US Used Car Market Size 2024-2028

The US Used Car Market size is estimated to grow by USD 41.9 billion at a CAGR of 4.6% between 2023 and 2028. The market is experiencing significant growth, driven by the excellent value-for-money proposition that used cars offer compared to new ones. This trend is further reinforced by the increased penetration of websites dedicated to selling used passenger cars, making the purchasing process more convenient for consumers. Additionally, the market benefits from the extended cycle of vehicle usage, as buyers seek affordable alternatives to new models. However, the market also faces challenges, such as stringent emission regulations that restrict the sales of non-compliant used cars. Adhering to these regulations is crucial to maintain consumer trust and ensure the sustainability of the market. Furthermore, the availability of financing options and the growing trend of car sharing and ride-hailing services are also shaping the used car market landscape. Overall, the used car market is poised for continued growth, driven by consumer demand for affordable and convenient transportation solutions.

Market Forecasting Overview

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Market Dynamics

The market is thriving with a diverse range of options for buyers and sellers. Dealership networks and vehicle dealers offer certified pre-owned vehicles with extended service agreements, providing added peace of mind. Off-lease vehicles and pre-owned cars are prominently featured at auctions, leasing offices, and rental car agencies. Private party sales and no haggle prices simplify transactions for used car owners. Additionally, the market includes second-hand cars with various financing options, catering to a broad audience. As demand for cost-effective and reliable transportation grows, these channels play a crucial role in the dynamic used car industry. The market is evolving with a blend of traditional and digital approaches. Franchise and franchised dealers are central to the dealership network, offering both conventional and CNG-powered vehicles, including SUVs and mid-sized models. Price-sensitive buyers benefit from off-lease vehicles and pre-owned luxury cars available through organized channels. Online transactions and digitalization are reshaping the market, complementing offline dealerships. Luxury car manufacturers and OEMs are adapting to meet emissions standards and BS6 norms, addressing environmental concerns. Value-added services, warranties, and digital platforms enhance the buying experience, while unorganized businesses remain a significant presence in the sector.

Key Market Driver

The excellent value-for-money proposition of vehicles is driving growth in the market. The rising number of automakers entering the market and the quality of used cars is improving in the eyes of customers due to an increased number of online dealers. Customers choose to purchase a used car over a new car, primarily due to its affordability. However, they are often skeptical of the quality of the used vehicle as the details regarding the previous ownership of the vehicle are often vague, and any damage to the vehicle after purchase would be void of warranty. The quality of the vehicle is usually guaranteed by a number of additional benefits provided when purchasing used cars.

Thus, excellent value for money from used cars will drive the growth of the market in focus during the forecast period. In the US, the market remains a significant driver within the automotive industry, buoyed by robust sales of pre-owned vehicles. With a plethora of options available, consumers are drawn to the diverse content and selection offered across dealership lots nationwide. This trend underscores the American penchant for value and variety in the used vehicle market. As a vital segment of the US automotive industry, used car sales continue to thrive, shaping the landscape of the US market. The resilient nature of the American consumer contributes to the market's sustained growth, reinforcing its position within the broader automobile industry.

Significant Market Trends

The increased penetration of websites dedicated to selling cars is a key trend in the market. The increased penetration of the Internet has facilitated an efficient online marketplace in the US. Consequently, the growing penetration of online car sales websites has made it easier for customers to purchase a used vehicle using websites in the country. Such sites help sellers to reach a vast number of potential buyers. 

Moreover, online car websites offer free or discounted after-sales service packages that cover various types of maintenance costs associated with the vehicle after purchase. The sale of cars in the US will be stimulated by more convenient ways to swap vehicles with other well-maintained vehicles through an online website. and will also drive the market growth and trends in focus during the forecast period.

Major Market  Challenge

The increasing preference for car subscription services is a major challenge faced by the market. The subscription model for cars is becoming increasingly popular among individuals who prefer personal transportation over time without having to invest and commit to a single-vehicle model for a more extended period. The car subscription model would allow a potential car buyer to choose any different vehicle model for a fixed period and miles.

Moreover, the car subscription business model covers all maintenance, vehicle insurance, and periodic service costs under the monthly subscription fee. The growing popularity of car subscriptions, as mentioned above, will harm market growth in focus during the forecast period.

Customer Landscape

The market trends and analysis report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. The market research and growth report focuses on adoption rates in different regions based on penetration. Furthermore, the market growth analysis report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Customer Landscape

Who are the Major Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

• AutoNation Inc. - The company offers the 2020 Acura MDX, 2019 Acura RDX, 2020 BMW 3 Series, and 2021 Chrysler 300.

The market report also includes detailed analyses of the competitive landscape of the market and information about 12 market companies, including:

• CarMax Inc.
• Carvana Co.
• General Motors Co.
• Group 1 Automotive Inc.
• Hendrick Automotive Group
• Hertz Global Holdings Inc.
• Lithia Motors Inc.
• Penske Automotive Group Inc.
• Sonic Automotive Inc.
• Vroom Inc.
• Asbury Automotive Group Inc.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

What is the Largest-Growing Segment in the Market?

The third-party channel segment is estimated to witness significant growth during the forecast period. The new US car market is highly competitive, with a large number of new vehicle models being launched every year. This, however, drives a steady supply of cars into the market. There is a substantial difference in used car prices compared to new cars.

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The third-party channel sales segment was the largest segment and was valued at USD 89.40 billion in 2018. The progressing number of new cars launched in the US car market will cause the average ownership cycle per car to reduce over the forecast period. This trend will be beneficial to car buyers because they would purchase vehicles that did not have significant use during the previous ownership cycle.

Segment Overview

The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Million" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments

• Distribution Channel Outlook
  • Third-party channel sales
  • OEM channel sales

• Application Outlook
  • Mid size
  • Full size
  • Compact size

Market Analyst Overview

The market is a significant segment of the automotive industry, catering to price-sensitive buyers seeking personal mobility solutions. The market is characterized by the presence of both organized and unorganized dealership networks, including franchise and non-franchise dealers. Online sales have gained traction in recent years, with auto marketplaces offering a wide range of used passenger cars. Digital retailing, AI applications, and inventory pooling have transformed the buying experience, making it more convenient and efficient for consumers. Automobile manufacturers are expanding their new vehicle business by venturing into the used car market. Sustainability is a growing trend, with electric vehicles, hybrid vehicles, CNG-powered vehicles, and diesel vehicles gaining popularity. SUVs, mid-sized, and compact-size vehicles continue to dominate the market.

Moreover, customer intelligence plays a crucial role in used car marketing, as understanding buyer behavior and preferences is essential for success. Urbanization and the telecom industry have facilitated the growth of online retailing, with off-lease vehicles and car subscription services emerging as new business models. Depreciation is a significant challenge in the used car market, but transparency in vehicle certification and resale value assessments, along with comprehensive insurance options, can help mitigate risks for buyers. Ensuring that insurance coverage is clear and accessible is essential for maintaining buyer confidence and protecting investments. Luxury vehicles and ownership duration also impact the market dynamics. In conclusion, the used car market presents numerous opportunities for growth, driven by automotive industry trends, affordability, and the shift towards digital retailing. Understanding the unique needs of various customer segments and adapting to changing market conditions is key to success.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2024 and 2028
• Precise estimation of the market in focus on the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across the US
• A thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the growth of market companies

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