Unprecedented Growth of the Second Hand Car Industry - Car Loan Blog - Tata Capital

Car Loan

The Growing Pre-Owned Car Industry

May 29, 2017

The Indian automobile industry is one of the largest and most competitive in the world. According to a report by the Society of Indian Automobile Manufacturers (SIAM), annual car sales in India could reach the 9-million mark by 2020. Sales of new cars aside, there has been a growing trend in the sales of the used car too. Until a decade ago, the pre-owned car's market in India was a disorganised sector and more than 60% sales of used cars happened within the known circle of the seller through local dealers, mechanics and word of mouth among friends and relatives – mostly on a customer to customer (C2C) level. But, now the market of pre-owned cars is a well-organised and certified business sector with Maruti Suzuki being the pioneers in this overhaul. In 2001, Maruti launched its segment of used cars under the brand name of Maruti True Value, thereby becoming the first major organised player to enter the used car market. And, since then there has been no looking back for this segment of the automobile industry. Now, almost every popular automobile brand has a dedicated business line for used cars - Mahindra's First Choice, Tata Motors’ Assured, Hyundai’s HPromise, and Renault's Selection. In addition, German automobile giants like Audi, BMW and Mercedes-Benz also have increased their focus on the pre-owned cars segment.

The reason behind the growth of pre-owned cars market is not limited to popular brands endorsing themselves to this segment of the business; rather there are multiple factors for this uptrend. Price advantage, appeal to all types of buyers, sparse use of cars, improved quality, better maintenance, ease and transparency, warranty, credibility, availability of finance options, and demand for luxury cars are making this segment ever more acceptable among Indian car buyers. According to a CRISIL report, the ratio of new to used cars in India has grown from 1:1.2 to 1:2.2 meaning for every 10 new cars sold, 22 used cars are getting sold simultaneously. And, it is projected that this trend will continue to grow at a steady pace of 15% till 2020. It has been reported that currently India has less than 1,000 organised used car outlets and it is projected that the rise in demand will increase this number to almost 4,000 outlets. In addition, if the proposed uniform tax laws across all states get implemented then the process of selling and registration of used cars will become all the more simple and economical.

It has been observed and acknowledged by automobile giants that even though the industry went through a period of sluggish sales numbers in the last few quarters, the used car segment has had a steady growth. In fact, the used car segment provided mush relief to several manufacturers during the low sales of new cars.

With poor sales numbers dogging the industry, the used cars have come to provide succour to several manufacturers and the larger ones have enhanced the services and offerings to capitalise on this segment. Vinay Sanghi, CEO, CarTrade.com, an auto classifieds portal, observes the perspective of used car market by putting forth this comparison - the current market size of new cars in India is 2.5 million, whereas the used car market is soaring at about 3 million. Similarly, at the launch of Mercedes-Benz India's pre-owned car business brand, Managing Director and CEO Eberhard Kern said that their pre-owned car segment has grown 39% during the period of January-September in 2014 by selling 1,700 units, indicating the high profit-making potential of used car market.

Well, the numbers and reports have clearly indicated that the Indian used car industry is indeed on a rapid growth path. And, for all good reasons, this growth will continue in the coming years too. Tata Capitals provides quick used car loans to realize your dreams. Without any requirement of collaterals and low interest rates owning a second hand car is extremely easy today.