Rising Demand for Affordable Vehicles

The used vehicle industry in the United States has seen significant growth over the past decade driven mainly by rising vehicle prices and demand for affordable transportation options. As new cars have become more expensive, many consumers are turning to the used vehicle market to get more value for their money. Recent data shows over 40 million used vehicle were sold in 2019 alone, compared to just over 17 million new car sales. This growing demand has prompted increased activity among used vehicle dealers and online used vehicle retailers looking to capitalize on consumer preference for pre-owned vehicles.

Expanded Online Used Vehicle Marketplaces

Online used vehicle marketplaces have played a big role in growing the used vehicle industry by making millions of affordable vehicle listings available to consumers across the country. Pioneering sites like CarGurus and AutoTrader paved the way, providing transparent used vehicle pricing data and digital shopping tools. Newer entrants like Carvana and Vroom have further expanded online used vehicle buying by offering personalized online shopping experiences and home delivery of vehicles. These digital platforms have streamlined the process of finding the right used vehicle at nearby dealers while also expanding dealer networks and inventory to serve more buyers nationwide. Their success demonstrates that the future of used vehicle retailing lies increasingly online as consumers continue leveraging the internet to research vehicles and complete transactions remotely.

The Rise of Used Car Supercenters

Physical Used Car vehicle supercenters featuring large inventories and no-haggle pricing strategies have emerged as prominent players seeking to capitalize on growing used vehicle demand. Companies like CarMax, with over 200 locations across the U.S., pioneered this supercenter model. Offering tens of thousands of quality pre-owned vehicles and a standardized retail experience, these chains have grown to dominate certain regional used vehicle markets. Most have further strengthened their omni-channel presence by enhancing their digital platforms and online inventory search capabilities. Used vehicle supercenters are especially appealing to new buyers needing handholding through the car buying process or those wanting broader selection under one roof versus visiting multiple smaller dealerships. Their continued expansion suggests the used vehicle industry consolidation around major retail brands.

Demand for Certified Pre-Owned Vehicles

Within the booming Used Car sector, certified pre-owned or CPO vehicles have seen some of the greatest demand increases. CPO programs, backed by manufacturer warranties, inspections, and reconditioning standards aim to provide buyers with a new car-like experience for a used vehicle. These programs have benefited automakers too by extending the lifecycle of their brand amongst used vehicle customers. Recent years have seen automotive companies doubling down on CPO investments and promotions aiming to capitalize on consumer preference for trusted certified inventory. CPO now accounts for around 15-20% of new car dealer used vehicle sales. Their appeal stems from peace of mind from thorough inspection and warranty coverage which has grown CPO resale values and lower risk perception versus regular used vehicle.

Strong Profit Opportunity Despite Economic Headwinds

Despite recent economic uncertainties from the Covid-19 pandemic, the used car sector has proved remarkably resilient. Transaction prices rose during 2020 reflecting tight used vehicle supply due to slowdowns in production earlier in the year. While demand may moderate in an economic downturn, used vehicle often provide an affordable mobility solution during difficult financial times for those needing reliable transportation. Their relative inexpensiveness compared to new cars also makes them an attractive alternative should consumer spending pullback. For industry players with diversified and efficiently run operations, the long term opportunity remains very bright. Even in a recession, millions of used vehicle sales are expected to continue providing steady business. Overall, the used vehicle industry has established itself as a stable profit center for both dedicated retailers and new car dealers alike going forward.

the used vehicle industry has undergone significant changes driven by growing consumer demand for affordable vehicles and innovative online retail models. Major industry shifts towards digital channels, prominent supercenter chains, and increased interest in certified pre-owned cars demonstrate the vitality and future growth potential of this economic sector. Both online and physical used vehicle retailers are well-positioned to capitalize further on these industry trends and benefit from expected ongoing consumer demand for millions of quality used vehicle transactions nationwide in the coming years. The accelerating pace of technology-driven disruption also promises to continually reshape how used vehicle are bought and sold to the benefit of savvy businesses and value-conscious consumers alike.

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