The global online car buying market size was valued at USD 237.9 billion in 2020 and is projected to reach USD 474.6 billion by 2027, registering a CAGR of 12.2% from 2021 to 2027. The online car buying market refers to the end-to-end buying of a car through online platforms. Customers may benefit from increased price transparency, the convenience of shopping from home, and a digital payment procedure when they buy a car online. Customers may rapidly obtain product-related information and prices by browsing the available options. They may quickly access a large range of available automobiles, as well as personalized suggestions and recommendations, as well as easy benchmarking and pricing comparisons with little or no paperwork, and vehicle delivery to their homes. Pre-owned automobiles, sometimes known as used vehicles, and new vehicles are two types of vehicles available for purchase on the internet.
Factors such as shifting OEMs to end-to-end online vehicle sales, growing third-party online platforms for private sellers and dealers, growing number of active internet users, and demand for car-sharing services are foreseen to boost the growth of the online car buying market. However, unorganized sales of pre-owned cars and a lack of regularization could hinder the growth prospects of the global online car buying market. Moreover, the adoption of new e-commerce & online technologies, steady increase in organized & semi-organized sales in emerging countries, demand for car-sharing services, and rise in electric vehicle business across the globe are foreseen to bolster the online car buying market.
However, uncontrolled pre-owned automobile sales and a lack of standardization stifle the worldwide market’s expansion. Moreover, the advent of e-commerce & online technologies, steady increase in organized/semi-organized sales in emerging countries, and growth in electric vehicles, as well as another alternative, fueled vehicle business across the globe and demand for car-sharing services, is projected to offer rewarding opportunities for the growth of the global online car buying market.
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COVID–19 Impact on the Global Online Car Buying Market
The outbreak of COVID-19 has resulted in flight cancellations, travel bans, lockdowns, and quarantines, which result in a decrease in production activities across the world. Since the beginning of 2020, several countries across the globe shut down their borders and limited transportation & travel to contain the coronavirus (COVID-19) outbreak, thereby creating impediments for international trade & transportation. The pandemic affected almost every dimension of economic activity and individuals globally. Moreover, there is a decrease in the demand from consumers due to the lockdown. Therefore, the sudden decrease in demand for vehicles has impacted automaker revenue and profitability, resulting in job losses in the automotive industry. For instance, the global economic trade impact of the COVID-19 pandemic on the automotive industry is estimated to be around $5.7 Billion. Moreover, apart from the supply chain issue, the automotive industry has seen a huge decrease in the demand for new cars during the lockdown period. The impact of COVID-19 is widely visible across all the automotive industries worldwide.
However, the online car buying market is experiencing a significant increase in sales. Then the COVID-19 outbreak closed showrooms, sent sales teams home, and drove consumers to purchase vehicles online. The pandemic of COVID-19 has expedited online transactions, increased internet penetration, and altered consumer behavior. Due to the epidemic, the customer was obliged to buy the automobile online. Many car dealers worldwide looked to be benefiting from the transition to digital retail. Furthermore, most consumers also prefer the online channels to buy new and pre-owned cars, which in turn foreseen to foster the growth of the online sector in the online car buying market.
Global Online Car Buying Market Dynamics
Drivers: OEMs focusing on making a shift to end-to-end online sales
Several OEMs have been experimenting with online sales to provide a better online experience for their customers, including improved price transparency, the ability to purchase from home, and a digital payment procedure. Volkswagen, for example, is combining the debut of its new IT infrastructure with the introduction of a new line of electric vehicles, which are projected to increase online vehicle sales significantly. PSA Group CEO Carlos Tavares announced in February 2019 that the company’s goal is to increase online sales by more than 1,500 percent, from 6,000 units in 2018 to 100,000 by the end of 2021. Furthermore, Britta Seeger, Daimler’s responsible member of the board for marketing and sales, revealed in June 2019 that the OEM expects to sell 25% of its automobiles online by 2025. Automobile manufacturers in Europe, including Dacia, Volvo, Hyundai, Jaguar, Alpine, Mitsubishi, BMW, Land Rover, and Mini, are directing internet sales in certain areas. However, the adoption of these online platforms and retailers continues to be modest, and the consumer experience they provide has to be enhanced. Hyundai and Audi, for example, only offer a limited number of models online. Many others do not accept trade-ins or limit buying options to new vehicles. Furthermore, most OEMs’ online sales share remains modest, with an increase predicted in the future.
Restraints: Unorganized car sales
The unorganized players in the online car buying market hinders the market growth. In countries such as China, Thailand, Brazil, India, and Mexico, the unorganized players hold a larger share in the online car buying market. Furthermore, the unorganized players do not offer any warranty on pre-owned cars bought online.
Furthermore, some sellers commit fraud by re-painting and removing dents from accident automobiles to conceal their damage and get a falsely inflated value, which causes customers to be wary of purchasing pre-owned vehicles. Therefore, a higher rate of malpractices and hold of the larger market share by unorganized dealers threaten the growth of the online car buying market, especially for the pre-owned car segment. For example, the CEO of Mahindra First Choice, a top pre-owned automobile sales firm in India, stated in a recent interview that unorganized companies in the pre-owned car industry constitute a danger to consumer safety.
Opportunities: Rapid adoption of E-commerce and online technologies expected to reinforce the growth
Technological changes, such as the advent of the internet, e-commerce sites/applications to enhance company demand, and the introduction of hybrid and electric automobiles, have altered the buyer position in the market. Due to web technologies, consumers are becoming more aware of the vehicle, on-road pricing of new cars and residual value, third-party profit margin, and others for pre-owned automobiles. Furthermore, rapid urbanization, a surge in internet connectivity, and developments in the telecom sector have allowed for a much-better information flow for people. Online car sellers rapidly use these factors for advertising their vehicles and spreading the details about them. This online platform has smoothly increased the sales process and enables more stakeholders to sell and buy cars.
The supply side of this market has more weightage than the demand side, and transparency through knowledge has changed the dynamics and managed to turn customer intelligence to their advantage, thereby foreseen to increase online car sales in the future.
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Scope of the Report
The study categorizes the online car buying market based on vehicle type, propulsion type, and category at the regional and global levels.
By Vehicle Type Outlook (Sales/Revenue, USD Million, 2017–2027)
- Hatchback
- Sedan
- SUV
- Others
By Propulsion Type Outlook (Sales/Revenue, USD Million, 2017–2027)
- Petrol
- Diesel
- Others
By Category Outlook (Sales/Revenue, USD Million, 2017–2027)
- Pre-Owned Vehicle
- New Vehicle
By Region Outlook (Sales/Revenue, USD Million, 2017–2027)
- North America (US, Canada, Mexico)
- South America (Brazil, Argentina, Colombia, Peru, Rest of Latin America)
- Europe (Germany, Italy, France, UK, Spain, Poland, Russia, Slovenia, Slovakia, Hungary, Czech Republic, Belgium, the Netherlands, Norway, Sweden, Denmark, Rest of Europe)
- Asia Pacific (China, Japan, India, South Korea, Indonesia, Malaysia, Thailand, Vietnam, Myanmar, Cambodia, the Philippines, Singapore, Australia & New Zealand, Rest of Asia Pacific)
- The Middle East & Africa (Saudi Arabia, UAE, South Africa, Northern Africa, Rest of MEA)
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The SUVs segment is projected for the largest market share by vehicle type
The online car buying market is segmented based on vehicle type into the hatchback, sedan, SUV, and others. In 2020, SUVs accounted for the largest market share of 36.4%. SUV is known as a sports utility vehicle and is generally classified according to the size of the vehicle, such as full-size SUV, compact SUV, and sport coupe SUV. Toyota Fortuner, Hyundai Creta, Maruti Vitara Brezza, Nissan Kicks, and others are different SUVs available in the online car buying market.
SUVs are currently the most demanding vehicles in the new and used online car buying market. In addition, higher ground clearance, easy entry & exit, high engine power, off-road capabilities, improved visibility, and better safety are the key factors that drive the demand for SUVs in the market. Moreover, SUVs are currently in trend due to their off-road capabilities, space, safety, etc. Therefore, SUVs are currently the most sold vehicles that increase their presence in the market. The higher demand for SUVs is anticipated to create growth opportunities for SUV vehicle types in the online car buying market.
Asia Pacific accounts for the highest CAGR during the forecast period
Based on the regions, the global online car buying market has segmented North America, Asia-Pacific, Europe, South America, and the Middle East & Africa. Globally, Asia Pacific is projected to be the fastest-growing region with a CAGR of 14.1% during the forecast period, 2021-2027. This region is expected to exhibit the highest growth rate among other regions. Rapid growth in the number of internet users in the region and technological advancement in the automotive sector has a major impact on the growth of the online car buying market in the region.
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Asia-Pacific has been a region with constant developments with higher growth opportunities than any other region due to its highest population and presence of developing countries such as India and China. The regional growth is driven by India, China, and ASEAN countries observed as emerging countries in the global online car buying market due to the region’s surge in several internet users. In addition, the factors that drive the growth of the online car buying market include a rise in population, easy affordability, convenience, and a surge in disposable incomes. Auto retailers focus on various digital platforms to conduct end-to-end online purchases to benefit from growing internet users. For instance, in December 2020, Nissan launched Nissan@Home, a digital platform allowing customers to conduct 100% of their purchases online, including test drives, financial arrangements, and more.
Key Market Players
The online car buying market is mildly concentrated in nature with few numbers global players operating in the market such as AutoNation, Inc., Cargurus, Inc., CarsDirect, Cars.com, Inc., Asbury Automotive Group, Inc., Cox Automotive Inc, Group1 Automotive Inc., Lithia Motors, Inc., Hendrick Automotive Group, and TrueCar, Inc. Every company follows its business strategy to attain the maximum market share.
