7% compound annual growth likely in global used-car market
You can expect the international used-car market to show some nice growth over the next handful of years, according to two reports released in the past week.
Technavio, a global tech research and advisory firm, forecasts a 128.42 million-unit global used-car market by 2021. That would represent a compound annual growth rate of more than 7 percent.
Meanwhile, Research and Markets is calling for 7.07 percent compound annual growth in the international used-car business for the 2017-2021 period.
While the Americas has had the strongest share of the global used-car market (47.76 percent in 2016), according to Technavio, the area of the world that will see the most growth is the Asia-Pacific Region.
And it could make a run for the title.
“APAC is the fastest-growing segment of the used car market, expected to showcase a CAGR of over 20 percent through 2021,” Technavio analyst Praveen Kumar said in a news release.
“The region is expected to increase its market shares swiftly and is likely to compete with the Americas by the end of the forecast period,” Kumar added.
Technavio says the used-car market in these countries is being helped by the growth in e-commerce along with easier emission norms.
“The online sales contribute to the majority of the organized used car sales in APAC, with traditional brick-and-mortar stores moving to online platforms for generating leads and increasing customer base,” Technavio said in the release.
As far as the Americas, late-model vehicle demand is pushing prices of these cars higher and helping to drive more revenue dollars in this market, according to Technavio. The company also credits e-commerce gains and improving employment prospects as influential.
Plus, ownership cycles are becoming shorter.
The firm said there was 43.58 million used-car sales in the Americas last year.
“The Americas occupied a majority 48 percent of the global used car market in 2016, and is expected to continue its dominance through the forecast period, driven by decreasing ownership cycles,” Kumar said.
Moving over to Europe, Middle East and Africa (EMEA), Technavio is forecasting a 2021 used-car market of 36.03 million units. Its share of the global market in 2016 was just under 34 percent.
Calling the auto industry in this region “quite mature,” the firm points to the aging population and higher fuel costs as key engines of used-car growth.
“Regions such as Russia lack stringent vehicular emissions regulations, which will positively impact the market,” Technavio said. “Compact and midsize cars are the most preferred vehicles due to their wide availability and decreased prices.”
Pre-owned quality perception
While also pointing to the value proposition of pre-owned cars as a key factor in the segment’s growth, Research and Markets also credits online used-car dealers and more automakers getting into the used-car space.
More specifically, Research and Markets suggest that consumers are viewing the quality of used cars more favorably because of those two factors.
“The majority of the purchase decision regarding used cars depends on the customer’s conviction about the quality of the car available. Customers purchase used cars due to the affordability,” the company said. “The quality of the used vehicle is a key decision-making factor as the details regarding the ownership of the vehicle are vague and damages after the vehicle purchase are not covered by the warranty.”
Source: Auto Remarketing