How is the technological disruption gearing up the KSA Used Car Market for the long ride?

The Used Car Market in KSA has witnessed a positive growth over the years supported by the increase in the millennial population in the country along with the entry of emergent players into the market. The rising trend in used cars over new cars indicates the buyer’s preference for purchasing used cars. Car dealers are emphasizing providing integrated user-friendly platforms to ease the buyer’s journey of used cars in the country.
In this segment, we will highlight these trends and developments that are changing the used car industry on a positive note with promising future growth.

1. The KSA Used Car market is in its growth stage and is highly fragmented with multiple players competing on the basis of locations covered, brand availability, financing options, and more

Competition Landscape

Industry Stage

The used car market in KSA is currently in Growth Stage with 2,500+ dealerships (organized as well as unorganized) operational in the industry.

Nature of Competition

Highly fragmented market with various OEM certified, brands company authorized dealerships, multi-brand outlets in the industry.

Top Players in KSA Used Car Market, 2021

Major OEMs Players:

Major Online Classified

Major Offline Auto-Classifieds Players:

Source: Industry Articles, Ken Research Analysis, Desk Research

2. The entire vehicle purchasing journey in KSA is undergoing digital transformation, from pre-buying browsing and researching to pricing comparison, finding a dealer, financing options & purchases

I: Emerging Phase <2010

• Sale/Purchase of used cars via C2C channel, local dealerships or outlets.
• Most of the transactions for automobiles in the country took place through offline mode.
• No strong presence of Online Auto-Classifieds due to lack of digital literacy
• Expats were the major buyers of used cars

Sale and Purchase of Used Cars via C2C, local dealerships or outlets.

II: Growing Phase 2010 – 2030

• Used car market driven by setting up of dedicated used car showrooms by dealerships, rising cost of living is restricting access to new cars and rising traction towards online platforms.
• Emergence of number of Unorganized and Online-Auto Classifieds such as Motory and Carswitch etc., with increasing internet penetration.
• The increase in number of inspections and checks and after-sales services offered by dealers lead to surge in demand for used cars.

Emergence of Online Platforms and shortage of vehicles

III: Maturity Phase <2030

• With enhancement in online infrastructure, used car market is expected to be driven by online-auto classifieds
• Customers are expected to increasingly pivot towards online channels to conduct their used car purchases.
• Market consolidation is expected with the emergence of new technology and players.
• Additional online services provided including vehicle selection, online payment, applying for loans and others

Foundation for further future disruption and emergence of new Tech

Market Landscape

• Growing Stage
• CAGR In Revenue Terms: 10.2% (2021-2026F)

Nature of Competition

• Moderately Fragmented market with presence of major Multi Brand Franchisee dealer dominating the market.

Source: Industry Articles, Ken Research Analysis, Desk Research

3. Social media plays a major role in generating leads for dealers & end consumers by virtue of offering advertisements at a lower cost with respect to other traditional marketing channels

Car Dealers

Walk-ins

• Most preferred channel of purchase; vehicle directly sold to customer with no middleman involvement.
• Customer completely aware of vehicle’s condition before purchase.
• Sold to people within the circle (known people).

1

Blogs/YouTube

• Car dealers use blogs to generate traffic to their website from search engine results pages.
• They often put up educational content related to cars maintenance, help guides, knowledge material in order to create a brand presence.

2

Online Portals/ Market Place

• Partnership with online platforms to supply used cars to customers.
• Online portals follow lead generation process, sellers list cars and company facilitates the overall transaction of acquiring the vehicle.
• Other Services include loan, checks and verification.

3

Facebook/ Social Media

• Unlike online portals and market places, social media provides an opportunity to dealers to advertise their cars for free.
• This platform is also used by individuals involved in C2C purchases.
• Also, major dealerships use this platform to announce promotional offers and local events

4

Source: Interviews with Industry Experts, Industry Articles and Ken Research Analysis

5. Additionally, the diffusion of advanced technology & digital enablement will further help the KSA used car market to expand with double-digit growth in the future

Technological Disruptions

Regional Expansion

• Expansion of distribution network across KSA, especially in the regions where used car demand is rising for preference for private vehicles post pandemic, is likely to be witnessed in the future to service the increasing demand for used cars.

Amalgamation of Different Business Models

• Dealerships are expected to introduce their own official website/platforms to showcase their used car inventory.
• Online auto portals are expected to venture into omni-channel experiences & offer varied services such as car subscription.

Focus on Value-Added Services

• Value-added services such as vehicle inspection, financing options, insurance, ownership transfer & more is expected to be a focus area for used car dealers to provide a hassle-free experience to the buyers.

Boom in Vertical Marketplace

• Vertical Platforms are giving buyers & sellers new ways to interact online & facilitate the buying decision by offering a plethora of options and focusing on user browsing experience.

Leveraging Latest Technologies

• Leveraging technologies such as Artificial Intelligence & Virtual Reality to enhance the digital experience for consumers by offering 360° interior & exterior view of the car, estimating car price online via uploaded images, analyzing consumer behavioral insights to show relevant ads according to interests & more.

Source: Industry Articles, Ken Research Analysis, Desk Research