Even a decade ago, the common trend was that people in their thirties would buy a car which they would use for the next 10 to 15 years before upgrading to a new one. However, with the increase in availability of jobs in every city, especially after the boom of the IT sector, more numbers of people are buying cars for easy commutes to and from work. Needless to say, youngsters do not have very high budgets to afford good cars. But the desire to own a top-rate vehicle is there among all. Hence, they settle for used car in India of their choice instead of being stuck with a hatchback.
The sales of new cars in India may be stagnant or negative even in some area, but the used car in India market, which has around 2.5million vehicles in it is going as strong as ever. In the past financial year, the growth of sales of pre-owned cars have been around 15 percent and the organized segment’s biggest player expects similar, commendable double digit growth figures in the coming year as well. What is more is that in the used car market, younger customers are becoming a bigger part as more number of people are resorting to the used car market from the new one for better bargains.
The average age of a pre-owned car buyer is lesser than that of a new car buyer as people who are as young as 25 years to 28 years old are choosing used cars in metros such as Bangalore and Pune. The purchasing motivation behind a used vehicle is different for youngsters which is why they are moving to the market. Previously, those who could not afford to buy a new car opted for a used car. But nowadays, youngsters are opting for pre-owned car models because it allows them to jump and skip segments.
Because more numbers of young customers are flocking to the used car market, the presence of first time buyers in it can be explained. As larger numbers of people turn to the used car market in order to jump segments, the structure of the market shall begin to change. Mahindra and Mahindra’s First Choice Wheels has re-iterated that roughly 65 percent of their buyers are first timers who have an average age of 35 years while roughly fifty percent of them are between the age of 25 years and 34 years. However, as the numbers of people are accepting used cars, the first time buyer share would begin dropping in new cars market.
True Value too has stated the same thing that there has been a drop of almost 7 to 8 percent among first time buyers of the new cars market although the used car line did brisk business. In FY14 alone, True Value sold 2.6 lakh vehicles. If it was considered to be a separate entity, then True Value would be the fourth largest vehicle company of India.
The expected growth of the used car market is around 15 percent this year while it was around 19 percent the previous year and 17 to 18 percent the year before last. The latest fiscal year is expected to bring in good growth for the used car market as well. In terms of volumes, certified used car dealers have clocked a growth of almost 35 percent in the past fiscal year. Unlike other times, the sales volumes are contributed by non-metro areas as well, located in hinterlands. There is a shifting trend in the cars market as tier II cities and non-urban areas are also opting to buy used cars because of the easy financing schemes and affordability of the cars.
Families that need two cars for ease of commute opt to buy the second vehicle as a pre-owned version. Most families reside in residential communities where each apartment is allotted a single parking space. Therefore, most of the families with two or more vehicles would have to park outside the community or in a non-designated parking spot. This can be risky for the safety of the vehicle. However, by buying a used car in India, you can be less worried about damage being caused upon it by vandals.
Another reason why youngsters are getting attracted to buying used cars over new cars is that the cars come with warranty and free service. Certified used car dealers such as First Choice and True Value offer a year long or 20,000kms whichever is lesser warranty. Also, within six months of buying the car, you can get it serviced twice. Moreover, financial schemes are offered to buyers who would like to buy the vehicles at equated monthly instalments or EMIs. The rate of interest charged by the financing companies is more reasonable than what they charge for brand new cars.
Certified used car dealers usually sell cars which are not older than 7 years and have been thoroughly inspected on various points. Most certified used car dealers make the checks on more than 120 different points. Therefore, you can be assured of their quality.
The fact that you can get good quality cars which are slightly older at prices which are 30 to 40 percent lesser than their newer counterparts has attracted a large number of people. For every new car sold in India, a used car in India sold is 1.1. Even though the ratio is lesser than that of developed countries, but the way the Indian car market is progressing, it would catch up in no time.
Even luxury car sellers have understood the importance of the used car market which is why they have introduced their own certified luxury used car dealerships. The trend was started by Mercedes Benz in 2010 and was followed by BMW with its line Premium Selection and Audi as well. Finance for these cars priced between Rs 20 lakhs to Rs 25 lakhs is much comparable to the financing options for a new car available in this range which does not belong to a luxury brand. Moreover these companies offer long enough warranty so that buyers rest assure of the quality.
Though a small business owner, Avinash Bhosale is an auto engineer and does part time auto modification. He writes about new and used cars give updates on offers for used car in India .