SEA Used Car Market Outlook to 2028

SEA Used Car Market Overview

• The Southeast Asia used car market is valued at approximately USD 100 billion, based on a five-year historical analysis. The markets growth is driven by increasing affordability of pre-owned vehicles, advancements in online sales platforms, and the widespread availability of financing options. Consumers in emerging economies across Southeast Asia are opting for used cars due to cost-effectiveness and the convenience of online marketplaces offering transparent deals and warranty options.
• Indonesia and Thailand dominate the market due to their large automotive ecosystems and established consumer base. Indonesia benefits from a growing middle class and urbanization, while Thailand is recognized for its robust vehicle manufacturing sector and the popularity of certified pre-owned vehicles. The demand in these countries is further bolstered by the availability of financing solutions and the cultural preference for vehicle ownership.
• Vehicle Scrappage Policyintroduced in several countries, particularly inThailandandIndonesia aims to phase out older, polluting vehicles and promote the adoption of newer, cleaner alternatives, including used cars. The policy provides financial incentives for consumers to trade in their old vehicles, which helps reduce the number of older cars on the road and encourages the purchase of used cars that meet stricter environmental standards.

SEA Used Car Market Segmentation

SEA Used Car Market is segmented by business model and country:

• By Business Model: The Southeast Asia used car market is segmented by business model into C2B and B2C+C2C. The C2B channel dominates the market due to its streamlined process, enabling car owners to sell directly to online platforms, which subsequently distribute the inventory to dealers via bidding or standard sales methods. The B2C+C2C model, while secondary, remains critical, with B2C being a preferred choice for consumers due to additional benefits like after-sales services, warranties, and financing options. In contrast, the C2C segment faces limitations due to a lack of these services.

• By Country: The Southeast Asia used car market is segmented by country into Indonesia, Thailand, Malaysia, Singapore. Thailand leads the market in terms of both sales value and volume, driven by a mature automotive ecosystem and high consumer demand for pre-owned vehicles. Malaysia significantly contributes to the online used car market, fueled by widespread internet penetration and the growth of digital marketplaces. Other countries like Indonesia and the Philippines exhibit steady growth due to rising urbanization and increased middle-class income levels.

SEA Used Car Market Competitive Landscape

The market is characterized by the presence of established players such as Carsome, Carro, and OLX Autos, alongside local dealerships and unorganized vendors. These players dominate through strong online platforms, partnerships with banks for financing, and AI-enabled tools for vehicle inspections, making the buying and selling process seamless.

SEA Used Car Industry Analysis

Market Growth Drivers

• Growing Preference for Private Transportation: Rising disposable incomes across Southeast Asia are leading consumers to favor private vehicles over public transport. As financial stability improves, many individuals are seeking personal mobility solutions, particularly in regions with higher GDP per capita. The average monthly disposable income in 2023 was around MYR 5,000 in Malaysia, which is expected to rise as economic growth continues.
• Impact of Online Platforms and Digital Transactions: The rise of online technologies is revolutionizing the used car market by improving consumer access to digital platforms for buying and selling vehicles. As internet penetration increases, more consumers are engaging in online transactions, streamlining the purchasing process and appealing to tech-savvy buyers. In 2023, the internet penetration rates in Southeast Asia show a significant trend towards increased connectivity, translating to approximately 490 millioninternet users across the region.
• Government Initiatives for Electrification: Governments across Southeast Asia are promoting the electrification of vehicle fleets and phasing out petrol/diesel cars to reduce carbon emissions. This shift is expected to drive demand for used vehicles as consumers seek cost-effective alternatives to new electric vehicles, thereby increasing the supply of used cars in the market.

Market Challenges

• Unorganized Market Structure: A significant portion of the used car market in Southeast Asia is unorganized, with many transactions occurring through independent dealers or peer-to-peer sales. This lack of structure often results in inconsistent pricing and quality standards, leading to consumer distrust. For example, in countries like India and Thailand, unregulated dealers frequently do not provide warranties, and some engage in malpractices such as concealing vehicle damage through superficial repairs. This environment creates apprehension among buyers, which can stifle market growth.
• Lack of Regularization and Consumer Protection: The absence of regulatory frameworks governing used car sales exacerbates the challenges faced by consumers. Without proper regulations, buyers are vulnerable to scams and misrepresentations regarding vehicle conditions. For instance, many consumers fear purchasing "lemons"vehicles with hidden defectsdue to insufficient transparency in the sales process. This issue highlights the need for stronger consumer protection laws to foster trust and encourage more transactions in the used car market.

SEA Used Car Future Market Outlook

Over the next five years, the Southeast Asia used car market is expected to experience significant growth, due to rapid urbanization, growing acceptance of online platforms, and increased preference for sustainable transportation alternatives. The rise in demand for electric and hybrid pre-owned vehicles and government support for emission reduction will also propel market growth. Emerging markets in Vietnam and the Philippines are expected to play a vital role in expanding the market.

Future Market Opportunities

• Shift from Two-Wheelers to Four-Wheelers: As Southeast Asia's economy continues to grow, there is a significant transition from two-wheeled vehicles to four-wheeled cars. This shift is driven by increasing disposable incomes and a growing working population that seeks personal mobility. For instance, many consumers in urban areas are now prioritizing the convenience and comfort of cars, creating a larger market for used vehicles as they look for affordable options amidst rising new car prices.
• Growing Demand for Eco-Friendly Vehicles: With increasing awareness of environmental issues, there is a rising demand for eco-friendly vehicles, including electric and hybrid cars. As governments in Southeast Asia promote the electrification of vehicle fleets, consumers are likely to turn to used electric vehicles as more affordable alternatives to new models. This trend not only supports sustainability but also opens up new segments within the used car market, particularly for those looking to transition to greener options without the high upfront costs.