Commenting on this trend, Kaushik Madhavan, Frost & Sullivan’s vice president of mobile (automotive and transportation) practice, said that strong demand for used cars will be “mainly driven by many factors, such as the second and third-tier cities to a large extent, (more More) The availability of financing options, the (greater) need for mobility, and the desire to own a car are one of the biggest drivers.”

According to this research, small towns will drive demand for second-hand cars. In the next four years, the share of non-urban cities in second-hand car sales is expected to rise from the current 55% to nearly 70%.

Who are the buyers of used cars?

The study investigated and analyzed the responses of existing and potential used car owners in 12 cities in the first and second tier regions, and showed that 64% of used car customers are first-time car buyers. Madhavan explained: “People like to experience car ownership through a used car first, and then upgrade to a new car.” As expected, affordability is the main factor influencing purchasing decisions.

Due to budget constraints and the perception of higher value of used cars, almost half of the respondents did not even consider buying a new car.

Used cars with a price of less than Rs 500,000 accounted for 70% of used car sales, and only 10% of customers chose models with a price of more than Rs 1 million. “The price range of 1-20 lakh rupees accounts for 16-17% of sales, the share of 2-30 lakh rupees is close to 20%, and the part of 3-40 lakh rupees accounts for 16-17% of sales again. These three price ranges Is the most popular because few original equipment manufacturers own new cars in this range, except Maruti Suzuki or DatsunTherefore, this is an area where customers (in the used car market) can obtain better vehicles from higher market segments,” Madhavan said.

For reference, the most affordable new photovoltaic in India is Maruti Suzuki Alto (3.00-46.1 lakh rupees), Datsun Redigo (Rs 398-49.6 lakh) and Renault Kwid (332-548 million rupees) (full price, ex-showroom, Delhi). With the soaring price of new cars, used cars are expected to become an increasingly popular choice.

Nearly half of used car sales will come from organized dealers

The used car market is generally considered to be an unstructured space, and currently mainly organized dealers account for only 25% of sales. However, due to the more consistent efforts of larger players and the increasing willingness of customers to pay markups for more reliable cars, their market share is expected to rise to 45% by fiscal year 2025. Value-added services provided by distributors, such as warranty and service support, are also becoming the main attraction.

In the organized field, Maruti Suzuki True Value and Mahindra First Choice are in a leading position, with 1,252 outlets and more than 1,700 touch points nationwide, respectively. Volkswagen has also entered the field through its Das WeltAuto (DWA) network, which can handle the purchase and sale of used passenger vehicles of all brands.

In response to questions raised by our sister publication OurProfessional on its retail channels, Ashish Gupta, Brand Director of Volkswagen Passenger Cars India, said: “Currently, we are operating 140 new sales touch points and 105 DWA outlets. “The company uses hybrid models, and most of its new car dealers also assume the responsibility of retailing used cars. “I hope to add 150 new sales touch points by the end of this year,” he added.

Commenting on the number, he said: “The network is very suitable for handling up to 1,00,000 new cars (per year), and a similar number of used cars. About two years ago, we opened a multi-brand used car business. 2019 , We sold about 3,000 (used) cars. In 2020, we tripled to 10,000, and this year, we plan to increase to more than 20,000. Therefore, we expect the sales of used cars to double year-on-year.”

Gupta further mentioned that dealer profit margins in second-hand channels are even higher than in the new car segment. Therefore, this is critical to the Volkswagen India network, which sold only 20,440 new cars in the 2021 fiscal year.However, with the arrival of Volkswagen, Volkswagen dealers will once again get a boost Volkswagen Taijun with Update Tiguan In the next few months.This will follow Honda City fighter Replace the aging Volkswagen Vento In our market.

India lags behind the global market in terms of used car trends

In the major global auto markets, the ratio of used car to new car sales in the United States and the United Kingdom in 2020 will be 2.8:1 and 4.1:1, respectively. A growing market, which is why the ratio last year was about 1.5:1,” Madhavan explained.

However, it is interesting that China’s announced ratio in 2020 is significantly lower than 0.6. Frost & Sullivan’s research attributed this to the Chinese market’s “low trust in used cars and lack of mature supply, evaluation and pricing systems”.

See also:

Skoda used car business will start in India