Size of the second hand car market in the US

market estimation market size Market sizing
Neue Antwort am 30. Sept. 2022
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Anonym A fragte am 27. Sept. 2022

Dear all,

I kindly would like to learn your approach on how to solve “what is the size of the second hand car market in the US?” and the drivers for it.

Thank you.

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Clara
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antwortete am 30. Sept. 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would always recommend you to give it a shot and then post it here, this would help you the most. 

Given that market sizing cases were the topic of many questions in this Forum, I developped a market sizing case, that you can find for free in PrepL´s library

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/market-sizing-new-startup-launch-baby-strollers-in-the-us-244

Furthermore, you can find a detailed market sizing (a complex one integrated into a case) in my latest case: 

Swiss manufacturer market assessment, profitability and scenarios: https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/advanced/swiss-coffins-the-death-business-245

Let me know if you have any doubts with it, it contains a detailed explanation and methodology about how to solve this specific example, but you can extrapolate to many other market sizings!

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Ian
Experte
Content Creator
antwortete am 28. Sept. 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

You'll learn a lot more from this by trying it out yourself first! Why don't you post your approach here and we can provide commentary?

How to approach market sizing

It's very simple: Do the approach the is the easiest for you given the question.

Are they asking you to estimate something where you don't even know where to begin from the top (maybe you have 0 clue as to the market size of the industry, the GDP of that country, etc. etc.)? Then do bottom-up!

Alternatively, does it seem impossible to do a realistic from-the-ground-up estimation of something (perhaps it requires just far too many steps and assumptions)? Then do top-down!

Fundamentally, you need to take the approach that just makes the most sense in that circumstance. Quickly think about the key assumptions / numbers required and whether you 1) Know them or 2) Can reasonably estimate them. If you can, go ahead!

An Example

He's a Q&A for a great market sizing question here asking to estimate # of electric charging stations in a city in 10 years:

https://www.preplounge.com/en/consulting-forum/how-would-you-solve-this-market-sizing-question-from-roland-berger-7631

This one could be answered top-down (as I did) by estimating population of the city, # of drivers/ cars, etc. etc.

OR, it could be answered bottom-up by estimating # of stations you see per block (or # of gas/petrol tanks), % increase this might be over time (or # of EV stations that would be needed per gas tank given EV stations take 10 times as long), and # of blocks you'd estimate the city to have.

Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229

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Pedro
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bearbeitete eine Antwort am 27. Sept. 2022
Bain | EY-Parthenon | Roland Berger | FIT | Market Sizing | Former Head Recruiter

There are many alternative ways to solve this. And you improve much more by trying by yourself than by just reading answers.  

I suggest you give it a try and then we can comment and suggest improvement opportunities.

However, I don't want to leave you without even giving a hint. I suggest you consider:

  • the number of cars in the US
  • how long does a car last (you can think about how many miles divided by miles per year… or just assume reasonable number)
  • how frequently one changes cars
  • divide between those purchased new vs. second hand
  • the different value of cars when purchased new
  • the depreciation of the cars as the years pass by

(editiert)

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Clara gab die beste Antwort

Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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