The Indian used car market is expected to grow at a fast pace, registering a CAGR of more than 10%, during the forecast period, 2019-2024.
- As per the data released by SIAM, in 2018, approximately 4 million units of used cars were sold, when compared to 3.6 million units of new car sales.
- Factors, such as rise in income levels, increasing demand for luxury cars, shorter car ownership periods, and growing demand from two-wheeler owners for small and compact cars, are driving the growth of the market.
- Approximately 60% of the used car buyers are first-time buyers, followed by multi-car families (37%), and only 3% replaced their pre-owned car with another pre-owned cars.
Scope of the Report
The Indian used car market is segmented into organized and unorganized segments. However, C2C (customer to customer) channel is also used for the sales of pre-owned cars in the market.
Key Market Trends
Organized Segment is Projected to Grow at a Fast Pace
The organized segment of the Indian used car market is expected to grow at a fast pace during the forecast period. This segment accounted for approximately 20% of the Indian used car market.
- According to major players, such as Mahindra First Choice Wheels and OLX, the organized segment witnessed a growth rate of approximately 35%.
- As per the major players, brick-and-mortar dealers provide more peace of mind to the consumers, as they can easily walk up to the dealers in case of any assistance required. Additionally, these dealers provide quality products, services, and genuine parts.
- Though the brand showrooms provide only their own brand of vehicles, they follow high-quality standards for buying cars from first owners.
- Furthermore, consumers prefer safety, transparency, convenience, and negligible risk, while purchasing used cars, which in turn, provides the organized sector an upper edge, when compared to unorganized sector.
Growing Demand for Luxury Used Cars
The used car market is witnessing a boom in the country, with the demand for luxury cars continually increasing.
Until few years, owning a luxury car used to be a dream for numerous consumers, owing to financial hurdles, but this is gradually changing, as the consumers can easily buy used luxury vehicles. Heavy depreciation in luxury car prices has made these vehicles, a preferred choice in the used car market. As per OLX, used luxury vehicles priced over INR 15 lakh were the preferred choice among the consumers. According to OLX, over 55,000 luxury cars (priced above INR 15 lakh) were listed on OLX every month and supply for premium cars jumped by over four times in 2017. As per the report, titled OLX Auto Note, top-end sedans and luxury cars added up to 38% of the total four-wheeler listings on the platform.
Some major factors driving the growth of the used luxury cars are as follows – high rate of depreciation value of the luxury cars, fast growing base of young population, increasing disposable income of the consumers (along with rapid urbanization), and growing internet penetration in non-metros.
As per automobile dealers, the demand for used luxury cars has been growing at approximately 35% - 40% year-on-year basis, as owners of the luxury cars usually sell off their vehicles after a year or two years, as they desire for upgraded and better models. Additionally, apart from the reasons, majority buyers of these vehicles are from Tier-1 and Tier-2 cities.
With the rise in the consumers’ disposable incomes, they are not hesitant to spend on luxury goods and services. For these consumers, luxury is indulgence; as a result, they want themselves to be associated with top brands to make a statement.
Some of the major players dominating the Indian used car market are CARS24, Maruti True Value, Mahindra First Choice, Hyundai H Promise, Ford Assured, and OLX.
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