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2024 Update Coming Soon Published- Sep 2021 Number Of Pages -103
Used car sales in any country are a derivative of the new car market. In a market like the US where 70-80% of new vehicles sold are either leased/financed, the new cars make their way to the used car market in 3-4 years, when the lease/finance period is over. A vehicle that has had one or more retail owners in the past is referred to as a used automobile, pre-owned car, or secondhand car.
Franchise and independent vehicle dealers, rental car agencies, buy-here-pay dealerships, leasing offices, auctions, and private party sales are just a few of the places where used cars can be purchased. Some auto dealers provide no-haggle prices, certified pre-owned vehicles, and extended service agreements or warranties.
Due to disparities in economic levels, automobile depreciation rates vary greatly across exporting and importing nations. In high-income countries as opposed to low-income countries, the cost of a vehicle depreciates more quickly.
Thus, used car dealers in high-income nations can charge more for their used cars when selling them in low-income nations. This is the motivation for exporting second-hand cars. One of the first used vehicle dealerships in the United States was the Empire State Motor Waggon Company in Catskill, New York.
The used car industry is significantly bigger than other significant retail sectors, like the home improvement and school and office equipment markets. The used car market accounts for about half of the U.S. auto retail market and is the largest sector of the economy in terms of retail sales, with annual sales of over some billion.
Used car sales in any country are a derivative of the new car market. In a market like the US where 70-80% of new vehicles sold are either leased/financed, the new cars make their way to the used car market in 3-4 years, when the lease/finance period gets over.
To learn more about the Global Used Cars Market, read our report.
A vehicle that has had one or more retail owners in the past is referred to as a used automobile, pre-owned car, or secondhand car. Franchise and independent vehicle dealers, rental car agencies, buy-here-pay dealerships, leasing offices, auctions, and private party sales are just a few of the places where used cars can be purchased. Some auto dealers provide no-haggle prices, certified pre-owned vehicles, and extended service agreements or warranties.
Now that the average transaction prices of new cars in the US have gone up to ~$36,800, due to consumer shift to high-priced and well-equipped pickups and SUVs, they are now out of reach for many budget-oriented buyers.
On the other hand, the average transaction prices in the used car segment have now inched closer to the $21k mark still offering a ~40%-50% saving on new cars depending on vehicle segment and trim.
The annual used car sales in the US are typically in the range of ~38-40 M units i.e., 2-2.5X of new car sales. More than 90% of used car transactions happen in the $5k-$33k price range.
The used car market in US is estimated at $740B in 2020 growing at –XX% CAGR till 2030
The used car sales which are now enabled by a simple click of a button ensure more transparency about the vehicle, buyer and seller, significantly enhancing the overall process. Most prominent examples include
In China, online used car companies raised more than $1 Billion in 2018 alone. To know more about it, read our Online used car market in China report
Connectivity and convenience features have been big selling points for consumers whereas hybridization and other hi-tech features have found very few takers. SUVs and pickups now make up for ~70% of new car sales but in the used car market, their combined share is only ~40-50%.
The share of the franchise and certified pre-owned vehicles in total used car sales has come down from 38% to 34% in the past few years, indicating growth in consumer-to-consumer transactions
The average savings in buying a 3-year-old used sedan as compared to new cars is ~35%-45% whereas in SUVs and pickups, it ranges between 25%-38%. CPO (Certified Pre-owned) vehicles now account for ~28% of total used car sales and are an important tool for OEMs to reach first-time Millennial buyers
The largest new-car retailer in the United States, AutoNation Inc., declared that it was purchasing a share in Vroom, an online used-car retailer. Through cooperation with Vroom, AutoNation would have access to a variety of used car buying and selling options outside of its brick-and-mortar locations.
Houston and New York are the locations of Vroom. Recently, used-car sales have become more significant for two reasons. First, used autos have bigger profit margins. Second, sales growth for new cars has slowed or even reversed. These elements indicate that retailers are leaning toward use.
To incorporate VIN-specific service and repair information directly on CARFAX Vehicle History Reports, CARFAX collaborates with car dealers and aftermarket service providers.
CARFAX collaborates with several websites, including AutoTrader.com, Cars.com, Kelley Blue Book, Edmunds.com, DataOne, Evox, DealerTrack, vAuto, Dealer Specialties, and many more, that provide vehicle inventory, dealer software, and customer information.
CARFAX Vehicle History Reports are recognized and trusted by millions of buyers and sellers of used cars. CARFAX Vehicle History Reports are used by thousands of credit unions, banks, insurance providers, and other auto-related firms to locate problematic autos and do vehicle research.
Used automobiles have historically been disregarded by the automotive industry as the inferior cousin of the upscale new auto market. The pandemic, however, has altered everything. Due to severe production delays caused by semiconductor chip shortages, used cars are now the mainstay of the auto industry.
Since there were fewer new cars on the road, second-hand car prices in the US have risen dramatically. By establishing a distinct vertical market for used cars, this situation offers finance captives a special chance to maximize revenue and growth while extending the brands of their manufacturer.
CarMax, one of the leading wholesalers and retailers of used cars in the country, has announced a partnership with UVeye to develop automated vehicle evaluation technology for wholesale buyers of vehicles sold at auction. A computer vision technology business called UVeye creates automated vehicle inspection systems that are supported by specialized hardware and artificial intelligence.
A used car has previously belonged to one or more retail owners. It’s sometimes referred to as a used car or a pre-owned car. Used cars are sold in a variety of places, including franchise and independent vehicle dealers, rental car agencies, buy-here-pay dealerships, leasing offices, auctions, and private party sales.
The customer base is likely to grow as a result of technological improvements including the expansion of online booking and the use of e-commerce websites and applications. Online vehicle marketplaces have been instrumental in giving customers access with just one click. Due to online booking, consumers are becoming more knowledgeable about the vehicle, its residual value, third-party margin, and other aspects.
A substantial rise in demand for used cars was caused by the convergence of these factors. Additionally, the expansion of the market has been fueled by elements like cost, the accessibility of used cars, the growing demand for personal mobility, and the emergence of several internet businesses to organize the industry. Nevertheless, several top businesses have launched brick-and-mortar and online locations across the nation to offer seamless used automobile buying experiences.
Dealers who are not formally organized or who are only loosely governed dominate the used automobile industry, making up the bulk of independent dealers nationwide. Participants give a high value to more recent vehicles and well-known brands with strong resale values. As prices continue to decline from record highs brought on by the epidemic, the US automotive market is seeing yet another major change.
Another significant factor influencing market expansion is the emergence of new market competitors and innovative retail strategies. The National Automobile Dealers Association stated that in the United States, franchised dealers made more money overall from used car sales than independent dealers. Additionally, improved brand loyalty across all age groups was profitable for organized retailers.
In the United States, Stellantis unveiled the Spoticar used-car trading platform. Many of the standard CPO features and warranties are included in Spoticar. Vehicles for sale won’t be more than 10 years old, nor will they have more than 120,000 miles on them.
The program will be administered by participating dealers among the parent company’s 2,600 stores in the U.S. All vehicles are warranted to be free of frame damage and to have a clear title. Additionally, dealers are pleased to start free trials of any subscription-based services, like SiriusXM radio, that the vehicles are equipped with.
The Spoticar website even has a drop-down menu where customers can filter cars by the monthly payment after entering their intended payment range, the loan term, and a range of credit scores to determine which cars qualify. About CPO, it seems that Spoticar will take the place of the CPO Go program that Stellantis introduced. The services of CPO Go include a vehicle inspection, a three-month warranty, a CarFax report, and a reimbursement for car rentals.
Alfa Romeo and Fiat are excluded from CPO Go, which is limited to vehicles that are at least six years old and up to 10 years old with between 75,001 and 120,000 kilometers and is not covered by the new car guarantee.
History reports: Vehicle history reports providing details regarding the condition of secondhand cars are offered by companies like AutoCheck. You can identify potential problems and make a wise purchase with the aid of these studies. The information in car history reports, which includes the salvage title, the number of prior owners, and the reported accidents, might help you spot potential issues in the vehicle’s past.
Artificial intelligence (AI) to provide more accurate valuations of used cars: The application of artificial intelligence (AI) and machine learning algorithms to generate more precise used car appraisals is an intriguing advance in the used car market. Companies like Black Book and Kelley Blue Book analyze data on millions of old cars to establish their market worth using sophisticated algorithms.
With the use of this technology, car dealerships, and individual sellers may more precisely price their vehicles, and buyers can make more educated selections about the vehicles they’re considering purchasing. Even before ChatGPT became well-known, the IT team at CarMax had been collaborating with Microsoft and OpenAI to deploy GPT-3.x for business value.
CarMax’s innovative digital business strategy for the used-car industry combined with cutting-edge AI capabilities that are accessible to everyone leads to powerful and successful commercial outcomes.
Ford utilizes CarStory, an artificial intelligence platform, to comprehend the inventory data for used automobiles. Dealerships may now find out specifics about the state of automobiles, owner history, and market pricing. Analytics are used in the CarStory reports to identify what makes each previously owned car distinctive.
Subscription-based car services: the used car market is the rise of subscription-based car services, which allow consumers to “rent” a car every month. Companies like Fair, Canvas, and Flexdrive offer subscription-based services that allow consumers to drive a variety of cars without the long-term commitment of ownership. This can be an attractive option for people who want to drive a different car every few months or who don’t want to commit to a long-term car loan.
Blockchain technology: Some dealerships and car rental companies are experimenting with the use of blockchain technology to provide a more secure and transparent record of a car’s ownership history. Blockchain is a distributed ledger technology that can be used to create a tamper-proof record of transactions. By using blockchain to track a car’s ownership history, dealerships, and car rental companies can provide more transparency to consumers and reduce the risk of fraud or misrepresentation.
Virtual Reality: Some dealerships are experimenting with virtual reality technology to enhance the car-buying experience. Customers can use VR headsets to take a virtual test drive and explore the car’s features and options in a more immersive way.
Affordability: Compared to new cars, used cars typically cost less to buy. Because of this accessibility, purchasers can purchase a car that suits their budget and might even acquire a higher-end model with more amenities for the same price as a new base model.
Lower Depreciation: Within the first few years of ownership, new cars often depreciate significantly. By buying a used car, customers can avoid the most rapid depreciation and possibly better preserve the value of the vehicle over time.
Greater Variety: The used automobile market offers a large variety of vehicles, including various makes, models, years, and price points. Customers have the freedom to select from a variety of solutions to fit their requirements and interests, including vintage models that might not be readily available as brand-new.
Reduced Insurance Costs: Compared to new cars, insurance prices for used cars are frequently lower. Since used automobiles often have lower prices, insurance companies frequently base premium calculations on the value of the vehicle, which could result in discounts for buyers.
Lower Registration Fees: In many states, the cost of registering a car is determined by its age and value. When compared to buying a new car, buying a used car can result in lower registration costs, which lowers the entire cost of ownership.
Lower Financing Costs: Compared to financing a new car, financing a used car could have a lower interest rate. Lower monthly payments and substantial cost savings for borrowers can arise from this.
Vehicle History Reports: Used car buyers have access to vehicle history reports, which offer details on a vehicle’s prior owners, accident history, service records, and more. These reports assist purchasers in making informed choices and evaluating the reliability and condition of the vehicle they are considering.
Reliability: Modern vehicles are constructed to be more trustworthy and long-lasting, so even pre-owned vehicles can deliver dependable performance. A secondhand car may provide many years of dependable transportation with the right upkeep and handling.
Faster Availability: Buying a new car may require waiting for the vehicle to be produced and delivered. The vehicle is already available on the used car market, enabling purchasers to finish the transaction and begin using their new car more quickly.
Lower Risk: Compared to buying a new car that hasn’t been extensively tested on the market yet, buying a used car can be less dangerous. Buyers may make educated judgments because used cars have a documented track record and possible problems or recalls may have been identified.
Mahindra First Choice to launch e-mkt for used cars. Mahindra First Choice Wheels Ltd. (MFCWL) intends to open a digital used-car market. Used car sales and purchases will first be limited to registered dealers, but eventually end users will also be able to participate. It’s conceivable that the online used automobile market will be open. It would initially be a D2D event in which First Choice authorized dealers would take part.
As a result, consumers would be able to sell the products we produce online, and the current locations would make it easier to buy and sell cars in person. They hope to organize this incredibly disorganized used-car market through these activities.
India’s favorite used automobile dealer, MFCWL, has 214 locations spread over 115 cities. This number will increase to 500 outlets, according to the firm. In India, including the metropolises and tier-II towns and cities, clients should soon be able to select from a variety of certified used automobiles.
The used car market in the US is fragmented and open to new entrants. The top 10 used vehicle retailers contribute to less than 10% of used car sales in the US. CarMax is the market leader with less than 2% market share, followed by Penske Automotive Group.
In 2020, Carvana sold more than 244,000 cars online, an increase of 37 percent YoY. They invested more than $240 Million in reconditioning the cars and purchased more than 350,000 cars total to date, and 203,000 of those were purchased in 2020; almost 60 percent of the total purchased cars in the company’s history.
Carmax announced the completion of its omnichannel rollout, which gives it the largest addressable market in the used car industry. This unique omni-channel experience empowers customers to buy a car on their terms – online, in-store, and a seamless integration of both.
AutoNation announced the opening of the first of five additional stores that the Company will open this year. AutoNation is targeting to have over 130 AutoNation USA stores in operation from coast to coast by the end of 2026. Certified pre-owned vehicles are selling quicker with better margins than similar non-certified pre-owned vehicles.
As a result, Honda and Acura are now re-branding and creating a second tier of certification of their certified pre-owned vehicles, offering free oil changes and roadside assistance. Costco is reportedly in talks with multiple OEMs to offer its Costco Automotive program.
