USED CAR BUYING TIPS
The business of used car has grown in leaps and bounds in India. Nowadays, as a common practice, young drivers...
Indian Used Car Industry Segmentation
A used car, also known as a pre-owned vehicle or a second-hand car, is one that has previously been owned by one or more retail owners.
India's Used Car Market is segmented into Vehicle Type, Vendor Type, and Fuel Type. By Vehicle Type, the market is segmented into Hatchbacks, Sedans, and Sports Utility Vehicles. By vendor type, the market is segmented into Organized and Unorganized. By Fuel Type, the market is segmented into Petrol and Diesel.
Indian Used Car Market Analysis
The India Used Car Market size is expected to grow from USD 27.47 billion in 2023 to USD 55.49 billion by 2028, at a CAGR of 15.10% during the forecast period (2023-2028).
The COVID-19 pandemic had a minimal impact on the industry. With the increased number of people preferring individual mobility and more finance options available in the used car market, the market is set to grow considerably. Due to the pandemic's reduced cash inflow, buyers have been forced to look for alternatives to new cars, and the used car industry has high growth potential in this regard. As the pandemic has hampered new vehicle sales and production, the used car market is gaining traction among buyers. The companies' emphasis on reducing diesel car production is expected to increase demand for compact diesel cars in the price and mileage-sensitive Indian market.
A few years ago, the new-to-used car ratio was 1:1.2, but it is now 1:2.2. When ten new cars are sold, the market has 22 used cars available for purchase. The average holding time of a new car has decreased from 5-6 years to 3 years. The used car category has provided many options for first-time buyers. In terms of buyer preferences and requirements, the trend in the used car market mirrors the trend in the new car market. Buyers in the used car segment are more likely to try out new brands.
Moreover, only 17% of the market is accounted for by the organised sector. Today, the majority of car purchases and sales are conducted informally. Although India has seen tremendous growth in the used car market, there is still room for future growth through the organised sector, as the ratio of new cars to used cars in mature markets such as the United States and Europe is 1:3. Overall, the Indian used car market appears to be on the right track.
Indian Used Car Market Trends
This section covers the major market trends shaping the India Used Car Market according to our research experts:
Rising Middle Class and Young Population
A rising middle class and India's young population are two key factors driving this massive growth over the next five years. This is also fuelled by the fact that India's disposable income has steadily increased over the years. According to the report, factors such as technology-driven transparency, convenience, transaction simplicity, and so on will also contribute to this projected growth. The average car age has decreased by 33% from six years in the fiscal year 2010-2011 to four years in the fiscal year 2021-2022.
With more players entering the market, India's used-vehicle industry is transitioning from an unorganized, setup where transactions occur via roadside garage mechanics, small brokers, and between car owners - to an organized system. The reduced average tenure of ownership for cars and two-wheelers due to higher disposable incomes, as well as the introduction of new models in shorter time frames, are also aiding the sector's growth.
Factors responsible for Indian consumers choosing used vehicles over new vehicles are a need for mobility for personal and business growth, budget constraints and macroeconomic uncertainty, progressive industry players offering refurbished, certified, high-quality cars with warranties, digital & AI-led transformation increasing convenience, trust, and transparency, and the value for money nature of used cars when compared to new cars.
The emergence of organized online and physical used car platforms, combined with an increase in demand for personal mobility and favourable government support, are also expected to drive growth.
Growing Demand for Luxury Used Cars to Play Key Role in the Market
The Indian used car market is expanding due to rising demand for luxury vehicles. The sale of used luxury cars increased by 20%.
Due to the high cost of a luxury car, it was difficult to obtain one until recently. However, this trend is changing as consumers can now purchase used luxury vehicles. With easy access to financing options, annual maintenance contracts, and lower entry prices, the market is becoming more organized. Furthermore, the average age of used luxury vehicles entering the market is between 2 and 3 years, versus 5-6 years for a mid-size or small-scale vehicle, making them a better option in some cases.
According to auto dealers, demand for pre-owned luxury cars has increased by 35-40% year on year, as owners of luxury cars typically sell their vehicles after a year or two and upgrade to better models. Initially, the market for pre-owned luxury vehicles was limited to major metropolitan areas. Local dealers and online players, on the other hand, have expanded the market. Customers in tier 1 and tier 2 cities can currently inquire about and purchase these vehicles.
Factors such as rising consumer preference for luxury vehicles and the country's youth preference for market leaders are expected to drive demand for used cars in India during the forecast period.
USED CAR BUYING TIPS
The business of used car has grown in leaps and bounds in India. Nowadays, as a common practice, young drivers...
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