Over last few years, there has been a tremendous growth in the used car industry in India. This has made the business a truly viable one with almost every used car business generating commendable profits. And as statistics suggest, this explosive growth in the Indian used car industry is here to stay. With a rising number of customers buying used cars instead of new ones, a clear trend has become visible.
Interestingly, the used car market has also been constantly penetrating further into country’s far-flung areas. Various big players are ready to spend cash in establishing infrastructure and logistics to enable its expansion.
Here, we are listing some of the most significant factors that have contributed to the growth of used car industry in India over past few years.
1. The Shift In Consumer Demand – A major force in the growth of used car industry in India
India has always been a price conscious market. The value of a new car depreciates by about 30% in the first year of purchase itself. This makes buying a used car a better value for money option. Hence the rise of the used car segment is an obvious result.
Further, there is also a growing societal acceptance of people buying a used car nowadays. These are now bought with the same joy and emotions as a new car purchase.
2. Reduction In The Ownership Period
A particularly interesting reason behind the rise of the used car industry can be attributed to the much-reduced ownership period of vehicles by customers.
A few years ago, the ownership period was of 6-7 years for most cars. It has now reduced to around 4 years and is expected to dip further to 3.5 years by 2021.
This has directly translated into an increase in the supply of well maintained used cars in the market. This has led to an increase in the choice of options available for a used car buyer.
3. Online Presence
The advent and spread of online platforms have been a major force behind an increase in the numbers of the used car businesses. Digitization has also been instrumental in organizing the used car industry online which traditionally been away from the online space.
With the existence of online portals, customers have been able to browse through a number of used cars that fit into their budget. It has also made the customers aware and able to search in depth about their future purchases as well.
4. Organised Players
There has been an unprecedented growth in the presence of manufacturer owned used-car retail outlets and other revolutionary used car buying services like CARS24. These are not only present in metro cities but have also penetrated into smaller towns. Such swanky outlets promise to deliver the same selling and buying experience as one does in a new car showroom.
The emergence of these players has increased the credibility of used car transactions and has boosted the confidence among consumers.
5. Demand For Used Luxury Cars
With a decrease in the ownership periods of normal cars, the premium segment has seen a further decline in the ownership periods as well. This has given rise to the market of used luxury and premium cars in the country. In fact, many affluent buyers have also been lured into the luxury used car market where selling or exchanging their present car has become much easier. Also, the quick depreciation of a new luxury car within the first couple of years mean that a buyer can opt for a 1-2-year-old luxury car at the price of a new sedan from a lower segment.
6. Increased Reliability
Modern day cars are far reliable that their earlier counterparts – thanks to the improved technology! A well-maintained car will easily run without trouble for years. This means that even as a second owner of a car, you can be assured of a hassle-free car ownership experience.
Manufacturers are also offering extendable warranty periods to as much as 7 years in some cases and this is strongly recommended to a used car buyer so that any manufacturer related defect can be dealt with without any overhead costs.