The used car market in India has been the center of attention in the slow growing automotive industry in India. In the last year, demand for used cars has soared with over 42 lakh buyers (Source: CRISIL).
A few years ago, the ratio of new cars to used cars was 1:1.2 which is now at 1:2.2. Basically, when 10 new cars are sold, 22 used cars are available for sale in the market.
In 2008-09, the estimated sale of pre-owned cars was at 37 lakhs. For the 2018-19 period, projected sales are at 62 lakhs estimated to be worth Rs.1.62 lakh crores. The average holding time of a new car has come down to just 3 years which was 5-6 years earlier. For the first time aspiring buyer, the used car category has opened up many options.
A classic example of how used cars have won over new cars is that of the Tata Nano. Marketed as the cheapest car in the world, this very tagline turned against Tata which invested a lot of capital in research and production of Tata. Any aspiring young buyer is likely to go for a second-hand car like a used Maruti WagonR or a used Alto instead of a new Tata Nano owing to better features in former cars – like more power, space, and superior class. This change in consumer behavior can also be attributed to the fact that buying a used car is no more a social stigma. This reminds me that if you want to sell your old car to buy a new one, CARS24 is the right place.
The trend in the used car market in terms of buyer preference and requirements mimic the trend in the new car market. However, buyers are more likely to experiment with brands in the used car segment. It is not the case with new cars. Maruti Suzuki though has always been the top choice of used car buyers and also enjoys a majority market share in the new car market.
The organized sector only accounts for 17% of the market. Most of the buying and selling of cars happens through unorganized means today.
Analysts suggest that even though India has seen immense growth in the used car market, there is still potential for future growth through the organized sector since in mature markets like the US and Europe the ratio of new cars to old cars stand at 1:3. All in all, the Indian used car market seems to be heading in the right direction.