The Future of the Global Used Car Market: An In-depth Analysis and Forecast
The global used car market is at a tipping point. As technological advances change the auto industry, traditional ownership models are being challenged and consumer behavior is adapting. With the advent of online marketplaces and new service-based car models, the landscape of the used car market is rapidly changing. According to recent reports, the global used car market has experienced significant growth over the years, reaching $1.57 trillion in 2021, and is expected to grow at a compound annual growth rate (CAGR) of 6.1% from 2022 to 2030.
(CAGR) Compound Annual Growth Rate - This is a measure of the mean annual growth rate of an investment over a specified time period longer than one year. It represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios, and anything that can rise or fall in value over time.
Emerging Trends
As we navigate the future of the used car market, two key trends are set to redefine the industry: Car-as-a-Service (CaaS) and car subscription services. With the CaaS market projected to reach $225.65 billion by 2030 and the car subscription market expected to grow at a CAGR of over 35% from 2023 to 2032, it's clear that the automotive industry is moving towards more flexible and service-oriented models. These services, pioneered by companies like BMW, General Motors, and Volvo, are effectively transforming car ownership from a lifetime commitment into a flexible choice for consumers.
However, these trends also bring new challenges, such as maintaining high standards of customer service and managing the costs of short-term usage.
Car-as-a-Service: The Future of Car Ownership
Car-as-a-service (CaaS) is an emerging trend where traditional car ownership is replaced with a more flexible, service-based model. This innovative concept is seen as the automotive industry's response to the modern consumer's demand for flexibility, convenience, and cost-effectiveness. In the CaaS model, customers can access a car without the responsibilities of ownership, including maintenance, insurance, and depreciation worries. However, challenges like the high cost for short-term usage and the requirement of continuous customer service excellence need to be addressed for it to gain more popularity.
Regional Analysis of the Used Car Market and BEVs:
The Asia-Pacific region, thanks to rising incomes, increasing demand for luxury cars and shorter car ownership periods, is seeing a surge in the used-car market, which will reach USD 935.12 billion over the next five years..
Europe
In Europe, the used car market faced challenges due to the COVID-19 pandemic. However, with the resumption of supply chains, the market started reverting to the pre-pandemic situation, creating increased opportunities. The European used car market, valued at USD 57.20 billion in 2021, is expected to grow to USD 77.98 billion in 2027 at a CAGR of 5.3%.
BEVs Update: Despite the low share of BEVs in the new-car market (3.7% in 2022), demand for used BEVs is increasing. In December 2022, Europe's passenger plugin electric car market surged, with 413,500 registrations and a record plugin vehicle share of 38%, including a 25% share for full BEVs alone. The total plugin vehicle sales for 2022 exceeded 2.6 million, with a 23% share (14% for BEVs). The market for plugin hybrids (PHEVs), however, is expected to decline, with their share dropping from 39% in 2022 to a predicted 30% or less in 2023.
Asia-Pacific
The Asia-Pacific region presents a burgeoning used car market, driven by the rise in income levels, increasing demand for luxury cars, shorter car ownership periods, booming import-export, and a growing preference for two-wheeler owners to upgrade to small and compact cars. The used car financing market in APAC is valued at USD 675.62 billion and expected to reach USD 935.12 billion over the coming five years, with a combined CAGR of 5.74%.
BEVs Update: The Battery Electric Vehicles (BEVs) market in the Asia-Pacific region is growing at an unprecedented pace. China, as the largest auto market, has seen a significant surge in demand for used BEVs, driven by governmental push for clean energy and consumer preference for eco-friendly alternatives. Japan and South Korea also follow suit, with increasing investments in EV infrastructure fueling demand. According to recent data, China's used BEV market was valued at $4.7 billion in 2022 and is expected to grow at a CAGR of 9.2% by 2030.
The Used Car market in the U.S. is estimated at 29.6 Million Units in the year 2020. China, the world`s second largest economy, is forecast to reach a projected market size of 34.1 Million Units by the year 2027 trailing a CAGR of 8.8% over the analysis period 2020 to 2027. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 3.2% and 5.2% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 3.7% CAGR.
Compact-Size Cars Segment to Record 6.3% CAGR
In the global Compact-Size Cars segment, USA, Canada, Japan, China and Europe will drive the 5.8% CAGR estimated for this segment. These regional markets accounting for a combined market size of 11.5 Million Units in the year 2020 will reach a projected size of 17 Million Units by the close of the analysis period. China will remain among the fastest growing in this cluster of regional markets. Led by countries such as Australia, India, and South Korea, the market in Asia-Pacific is forecast to reach 21.8 Million Units by the year 2027, while Latin America will expand at a 7.5% CAGR through the analysis period.
Country-wise Insights
| Country | Market Value 2021 (USD) | Expected CAGR by 2027 | Notes |
|---|---|---|---|
| Spain | 8.7 Billion | 5.9% | The used car market is growing due to economic recovery and an increase in digital platforms for car trading. The used BEV market is also growing with a YoY increase of 20.6% observed in 2022. |
| Switzerland | 1.9 Billion | 4.8% | The used car market is robust due to strong consumer confidence and high purchasing power. The used BEV market is still niche but has strong growth potential due to government EV incentives. |
| United Kingdom | 16.8 Billion | 5.2% | The used car market is thriving due to increased online sales and evolving consumer behavior. The used BEV market has seen a sharp rise due to stringent emission norms and increasing consumer awareness. |
Looking Ahead
As we look towards the future, it's evident that the global used car market is undergoing a significant shift. The advent of Car-as-a-Service (CaaS) and the growing popularity of Battery Electric Vehicles (BEVs) are redefining the landscape of the industry. Despite certain challenges like high service standards and short-term usage costs, these trends hold immense potential for market growth.
With Asia-Pacific leading in market size and Europe showing considerable promise in the used BEV market, the industry's future appears robust. The global used car market, valued at $1.57 trillion in 2021, is expected to grow at a CAGR of 6.1% from 2022 to 2030.
In conclusion, the used car market is undergoing a transformative phase, moving from traditional ownership to more flexible, service-oriented models. This evolution, bolstered by technological advancements and changing consumer behavior, indicates a promising and dynamic future for the global used car industry. Despite regional variations and looming challenges, the industry's resilience and adaptability ensure its potential remains vast.
Source
- globenewswire.com
- statista.com
- alliedmarketresearch.com