Purchasing the right vehicles with appropriate drivetrains is an important task for retailers as this purchase represents a significant capital outlay. On top of this, having the right stock means one is more likely to provide buyers with the options that they want, leading to faster inventory turnover and better profits.
Nonetheless, the range of options available may be difficult to navigate for retailers—but that’s where this guide comes in. Read on to learn more about the different kinds of vehicles and drivetrains on the market, and which to stock for a range of buyer’s needs and preferences in 2024.
Table of Contents
Market potential for automotives
What to look for when selecting automotives to sell?
How to choose the best options for different end customers?
Conclusion
Market potential for automotives
In 2022, the global passenger vehicle market sold around 57.5 million units, representing an almost two percent increase over the previous year, including four-wheel drive and all-wheel drive models. Analysts predict that this increase will be maintained in the coming years. This indicates that the market shows an upward trend.
Private vehicle use is a popular mode of transportation in many countries. The reasons for this are varied such as poor public transport systems, especially in rural areas, inadequate levels of service in public transportation, and the perceived levels of safety or lack of security in public transport systems. As consumer spending power increases, it often leads to the desire to own a car. Demand for four-wheel drive and all-wheel drive models depends on the climate of the location.
Used vehicle market
The used car market shows as much, and in many cases, more resilience than new vehicle sales. In 2021, 120.3 million units were shipped with a value of USD 1.57 trillion. This market is expected to expand at 6.1% from 2022 to 2030 as newer vehicles are often unattainable for buyers.
Of the markets polled, China was by far the most buoyant market, accounting for just over 23 million units. Other countries that experienced lively used car markets are India and the United States. The Asia-Pacific region is expected to grow significantly due to increasing demand for affordable vehicles.
Market dynamics
Several factors are driving this demand for vehicles, primarily used vehicles. These include the need for affordable cars, the improved internet access for online sales, and the high number of organized franchised dealers driving the market.
This brings a significant opportunity to this market: using online platforms to encourage sales. Improved internet access in developing countries makes this approach more viable than ever before. Franchised dealers promote sales through advertising, on which the used car market can trade. The buying public has become more attuned to searching for bargains, which is where private or online dealers can score significant numbers of clients.
What to look for when selecting automotives to sell?
The market for passenger vehicles is buoyant, and there are opportunities for savvy investors. The new vehicle market is primarily wrapped up by the manufacturers and their franchised dealer network, but the used car market is an exciting environment for enterprising investors.
It’s not enough to buy vehicles and advertise them for sale. Market research and selecting cars that match the local market are essential factors. A significant part of this is the drivetrains that the vehicles have.
In vehicles with an internal combustion engine, the drivetrain consists of those parts of the vehicle that connect the engine’s power to the wheels. As the engine starts running, the power is transferred through the gearbox to the wheels. The wheels that are forcibly driven to provide momentum can be all four (all-wheel drive (AWD) or four-wheel drive (4X4)), the two front (front-wheel drive (FWD)) or the two rear wheels (rear-wheel drive (RWD)).
All-wheel drive
All-wheel drive drivetrains have a fluid-filled differential and advanced electronics packages that direct the engine’s power to all four wheels. The electronics manage the energy sent to each wheel depending on the road conditions. This means the vehicle has a vastly superior capacity for safe driving in slippery conditions. These vehicles are offered with either automatic or manual gearboxes.
This drivetrain is fitted to all types of vehicles, including passenger vehicles, SUVs and trucks, and is highly sought after in areas with slippery driving conditions. Demand for this type of vehicle has risen significantly in recent years, especially in Europe and Asia-Pacific. This is due to their traction control which makes driving in inclement conditions much safer for the driver and passengers.
The largest market for this type of vehicle is the USA. Asia-Pacific and European regions are the fastest-growing market for these vehicles and offer the best investment opportunities. The market for this type of vehicle was valued at USD 29.1 billion in 2022, and it’s expected to have a compound annual growth of 7.83% by 2032, driven mainly by the Asia-Pacific and European markets.
All-wheel drive vehicles have many benefits for the consumer, with safety being the most important. These vehicles are available from all motor manufacturers, giving the entrepreneur a wide range of vehicle types and accessories choices.
Many electric and hybrid vehicles are equipped with all-wheel drive. Though the drive mechanism differs from that fitted to a car with an internal combustion engine, the drive is over all four wheels.
Four-wheel drive
Four-wheel drive is similar to all-wheel drive, except that these vehicles are intended for more rugged terrain and have a transfer case that gives extremely low-range gearing to traverse rough territory. Four-wheel drive vehicles can drive in rear-wheel mode only. Vehicles utilize four-wheel drive high for demanding on-road conditions or four-wheel drive low range for demanding off-road conditions.
These vehicles offer superior traction control, which is sometimes managed by the electronics packages installed on the cars. Still, to select low range, the driver must perform manual intervention such as pressing a button or pulling a lever.
This type of drivetrain is often associated with trucks, but can also be found on various SUVs. Hybrid and electric-powered 4X4 vehicles are gaining popularity and are available in trucks, SUVs, and minivans. Four-wheel drive vehicles can be equipped with either manual or automatic gearboxes.
The forecasted market value for four-wheel drive vehicles for 2023 is just over USD 16 billion and is expected to rise by a compound annual growth of 4.12% to USD 19 billion by 2028.
Four-wheel drive vehicles are universally popular and have a ready market in the commercial and leisure fields.
Front-wheel drive
This system transmits the vehicle’s power to the two front wheels to pull the car down the road. It’s the system used in many modern vehicles and provides excellent stability.
This type of drivetrain is fitted to many vehicles, such as passenger cars, SUVs, trucks and people carriers. Small economy vehicles such as hatch-backs or sedans are the most common vehicles that use this type of drivetrain. This is because they usually have lower fuel consumption figures and are easier and simpler to maintain.
In recent years, the front-wheel-drive market has fallen in favor of the all-wheel-drive market. Many larger vehicles that used this drivetrain have moved to all-wheel drive, primarily due to consumer pressure for increased safety.
Many electric and hybrid vehicles have electric motors driving the front wheels.
Rear-wheel drive
This type of drive is the opposite of front-wheel drive and means the engine’s power is directed to the rear wheel. This means that the vehicle is pushed down the road. Although it provides better braking and handling, it offers poor traction making it an unlikely choice for consumers who regularly drive in slippery conditions.
Performance enthusiasts tend to love rear-wheel drive cars, which are often easy to accessorize. Many older vehicles use this type of drivetrain.
How to choose the best options for different end customers?
Each drive type has benefits, and the wise entrepreneur will select drivetrains that suit the region in which they operate and the customer base they wish to target.
All-wheel drive
The demand for this type of vehicle has been driven by customer demand for increased safety, especially in slippery conditions. This makes it attractive to consumers in countries with icy winter conditions, monsoon rains, or overall poor road conditions. Many modern vehicles are equipped with this type of drive train.
Globally this type of vehicle appeals across gender and age barriers.
Four-wheel drive
Four-wheel drive vehicles have enormous popularity in the recreational market with the growing popularity of off-road adventure and sports. Off-road vehicles have a wide range of users in commerce, agriculture, construction, mining, forestry, and first-responder vehicles.
These vehicles have greatly improved fuel consumption and lower insurance costs, aiding the demand for this type of vehicle.
Front-wheel drive
As many small, economical vehicles come equipped with this type of drivetrain, the customer most likely to view this vehicle is a first-time buyer, a family looking for a second vehicle, customers with low disposable income, or customers living in areas where inclement driving conditions are rare.
Rear-wheel drive
Exceptionally few modern vehicles are equipped with rear-wheel drive, and those tend to be high-end performance vehicles offered at a premium price. Classic cars built before the 1990s will also have rear-wheel drive.
The customer seeking this type of vehicle will be a customer with performance as the essential feature, a customer with significant disposal income or a classic car enthusiast.
Electric and hybrid vehicles
This type of vehicle offers front, all-wheel, and four-wheel drive options. Nearly every motor manufacturer is now producing them. Consumers are pressuring motor manufacturers to make cars with superior fuel consumption and low or zero emissions. This pressure has resulted in the explosion of hybrid and electric vehicles available in the market and their popularity amongst consumers.
Conclusion
The market for motor vehicles will always be buoyant, and entrepreneurs will realize good returns on their investments by carefully selecting the cars that are most likely to sell in their environments. The drivetrain selection will ensure that the vehicle’s capability is suited to the environment, ensuring the dealer’s stock is turned over regularly.
New cars tend to be sold via franchised dealerships, but the used car market, especially for nearly-new vehicles, offers excellent commercial opportunities. Online marketing is gaining popularity, providing retail opportunities with significantly lower input costs.
Alibaba offers vehicles with a range of drivetrains that suit many operating environments. A search of the Automotive section at Alibaba will link entrepreneurs with cars from many manufacturers.
