Used car market sees a growth of 50% in a year
CHENNAI: The new vehicle market may not have had a great festival
season this year, but the fireworks are going off for the used car
According to top players in the organised used car market like Mahindra First Choice Wheels, OLX or Truebil, the segment saw a growth rate of 40-50% this year. Ironically, the expansion came on the back of the rush of car and SUV launches this year. With new models rolling out, their earlier versions see a sharp drop in prices in the used car pool, making them bargain buys. Also, with every launch, more vehicles come into the used car market, which is a supply constrained business. Hence, the surge in demand, say marketers.
Online used car marketplace Truebil’s co-founder & marketing head Shubh Bansal said, “In the January-September period this year, there have been as many as 27 new/ facelift model rollouts. So the price of the same model in used cars has dropped significantly. Those that are doing very well are Suzuki Swift, Honda City and the Maruti Alto (with the launch of the new Santro, prices of used Altos have dropped).”
Organised used car market leader Mahindra First Choice Wheels has seen 40-50% growth over last year. The company’s CEO Ashutosh Pandey said, “The market has been growing quite well. So this wasn’t unexpected, particularly since there has been a lot of new car inventory due to low growth in that market. As the used vehicle business is a supply constrained market, the increase in stocks boosted growth.” Additionally, while fuel price — a factor that affected new car sales — has also impacted the used vehicle segment, the “capital cost of the asset” has come down sharply enough to “make used cars a compelling value proposition”, he added.
Indeed, the plethora of launches or facelifts have created a phenomenon of “almost new cars” turning up in the used vehicle pool, said OLX India VP (cars category) Sunny Kataria. “The supply of used cars that are less than 2 years old with just 15,000-20,000km clocked has grown sharply,” he said. “For this category, supply is up 20% over last year and demand is up 50% year-on-year.”
The growth rate may have peaked now, but the used segment has shown an uptick of 20% in demand for the last three-five months. “These are great bargains because the buyer is getting 20-25% off on an asset of Rs 6-8 lakh, which is less than two years old,” Kataria said. Boosting this trend is the demand from non-metro markets, while supply is coming mostly from metro markets. “Around 60% of the supply of this category of vehicles is from metros, while 50% demand is from non-metros,” Kataria added. The demand is driven by the aspiration for new technology features such as automatic boot opening, screens inside cars and Bluetooth connectivity.