Europe Used Cars Market Size

Europe Used Cars Market Size

Europe Used Cars Market size was valued at USD 725.4 billion in 2023 and is estimated to register a CAGR of over 4% between 2024 and 2032. The shortage of semiconductor chips is driving the used car industry in the region. There are fewer new automobiles in the market due to production slowdowns and temporary plant closures brought on by the lack of automotive chips. As fewer new vehicles hit the market, buyers may buy used cars as a substitute to meet their mobility demands.

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High new vehicle prices and fewer incentives provided by automotive OEMs have decreased the availability of new cars. Additionally, higher pricing and restricted supply are likely to cause consumers, particularly those on a tight budget, to view used cars as a more cost-effective option. For instance, according to the Car Remarketing Association of Europe, in 2022, Italy recorded the largest increase in used car transactions, with a 64.9% rise In September. With a growth rate of 52.2%, France was closely followed by Germany (11.9%), Austria (14%) and Spain (26.2%).
 

Moreover, the value of new cars rapidly decreases in the first few years of ownership. Owing to such factors, a lot of people choose to buy used cars rather than new ones to save money on depreciation. Due to the lack of raw materials, various Original Equipment Manufacturers (OEMs) raised the MSRP for recent model years, which raised the cost of used cars from those model years and trickled down to older inventory, thus depreciating the value for new cars in the market.
 

Further, prices are influenced by consumer willingness to pay close to or even more than MSRP for used cars when there is a lack of new inventory and lengthy wait times. According to a Fleet Europe report published in 2023, the retail depreciation difference between the prices of new & used cars at different prices is 36%. Furthermore, the report states that the UK performs ineffectively among the major Western economies, with cars losing 51.9% of their value in three years.
 

The costs of buying, storing, and maintaining inventory are covered by dealerships and companies in the used automobile sector. Growing inventory costs, such as those associated with purchasing vehicles, paying storage fees, and depreciating assets, can reduce profit margins, challenging a dealer company's ability to remain in operation, especially in difficult economic times or during market downturns. Due to this, these rising costs can significantly hinder market growth by making it more difficult for dealerships to sustain profitability and attract new customers.