Since the start of the 20th century, the Indian used car market has seen tremendous growth. Currently, one pre-owned car is sold for every sale of a new vehicle. The market size is expected to witness a Compounded Annual Growth Rate (CAGR) of 15.2% and may reach USD 75 billion by 2023.
There are many reasons why the used car market in India is witnessing a steady growth. Here are four trends in the used car market:
1. Shorter ownership
Previously owners retained their vehicles for longer periods like six to seven years. However, technology is rapidly developing due to which newer models are released in short periods. Moreover, many urban families own more than one car, which reduces their usage ensuring these are maintained well. This allows individuals to avail of a car loan to buy a used vehicle at affordable prices.
2. Increase in the number of organized players
Between 2005 and 2007, the Indian used vehicle market was controlled by the unorganized players that owned almost 95% of the total segment. The market share of organized players was only 4% during this period. However, the share of organized players has increased to 15% in 2010 – 2012 and the same is further expected to increase to 18% by 2021. Therefore, consumers are more confident about the quality of the pre-owned vehicles. Moreover, these organized vendors assist buyers to avail of a used car loan, which contributes to the rise in the demand.
3. Societal acceptance
In the past, society perception was not favorable when an individual opted to buy a used car. However, this is slowly changing and a higher number of people are no longer worried about owning old vehicles. The quality of these pre-owned cars is good with ownership reducing to shorter periods. Moreover, if a person is a new driver owning a used car is prudent until he is more confident about his driving skills. The easy availability of pre-owned car loan makes it easier to own a vehicle.
4. Increasing fuel prices
The economic slowdown has reduced the sales of new cars. However, the used car markets have seen a rise. The increasing fuel price is another reason why the sale of pre-owned vehicles is rising. Buyers would like to reduce their total car ownership expense by decreasing the loan for used cars amount thereby reducing the monthly installment.
As acceptance grows, the sale of used cars is increasing. More and more buyers find this option more affordable and see a true value for money in it.