Used Car Market in US 2019-2025

November 3, 2019
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US USED CAR MARKET

KEY FINDINGS

  1. In California, the biggest car market in US, the sales of new cars are higher than <6 year old used cars. Los Angeles is the largest 0-3 year old used car market in US. Contrary to new car sales, sedans outsell trucks by a significant margin in used car market in California
  2. Automotive retailers are now improving Omni-channel presence( swift movement between online platform and physical store/experience centers) across the country to sell more cars and increase their GPU( Gross profit per unit)
  3. The acquisition price for dealers has remained more or less flat in 2019, which went up by $400-$500 each in 2017 and 2018

 

INTRODUCTION

Used car sales in any country is a derivative of the new car market.  In a market like US where 70-80% of new vehicles sold are either leased/financed, the new cars make their way to used car market in a span of 3-4 years, when the lease/finance period gets over.

 

MARKET SEGMENTATION

Used car market in US- Market segmentation by vehicle segment, vehicle type and transaction price

 

TRANSACTION PRICES

Now that the average transaction prices of new cars in US have gone up to ~$34,500, due to consumer shift to high priced and well-equipped pickups and SUVs, they are now out of reach for many low and mid-income buyers. On the other hand, the average transaction prices in used car segment have now inched closer to $20k mark still offering a ~40%-50% saving on new cars depending on vehicle segment and trim.

 

POPULAR CONSUMER TRENDS

  1. Connectivity and convenience features have been big selling points for consumers whereas hybridization and other hi-tech features have found very few takers
  2. SUVs and pickups now make up for ~70% of new car sales but in the used car market, their combined share is only ~55-60%.
  3. The average age and miles driven by used cars in 2019 has come down by ~15% as compared to 2013-2014
  4. The share of franchise and certified pre-owned vehicles in total used car sales has come down from 38% to 34% in past few years, indicating growth in consumer to consumer transactions
  5. The average savings in buying a 3 yr old used sedan as compared to new cars is ~35%-45% whereas in SUVs and pickups it ranges between 25%-38%
  6. CPO(Certified Pre-owned) vehicles now account for ~6% of total used car sales and are an important tool for OEMs to reach first time Millenial buyers

 

TOP 5 OFF-LEASE VEHICLE MARKETS IN US

 

Sl noCity
1NewYork
2LosAngeles
3Detroit
4Miami
5Philadelphia

 

MARKET SIZE AND FORECAST

The annual used car sales in US are typically in the range of ~40-42 M units i.e. 2-2.5X of new car sales. More than 90% used car  transactions happen in the $5k-$33k price range

Used cars sold in US between 2013-2018 in Million units

 

The used car market in US is estimated at $750B in 2019 growing at –% CAGR till 2025

 

THE PROLIFERATION OF DIGITAL PLATFORMS

The used car sales which are now enabled by simple click of a button ensure more transparency about the vehicle, buyer and seller , significantly enhancing the overall process. Most prominent examples include 

  • Sonic Automotive launched an app for vehicle appraisals 
  • Group 1 Motors launched “Accelride” which allows users to browse vehicle inventory, select financing and payment terms and coordinate home-delivery
  • Carvana developed a proprietary vehicle-acquisition algorithm to customize its vehicle inventory to an individual customer`s needs

 

In China, the 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

 

COMPETITIVE LANDSCAPE

The used car market in US is fragmented and open for new entrants. The top 10 used vehicle retailers contribute to less than 10% used car sales in US. CarMax is the market leader with less than 2% market share, followed by Penske Automotive Group.

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 road-side assistance. Costco is reportedly in talks with multiple OEMs to offer its Costco Automotive program.

 

COMPANIES PROFILED

  1. Carvana
  2. Carmax Business Services, LLC
  3. Truecar Inc.
  4. AutoNation
  5. CarsDirect
  6. CarGurus
  7. Autotrader, Inc.
  8. Cox Automotive, Inc.
  9. Penske Automotive Group
  10. Sonic Automotive
  11. Group 1 Motors
  12. Lithia Motors
  13. Swap Motors
  14. Lazy Chimp
  15. Current Automotive
  16. Blinker
  17. R8TR
  18. Tred

 

 

THIS REPORT WILL ANSWER FOLLOWING QUESTIONS

  1. Estimated and Forecasted market size for 2019-2025
  2. Most important consumer trends, which features are most sought after in different regions
  3. Underlying opportunity for automotive aftermarket components and services
  4. Market share of leading vendors and their growth strategies
  5. impact of digital disruption and opportunity for new vendor or a new tech platform in used car market in US
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