The traditional mindset towards cars differ from consumer to consumer. Lower-end consumers see cars as either luxury or comfort while upper-end consumers see their reputation or pride in their cars. It’s that perception towards cars that drives and influences demand. In recent times, demand for used cars has risen everywhere irrespective of the region but the numbers differ.
In India, growth in the used-cars market is between 3X and 4X of the growth in the new-cars market as the number of vehicles in the used-cars market pool is much larger than the number of new cars sold annually. The slowdown in the new car market hasn’t affected the used-cars market, as the consumer base is slightly different. However, if there is a long-drawn slowdown in the new cars, it will impact the number of people who sell their used cars, which is the main source of supply of used cars.
Beijing has been unwilling to make large tax cuts to encourage purchases, but the range of smaller initiatives, such as the introduction of subsidies for rural residents to trade in their old vehicles, are likely to increase revenues.
China’s used car market grew by 11.5% year-on-year to 13.8 million units in 2018 even as the number of new cars sold in the country declined by 3.5% to 27.8 million amid a slowing economy and auto market.
On top of that, young Chinese consumers have a positive attitude towards used cars which has been a boon for the sector.
While previously many young people viewed purchasing a second-hand car as embarrassing, this has now changed with used car dealer Uxin reporting that one-third of its buyers were under the age of 29 years old.
This will likely change since the supply of used cars will increase as the market matures and the cost benefits of purchasing a second-hand car will start to highlight more. However, the pre-owned car market is largely driven by supply and not demand.
Factors Influencing the Demand
Alloy wheels, or ‘mag wheels’, made of an alloy of aluminum or magnesium or sometimes both, were traditionally available only on high-end sports cars and luxury vehicles. But, over the last two decades, they have run down to even budget cars.
Most alloy wheels are cast aluminum alloys, which gives them greater strength and ductility. The demands of motorsport saw alloy wheels increasingly adopted for their several benefits and saw steadily appreciating demand from the commercial market as well. Looking out for vehicles with Aluminium Alloy wheels, more people are selling their cars seeking an upgraded and sporty vehicle.
Automotive Airbag Market
Rising safety concerns among consumers and stringent safety regulations have enhanced the growth of the automotive airbag market for passenger cars. Increasing concerns towards vehicle occupants’ safety have led to developments in automotive airbag designs, actuation technology, and material selection and enhanced quality standards across the globe.
Safety is an issue where people generally do not compromise. Presence of an economical safer alternative to their vehicle hurries them to sell the old one and acquire a new vehicle with improved safety.
Automotive Interior Material Market
Emerging trends like smart fabrics demand of natural fiber composites in vehicle interior are driving people to choose a vehicle with better interior. Increasing vehicle production, growing demand for advanced vehicle safety and comfort systems, and rising demand for premium aesthetic vehicles with lightweight interior materials also have a direct impact on the dynamics of the industry.
This market largely drives used car demand in the premier segment but is increasingly getting hype in the budget segment as well. Asia Pacific is getting most influence due to high vehicle production, improvement in the economic conditions, and increasing investment by the industry players within the APAC region.
The United States Case is Different Altogether
On the other hand, a developed market like the US operates on different dynamics. The big one is ridesharing. It will become much more popular, along with fleets of autonomous vehicles owned by companies up the majority of cars on the roads of developed countries.
Consumers will not necessarily need to own those self-driving vehicles. Autonomous cars will have the capability to stay on the road more or less continuously, which means they can earn more money and customers will have an easier time finding a ride.
Car buyers will also be able to get good deals, and the rise of self-driving cars to hurt used car prices.
The autonomous wave will hit new cars first, with better technology running downtown to lower-cost vehicles over time. But not every consumer is a first-wave adopter, and automobiles are products that have long lives and multiple owners.
Vehicles with automation features are expected to become very popular for the used car sector. Further, used cars will allow owners to upgrade to vehicles with even better technology faster as it becomes available.