A used car, also known as a secondhand car, is a pre-owned vehicle, which has previously had at least one retail owner. In some cases, the vehicles have passed through several owners. The industry of owned cars has become highly popular in the last few years. These vehicles are sold via various channels like franchise stores, certified car dealers, private parties, and rental car companies. In some regions, the used car industry is highly unorganized in which the buyers & the sellers come together and perform the transaction without the involvement of a third party.
Further, these cars have found consumers across borders with sellers in high-income countries preferring to sell their cars in low-income economies as it allows them higher returns. The pricing of used cars is majorly based on three models including private-party price, dealer trade-in price, and dealer price. The international used car industry is highly regulated in some parts of the world and market players must make sure the compliance to avoid repercussions.
The US Used Cars Market
The US Used Cars Market is projected to reach USD 0.6 trillion in 2024 at a compound annual growth rate of 6.9% over its forecast period.
The used car market in the US provides growth opportunities through the expansion of online sales platforms, providing consumers greater convenience and vehicle variety. In addition, the growing demand for certified pre-owned vehicles and the higher adoption of eco-friendly models, like hybrids and electrics, provide avenues for growth as consumers prioritize quality, reliability, & sustainability in their vehicle choices.
Further, the used car market is driven by higher demand for affordable vehicles & the convenience of online purchasing platforms. However, it faces challenges from higher interest rates, which can make financing more expensive, and concerns over the potential for high maintenance costs in older vehicles, which may impact some buyers from entering the market.
Key Takeaways
- Market Growth: The Used Cars Market size is expected to grow by 1.5 trillion, at a CAGR of 7.3% during the forecasted period of 2025 to 2033.
- By Size: The SUV segment is expected to lead in 2024 with a major & is anticipated to dominate throughout the forecasted period.
- By Vehicle Type: The conventional vehicle segment is expected to lead the Used Cars market in 2024.
- By Sales Channel: The franchised dealer segment is expected to get the largest revenue share in 2024 in the Used Cars market.
- Regional Insight: North America is expected to hold a 39.2% share of revenue in the Global Used Cars Market in 2024.
- Use Cases: Some of the use cases of Used Cars include first-time drivers, secondary family vehicle, and more.
Use Cases
- Cost-Effective Transportation: Used cars provide an affordable alternative to new vehicles, enabling individuals to look into reliable transportation without the high upfront cost of a new car.
- First-Time Drivers: Used cars are ideal for first-time drivers, mainly teenagers, who need a vehicle to practice & gain experience on the road without worrying about the depreciation of a new car.
- Secondary Family Vehicle: Families often buy used cars as a second vehicle for commuting or running errands, minimizing the need to share a single car among multiple drivers.
- Vintage Car Enthusiasts: Collectors & enthusiasts often look out for used cars to find classic or vintage models that are no longer in production, restoring them as a hobby or investment.
Market Dynamic
Driving Factors
Increased Affordability and Financing Options
The growing availability of affordable vehicles and flexible financing options drives the used car market. As more consumers look for affordable alternatives to new cars, the need for quality used vehicles constantly rises, assisted by lower interest rates and extended warranties.
Rising Demand for Certified Pre-Owned Vehicles
The need for certified pre-owned (CPO) vehicles is growing as consumers look to assurance of quality and reliability. CPO programs, backed by manufacturers, provide warranties, thorough inspections, and other benefits, making used cars a more attractive option for buyers who want the peace of mind associated with new vehicles.
Restraints
Depreciation and Maintenance Costs
One of the main challenges in the used car market is the potential for higher maintenance and repair costs. Older vehicles may demand more frequent servicing, and buyers are often bothered about hidden issues that could lead to unexpected expenses, making some hesitant to purchase used cars despite the lower upfront cost.
Limited Warranty and Consumer Protection
Unlike new cars, used vehicles typically come with limited or no manufacturer warranties, reducing consumer confidence. The lack of complete consumer protection & the risk of purchasing a vehicle with undisclosed problems can impact buyers, mainly in markets where regulatory oversight is minimal.
Opportunities
Expansion of Online Sales Platforms
The growth of online marketplaces for used cars provides a major opportunity. Digital platforms make it easier for buyers to access a variety of vehicles, compare prices, and conduct transactions remotely, growing the market's reach and creating new channels for sales, mainly in regions with limited physical dealerships.
Increasing Demand for Eco-Friendly Vehicles
As environmental awareness rises, there is a higher demand for fuel-efficient and eco-friendly vehicles in the used car market, which provides an opportunity for dealerships to aim at sourcing and selling hybrid and electric vehicles, serving a segment of buyers looking for sustainable transportation options at a lower cost than new models.
Trends
Rise of Vehicle Subscription Services
A recent trend in the used car market is the emergence of vehicle subscription services, where consumers can access a range of used cars on a flexible, short-term basis. These services appeal to customers who prefer convenience and variety over ownership, offering a new way to engage with the used car market.
Increased Adoption of Data-Driven Pricing Models
The use of advanced analytics & data-driven pricing models is revolutionizing the used car market. Dealers & online platforms are using big data to assess vehicle conditions, market demand, & pricing trends more accurately, allowing more transparent and competitive pricing, which improves consumer confidence and market efficiency.
Research Scope and Analysis
By Vehicle Type
The global used car market is categorized into electric, hybrid, and conventional vehicle types. In 2024, the conventional segment is expected to achieve the highest growth rate and dominate the market in terms of share, as they have been established for a longer time, resulting in a significant and loyal consumer base. Conventional vehicles, mainly sports utility vehicles (SUVs), continue to see strong demand, mainly within the commercial market, further solidifying this segment's leading position.
Further, the electric and hybrid vehicle sectors have recently gained traction, but the conventional segment remains the cornerstone of the used car market.
Its longevity & widespread consumer adoption contribute to its vast market presence. The familiarity and established infrastructure supporting conventional vehicles make them a preferred choice for many buyers. As the market evolves, conventional vehicles, with their proven reliability and broader availability, are likely to continue attracting a major portion of consumers, even as interest in electric and hybrid options grows.
By Fuel Type
The used car market based on its fuel type, includes gasoline, diesel, and others. Among these, gasoline-powered vehicles are popular due to their convenience in refueling &their balanced mix of performance and fuel efficiency and are expected to lead the market in 2024, as it makes them a common choice across various vehicle categories, from compact cars to larger models, appealing to a broad range of consumer preferences. Gasoline vehicles are mainly favored for their versatility, making them a staple in the used car market.
Further, Diesel-powered vehicles, on the other hand, are known for their high torque and superior fuel efficiency, making them ideal for long-distance travel and heavy-duty uses. The growing preference for diesel vehicles among consumers who prioritize fuel savings, mainly for highway driving, is contributing to market growth. Diesel used cars are mainly prevalent in segments like SUVs, trucks, & specific sedan models, where their performance benefits are most valued, which highlights the distinct advantages diesel engines offer, catering to those who need more strong and fuel-efficient vehicles.
By Size
The SUV segment is set to dominate the used car market in 2024, driven by switching consumer preferences toward larger, versatile vehicles that provide a blend of comfort, utility, and enhanced safety features. SUVs appeal to a large demographic, from families needing spacious interiors to outdoor enthusiasts who need off-road capabilities. Their popularity has grown in both urban & rural settings, reflecting a wide cultural trend toward vehicles that combine practicality with status and adaptability. With their higher ground clearance, towing capacity, & advanced safety features, SUVs have become a top choice among used car buyers looking for a vehicle that can meet different needs.
Further, the mid-sized vehicle segment is expected to register the fastest growth during the forecast period, as they are valued for their balance between compact cars and larger sedans or SUVs, providing ample space for passengers and cargo while remaining easy to move and park, which makes them an appealing option for buyers looking for a versatile and functional daily driver. In addition, the compact vehicle segment is expected to experience significant growth, driven by the demand for economical & easily accessible vehicles. Franchised dealers have favored compact cars due to their high production rates & substantial inventory, making them readily available at affordable prices and driving their popularity in recent years.
By Vendor Type
The organized segment is expected to lead the used car market in 2024, capturing the highest revenue share, and is anticipated to achieve the fastest growth during the forecast period, which is driven by the growing presence of franchised dealers, whose expanding networks are reshaping the market landscape. Emerging players and advanced retail models are also contributing to this growth.
According to the National Automobile Dealers Association (NADA), franchised dealers in the U.S. are earning higher gross profits on used vehicle sales in comparison to independent dealers. In addition, organized vendors benefit from strong consumer loyalty across many age groups, reinforcing their market position. In developed markets like the U.S., Germany, and the UK, a few leading dealers account for a majority portion of the market, making the sector more cohesive in these regions.
Further, the unorganized segment is expected to experience significant growth throughout the forecast period. These vendors mostly lower overhead costs than established dealerships, enabling them to provide more competitive pricing on used cars, which attracts budget-conscious consumers looking for value for money, enabling unorganized players to carve out a major niche in the market.
By Sales Channel
The franchised dealer segment is expected to be the largest contributor to the used car market in 2024 and is anticipated to see significant growth throughout the forecast period. Franchised dealerships, which sell both new and used vehicles, benefit from key factors such as easy access to a wide range of vehicles, certified pre-owned options, immediate delivery, and strong brand trust. These elements are driving the growth of franchised dealers in the market. Additionally, major trends in this segment include the expansion of online infrastructure, competitive pricing strategies, comprehensive product testing, and the provision of post-sale services, all of which improve customer experience and satisfaction.
Moreover, independent dealers, which operate without affiliation to any specific brand or manufacturer, continue to play a major role in the used car market. These dealerships provide vehicles from multiple manufacturers and are often known by localized names. The growth of independent dealers is fueled by factors like easy access to financing and the affordability of their offerings. They also benefit from reduced prices and lower legal documentation requirements, making them an attractive option for price-sensitive buyers. The flexibility and personalized service offered by independent dealers provide them with opportunities to thrive in the competitive used automobile market.
The Used Cars Market Report is segmented on the basis of the following
By Vehicle Type
- Conventional
- Hybrid
- Electric
By Fuel Type
By Size
By Vendor Type
By Sales Channel
- Franchised Dealers
- Independent Dealers
- Others
Regional Analysis
North America is set to lead the used car market in 2024, accounting for the largest revenue share of 39.2%. The region provides a variety of selection of vehicles, from recent models with the latest features to older, classic options, meeting a wide range of consumer preferences and budgets, which attracts a broad customer base, contributing to North America's dominant market position. The well-established market infrastructure & strong consumer demand further enhances North America's leadership in the used car market.
Further, the Asia Pacific region is expected to experience the fastest growth during the forecast period, driven mainly by the growing demand for used vehicles in China. The region is expected to achieve the highest growth, with significant contributions from growing markets like China, India, and other Asian countries. The rise of organized players providing advanced used car trading services has expanded the market in the Asia Pacific, mainly in China.
In India, technological developments, including virtual showrooms, mobile apps, and cloud-based tools, are improving the used car buying experience, creating new opportunities for consumers. In addition, emerging markets in Indonesia, Malaysia, South Korea, and other developing countries are showing strong potential, further boosting the region's growth prospects.
By Region
North America
Europe
- Germany
- The U.K.
- France
- Italy
- Russia
- Spain
- Benelux
- Nordic
- Rest of Europe
Asia-Pacific
- China
- Japan
- South Korea
- India
- ANZ
- ASEAN
- Rest of Asia-Pacific
Latin America
- Brazil
- Mexico
- Argentina
- Colombia
- Rest of Latin America
Middle East & Africa
- Saudi Arabia
- UAE
- South Africa
- Israel
- Egypt
- Rest of MEA
Competitive Landscape
The competitive landscape of the used car market is characterized by a mix of traditional dealerships, online platforms, and private sellers, all competing for market share. Competition is intensifying as digital platforms simplify the buying process, providing consumers greater convenience & transparency. Traditional players are adapting by improving their online presence & providing added services like certified pre-owned programs. Price competition is strong, with players focusing on customer trust, vehicle quality, and financing options to differentiate themselves. The market is also experiencing higher consolidation as businesses look to expand their reach and improve operational efficiency.
Some of the prominent players in the Global Used Cars Market are:
- eBay Inc
- TrueCar Inc
- Alibaba Group Holding Ltd
- AutoNation
- Lithia Motor Inc
- Cars24
- Mahindra First Choice
- Arnold Clark Automobiles Ltd
- Cox Automotive Ltd
- CarMax Enterprise Service
- Other Key Players
Recent Developments
- In July 2024, Mumbai: Volkswagen Passenger Cars India unveiled the beginning of its Autofest Mega Exchange Carnival 2024 which offers customers a chance to upgrade to a new Volkswagen car with exciting benefits & deals available during July 2024. Further, the company also announced the rebranding of its used car business Das WeltAuto to ‘Volkswagen Certified Pre-Owned’, in a move that aligns with the Brand’s global positioning.
- In June 2024, Autotech Company CARS24 entered into the multi-brand car repair and maintenance services sector, which follows the company’s diversification into financial services for funding used cars and expanding into Tier III cities and 43 other cities.
- In March 2024, Audi announced that the company has taken a significant step in expanding its retail footprint in India with the launching of a new pre-owned car facility, Audi Approved: plus, in Guwahati, Assam. Situated at Balughat, Jayanagar, Tripura Road, which marks the 26th Audi Approved: plus facility in India and the largest luxury used car showroom in the Northeast, boasting a 10-car display.
- In November 2023, Amazon announced that in coming years it will allow auto dealers to sell cars through its site, starting with South Korean automaker Hyundai, as the company has slowly muscled its way into the car-buying business over the years, launching digital showrooms on its site for shoppers to research and compare vehicles, but not purchase them directly through Amazon. Consumers can also buy car products, like replacement parts, through its site.