The pandemic is giving pre-owned cars a new lease on life
COVID-19 has shuttered businesses, closed public spaces, and confined people to their homes for months now. But as lockdowns over the globe gradually ease and people venture out into the open again, the need for easy mobility is gaining importance once more.
Unfortunately, the modes of transportation people once relied on aren’t as safe as they used to be. Nobody wants to be packed into a train carriage with hundreds of others, buses may as well have turned into oblong infection chambers, and shared cabs- despite their drivers’ many temperature checks- aren’t as readily used as they were pre-pandemic.
So with limited options left to consumers, the beleaguered automobile industry is slowly regaining its footing. But since the pandemic has also affected the incomes of those who were looking to buy a new car, a lot of them are now setting their sights on the next best thing- pre-owned cars.
While new car sales in America are still below pre-virus levels, pre-owned car sales are ticking upwards, and have surpassed their numbers last year. For instance, new vehicle sales for the week ending May 28 were down 28% compared to 2019, while pre-owned car sales jumped by 6%. Even in England, the pre-owned car market has bounced back from its lockdown slump with sales up by 3.4% in the first 10 days of June, compared with the same period in 2019.
This bounceback is evidenced by an uptick in website traffic for their trading platforms between March and June. As per Similarweb data, Website visits for Cazoo, Caravana, Autotrader, Vroom, Autoscout24, Cars24, and Autohome increased by 108%, 58%, 23%, 103%, 16%, 53%, and 35% respectively. This spike also reflects the fact that with lockdown restrictions and social distancing rules, customers are now more desirous of purchasing their new vehicles online.
A steady surge in business has also caused used car platforms to add more numbers to their workforce. Since the beginning of the year, the number of employees at Cazoo, Caravana, Vroom, Autoscout24, Cars24, and Autohome have increased by 39%, 4.5%, 3%, 12.4%, 7%, and 5% respectively. This growth is quite encouraging in the era of layoffs and furloughs.
Buoyed by this promising outlook, the pre-owned car sector is seeing fresh investment even during this tumultuous period. In June, Brazilian dealer Carflix closed its Series A for $2.7 million in an investment round led by BV bank. That same month, British platform Cazoo raised 20 million Euros in a round led by Draper Esprit, DMG Ventures and General Catalyst, to become the fastest British unicorn- only 18 months after its inception. In July, Indonesian used automobile marketplace TiinTiin.id announced that it had raised over $2.5 million in a seed round led by CEO Rolf Monteiro, Singapore-based Amand Ventures, and PT Luminary Media Nusantara.
All in all, as people all over the world begin making their way to destinations beyond their neighborhood grocery store, the pre-owned car space is definitely one to watch.