The economic crisis that continues today will not harm the European used car market, on the contrary, it will grow. Experts from the consulting company Bain & Company in their report predict an increase in its total value by 5% every year. This can happen due to the shortage of new cars that has been going on since the beginning of the Covid-19 pandemic and the increase in their prices.
The value of the European used car market will grow to 503 billion euros in 2025, compared to 460 billion euros in 2022. Over the past seven years, this market has grown by almost 60%.
"Contrary to fears that the economic crisis will have a negative impact on the used car market, our analysis shows that demand for these cars will remain stable, as for many Europeans owning a car is the only means of transport that allows them to get to work or study," says Roch . Baranowski, partner at Bain & Company and co-author of the report. "While weʼre seeing a slight decline this year, historical data shows that even during periods of economic downturn, this market segment has been relatively resilient to shocks. In addition, we have a systemic shortage of new cars in Europe.", which contributes to the development of the secondary market, he adds.
Demand for used cars is driven by a shortage of new models that has been going on for several years, mainly due to production cuts. According to a report by the European Automobile Manufacturers Association (ACEA), 10.8 million passenger cars were produced in the EU in 2022, which is 24% less than before the start of the pandemic in 2019.
Consistently low production is the result of a combination of many factors, including EU climate policy, the outbreak of the pandemic and the war in Ukraine. A small decline began as early as 2018, when automobile concerns began to adapt to increasingly strict European CO2 emission standards and gradually switch to the production of electric vehicles. Currently, companies continue to reduce the production of models with internal combustion engines, which, according to the plan, should be completely phased out in 2035.
Another challenge for European automakers was the outbreak of the Covid-19 pandemic, which interrupted supply chains, leading, in particular, to a decrease in the availability of microprocessors. This led to the beginning of a full-scale war in Ukraine, which exacerbated problems with the availability of spare parts and contributed to a sharp increase in energy prices. " Due to the lack of components, factories are idle, relatively few new cars enter the market. Expecting to wait a few months for a new car, many drivers either do not change their car at all, or decide to buy a used one instead. In addition, due to the increase in energy prices and the investments of concerns in ecological projects, new cars are becoming more and more expensive and therefore less affordable. Because of this, more and more people will look for vehicles on the secondary market," says Roch Baranowski.
According to Bain & Company analysts, problems with the availability of microchips are gradually disappearing. On the other hand, the war in Ukraine will continue to disrupt the supply of raw materials, including Ukrainian-made wiring harnesses.
At the same time, the increase in demand for used cars leads to an increase in their prices. Thus, since 2019, the average price of a used car in the European Union has increased by 27%, and in 2022 it amounted to 14 thousand euros. According to Bain & Company experts, it will grow to 15 thousand euros in 2025.
According to analysts, the growing popularity of electric cars, for which Europe is the second largest market in the world after China, will not hurt sales of used cars. The experience of the Scandinavian countries shows that the availability of a wide range of electric cars has a positive effect on the supply of used cars, because drivers decide to speed up the exchange of cars for environmental reasons in order to purchase an electric one as soon as possible.
The used car market will also change under the influence of digitalization. Analysis shows that more and more transactions will be made entirely online. Although in 2020 only 1% of used cars in the EU were sold in online car dealerships, in 2025 their market share could reach 6%. The key factor that will determine the future of online sales of used cars will be the creation of mechanisms that build customer trust. To achieve this, dealers will have to invest both in the development of online sales systems and in cooperation with local partners, experts say.
Subscribe to the Telegram channel of the Auto Market Research Institute to be the first to receive information without advertising or spam.
