The Southeast Asia (SEA) used car market is undergoing a significant transformation, with evolving consumer preferences, digitalization, and changing economic dynamics shaping its growth trajectory. In this article, we delve into the key trends and growth strategies that are propelling the SEA used car industry forward.
Transitioning Consumer Preferences
In recent years, the SEA used car market has witnessed a notable shift in consumer preferences. This transformation is evident in the substantial increase in the adoption of used cars over new ones. The COVID-19 pandemic played a crucial role in accelerating this shift, as it constrained consumers' purchasing power, making used cars a more appealing and cost-effective option. This shift is projected to continue, with experts forecasting a double-digit Compound Annual Growth Rate (CAGR) between 2021 and 2026.
Market Consolidation and Online Platforms
As the SEA used car market evolves, the market structure is predicted to consolidate. This trend is attributed to the growing market share of organized players who leverage digital platforms to facilitate transactions. Online marketplaces are connecting buyers, dealers, financing companies, and insurance providers, offering comprehensive solutions that enhance the overall used car buying experience.
Segmentation and Business Models
The SEA used car market is segmented based on business models, primarily C2B (Consumer to Business) and B2C+C2C (Business to Consumer + Consumer to Consumer). The C2B model enables direct sales from consumers to online players, who subsequently sell the inventory to dealers. This segment is poised to witness substantial growth in sales volume. On the other hand, the B2C model, backed by organized and unorganized multi-brand dealers, provides additional advantages like aftersales services, warranties, and financing options, making it a prominent channel for used car transactions.
Country-specific Insights
Thailand: Thailand leads the SEA region in both sales value and volume, with a robust online used car market. Factors such as increased demand for private vehicles, ease of finance availability, and changes in VAT on new cars contribute to the positive growth trajectory in Thailand's used car market.
Indonesia: The Indonesian market is characterized by the entry of financing companies and OEM-certified used car programs. Despite being largely unorganized, various growth drivers, including consumer preference for local dealers and online auto-classified platforms, contribute to the industry's expansion.
Malaysia: A flourishing online used car segment is observed in Malaysia, driven by players such as Carsome, MyMotor, MyTukar, and MUV. Rising demand for private vehicles, improved purchasing power, and government incentives collectively contribute to the growth of the used car market.
Philippines: The Philippines market experiences growth due to factors such as increased demand for private cars, rising per capita income, convenient financing options, and enhanced digitalization. However, the market remains highly fragmented.
Singapore: Singapore's used car market has witnessed a surge in online lead generation over the past decade. Intense competition characterizes the fragmented market landscape.
Vietnam: Vietnam's market leverages growing internet penetration, with online classified players gaining traction. C2C platforms play a crucial role in catering to digitally inclined consumers.
Competitive Landscape
The SEA used car market is fiercely competitive, encompassing a multitude of players spanning C2B and B2C online platforms, multi-brand dealerships, and independent dealers. Key competitive parameters include pricing, vehicle age, residual value, brand reputation, and maintenance services. As new entrants explore untapped markets in Southeast Asia, the industry continues to evolve
Digital Transformation
The rapid increase in internet and smartphone penetration across Southeast Asian countries has paved the way for online auto classifieds and social media platforms to gain prominence in the used car market. The digitalization of listings enhances accessibility, providing consumers with a plethora of information through reviews, photos, and videos. As online penetration for used cars remains in the single digits, these platforms are poised to tap into the industry's untapped potential.
Conclusion
The Southeast Asia used car market is in the midst of a transformational period, driven by evolving consumer preferences, digitalization, and changing economic dynamics. As online platforms gain traction and consumers gravitate towards cost-effective alternatives, the industry is expected to witness sustained growth. The diverse competitive landscape and the potential for further digital expansion highlight the exciting prospects that lie ahead for the SEA used car market.