Price-sensitive consumers are increasingly preferring used vehicles over new ones
New York, NY (PRWEB) March 05, 2014
The Used Car Dealers industry experienced volatile conditions in the early parts of the five years to 2014; however, the industry has since shifted gears and taken off at full speed. During the recession, relatively high unemployment and limited disposable income caused consumers to cut back on discretionary purchases, such as cars. Consequently, revenue for the Used Car Dealers industry fell in 2009. Beginning in 2010, however, the economy began to improve and consumer spending began to rise again. Moreover, consumers, still wary of the economic climate, increasingly opted to purchase used vehicles over new ones, helping to boost sales. This renewed demand has remained consistent and over the five years to 2014, revenue for the Used Car Dealers industry is expected to grow at an annualized rate, including an estimated jump in 2014.
Profit, measured as earnings before interest and taxes, is also expected to increase over the five-year period, supported by higher average selling prices. Although used vehicle prices declined in 2009 and 2010, according to IBISWorld Industry Analyst Brandon Ruiz, “they began to rise in 2011 in light of limited inventory. The recession reduced fleet purchases and the number of leased vehicles, which caused a shortage in the one-to-five-year-old used vehicles segment.” In 2014, profit will account for a percentage of revenue.
The Used Car Dealers industry is highly fragmented and has a low level of concentration. These trends are expected to continue in the five years to 2019. Over the period, industry revenue is projected to grow at an annualized rate. “Rising demand for used vehicles, particularly for vehicles five years and older, is anticipated to drive growth prospects,” says Ruiz. Nonetheless, many firms are expected to forgo significant expansion of their operations. Rather than expanding into new markets with new locations, dealers will instead prefer to increase inventory at their existing retail outlets, hoping to leverage higher sales from an existing customer base. As such, the total number of industry dealerships is only projected to rise at an annualized rate over the five-year period.
For more information, visit IBISWorld’s Used Car Dealers in Canada industry report page.
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IBISWorld industry Report Key Topics
The Used Car Dealers 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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