEAN from the current economic crisis due to the COVID-19 pandemic during the forecast period.
