Price-sensitive consumers have been increasingly opting for used vehicles over new ones
Los Angeles, CA (PRWEB) February 26, 2013
As a result of the recession that began in late 2008 and lasted through 2009, consumers facing unemployment and limited disposable income avoided large discretionary purchases, such as cars. Consequently, revenue for the Used Car Dealers industry fell an estimated 1.9% and 4.3% in 2008 and 2009, respectively. “Beginning in 2010, however, the economy began to improve, and consumer spending began to rise again,” says IBISWorld industry analyst Radia Amari. “Moreover, consumers, still wary of the economic climate, increasingly opted to purchase used vehicles over new ones, helping to boost sales.” The average price of a used vehicle is less than $13,000, while new vehicles average between $20,000 and $30,000. This renewed demand has remained consistent, and over the five years to 2013, revenue for the Used Car Dealers industry will grow at an estimated average annual rate of 2.1% to $7.0 billion.
Profit, measured by earnings before interest and taxes, is also expected to increase during the five-year period, supported by higher average selling prices. Although used vehicle prices declined in 2009 and 2010, they began to rise in 2011 in light of limited inventory. According to Amari, “The recession reduced fleet purchases and the number of leased vehicles, which has caused a shortage in the segment of used vehicles aged five years or fewer.”
These trends are expected to continue during the five years to 2018. Rising demand for used vehicles, particularly for those five years and older, will likely drive anticipated Used Car Dealers industry growth. Nonetheless, many firms are expected to forgo significant expansion of their operations. Rather than expanding into new markets with new locations, dealers will increase inventory at their existing retail outlets, hoping to leverage higher sales from an existing customer base. The Used Car Dealers industry is highly fragmented and has a low level of concentration. The low concentration level reflects the large number of nonemployers operating within the industry and the industry's high level of competition. Over the five years to 2013, the number of industry companies declined at an annualized rate of 2.3% to an estimated 6,498. The number of companies is forecast to continue declining in the next five years, albeit at a slower annualized rate. For more information, visit IBISWorld’s Used Car Dealers in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry sells used passenger vehicles, including cars, light trucks, sports utility vehicles and vans. Used car dealers also provide parts and repair services, as well as financing and insurance.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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