Thrifting is finally being normalized in India for just about any product. People are getting more and more comfortable with the idea of buying used goods instead of new ones, and rightfully so! It is suitable for their pockets, the environment, and everyone altogether. Starting with the smaller products, the “second hand” market has reached the car industry today. The growing demand of people has fueled the emergence of the used car market in India.
The automobile industry already occupies a large section of the country’s economy. The automobile sector occupies 50% of the manufacturing GDP, 26% of the industry GDP, and 7.1% of the overall GDP of India. Within the industry, the second hand car market in India accounted for 1.3 times the new cars in terms of the sales of 2018.
Hence the size of the used car market in India is increasing exponentially. Many big names have started investing in this upcoming mega-industry in the recent past, looking at its steady growth.
- What are the factors promoting the growth of the secondhand car market in India?
- What does the Indian used car market report tell us?
- What are the powerful platforms operating today that make the used car market more accessible to ordinary people?
We shall be addressing these questions below.
Factors promoting the growth of the secondhand car market in India
There must be something lured in the big names to invest in the used car market in India. The explosive growth of this industry through the years has many reasons to blame, a few of them being pointed out below:
- Demand
The relation between demand and supply is no secret. The vanishing stigma around used goods has enabled a lot many people to own things they couldn’t have had otherwise. The common masses are finally waking up to the ease of owning a pre-owned car. On average, the price of a vehicle drops by nearly 30% in a year of purchase. Hence, the customer has to pay a significantly lesser amount for a new-like car. This has dramatically increased the demand for pre-owned vehicles, airing the fire of the secondhand car market in India.
- Reliability
The cars made today, or automobiles in general, are significantly more substantial and more reliable than the older makes. This has made people trust the quality of the car even after some years of use. Hence, people nowadays don’t mind buying a used car, increasing the size of the used car market in India.
- Luxury in cheap
As already mentioned, the price of a car drops by 30% in the first year of use. This is also true in the case of luxury cars. With better standards of living, more people dream of owning a luxury car. So why spend a considerable amount on a new one when you can get an “almost new” luxury car for a lot cheaper!
- Going online
Online appears to be the marketplace of today. Nearly every business of every industry has made its appearance in the binary world. The second hand car market in India is no different! With the ease of the online second handcars marketplace, people are exposed to the millions of car options from sellers worldwide, further increasing the size of used car market in India.
Indian used car market report.
Some key points in the Indian used car market report:
- The government encourages this sector as well, given the reduction of GST charged on pre-owned cars from 28% to 12-18%.
- In 2019 alone, they evaluated the used car market in India at USD 24.24 billion.
- It is estimated to register a CAGR of 15.12% during 2020-2025.
- Many major car manufacturing companies have started their very own used cars segment. For example, Maruti Suzuki’s True Value chain ensures the used cars go through thorough screening before they are put up for sale.
- 75% of the pre-owned car users prefer hatchbacks and sedans, given their affordability.
- They bought cars are primarily from first owners. Among these, 72% of the cars are less than five years old.
The used car market in India can be broadly divided into two categories:
- Transactional
This basically comprises the offline and online marketplaces for the second hand cars. The used cars segment was initially brought into implementation in India by the offline market. However, with the growth in technology, online markets are listing the pre-owned cars for millions of buyers as well. India’s Droom and USA’s Vroom and Carvana are examples of online transactional markets for used cars. As for the offline markets, India has Cars24 and Spinny, to name a few.
- Non-transactional
Other than the marketplaces, the used car industry is also spreading through classifieds and content like blogs, forums, etc. These platforms are spreading awareness about the used car segment among people. OLX, Cardekho, and Quikr are bringing the second hand car market in India to the people.
In the past four years, an investment of over 5 Cr has been recorded in the used car industry.
A study shows that 85% of the people owning a two-wheeler prefer to buy a used car over a new one as an upgrade. The reason is simple: better car at a lower price. Among them, 15% of the consumers keep buying pre-owned vehicles. Studies say that people consider purchasing a pre-owned vehicle as a rational decision.
Final words
The used car market is the upcoming mega-industry in the Indian marketplace. Most of the used car buyers constitute the middle class and youngsters. This category of society also makes up for a significant part of the social strata.
If we were to believe predictions, the second handcar market is not going to stop anytime soon. With the increase in people’s income every year, the number of car owners is also rising. Be it the low-mid range or the SUVs and luxury cars, and the second handcar market is proving to be the right place for everyone. Before you choose to buy your next car, do check out the used car marketplace as well!