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Tata Capital > Blog > Loan for Vehicle > Emerging Trends in the Second-Hand Car Market

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Emerging Trends in the Second-Hand Car Market

Emerging Trends in the Second-Hand Car Market

With prices of most commodities undergoing a hike since the demonetisation in 2016, the cost of living has risen noticeably. However, this hasn’t stopped people from pursuing the need for comfort and convenience while travelling. The availability of used cars has made it possible for even the lower middle class to own a vehicle at an affordable price. Such ‘pre-owned’ cars are also popular among those who wish to upgrade to a bigger or more feature-rich model but have a limited budget.

India’s second-hand car market has seen a substantial growth from 1.6 million units worth Rs 38,500 crore in 2011 to 3.3 million units worth Rs 96,000 crore in 2016. According to some big names in the industry such as Mahindra First Choice Wheels, the used car market in the country is estimated to grow by 15% and touch the Rs. 2,50,000 crore mark with 6.6 million units by 2021.

What’s responsible for this rapid growth of the Indian second-hand car market? Let us take a look at the main factors:

  • Shorter ownership cycles – About seven years back, the ownership cycle for a car used to be 6-7 years. Around two years ago this dropped to 4 years, and is likely to reduce further to 3.5 years by 2021. This adds to the number of units in the market, leading to a successful growth.
  • Quality assurance – Even when investing in things as trivial as clothes, people do their research before they buy. Likewise, while investing in a car – even if it is pre-owned – the customer is spending a good sum of money and expects superior quality and performance. Automobile quality in India has improved, making it possible for buyers to trust even high-mileage cars.
  • Increased reliability – With the emergence of organised players in the industry, user confidence and reliability has increased, engaging more consumers.
  • Greater acceptance – In recent years, the attitude of people towards buying pre-owned cars has changed and it is no longer looked upon negatively.

Progress in the industry

The used car industry has evolved with time and is getting organised; it’s no longer limited to small players. According to a study published in December 2017, the Indian used car market is estimated to cross $66 billion by 2022, thanks to increasing urbanisation and population growth.

With automobile makers focusing on setting up used car networks across the country to facilitate easy buying and selling of pre-owned cars, it increases the inclination of consumers to buy second-hand cars at affordable prices. It also assures they are in good condition. Moreover, the increasing popularity of online platforms such as OLX and Quikr has only helped the market to grow.

Earlier, most companies would deal in used cars of only their respective brands because it helped promote their new models, but now the business has evolved and is no longer restricted to just one brand. Some key players in the pre-owned car market in India are Mahindra First Choice Wheels, Hyundai H Promise, Maruti True Value, Volkswagen Das Welt Auto, Toyota U Trust, Ford Assured, Honda Auto Terrace, Mercedes-Benz Certified, Audi Approved Plus, BMW Premium Selection, etc.

The most popular choices

As of March 2017, India’s bestselling second-hand cars were Suzuki Swift, Maruti Alto, Hyundai Santro, Hyundai i10 and i20, Maruti Wagon R, Honda City, Maruti Dzire, Maruti Zen and Estilo, Chevrolet Beat and Spark, and Tata Indica. From this it is evident that people who buy second-hand cars are doing so because they are more convenient and affordable. It isn’t that common for people to buy pre-owned luxury cars like BMW, Audi, or Mercedes, probably because those who can afford them belong to the richer section of society and would rather buy a brand-new showroom model.

The second-hand car market in India is growing steadily and has become a burgeoning industry because it allows the average Indian to purchase cars of superior quality and in good condition without having to spend a bomb. It is budget-friendly and makes cars more affordable, thus fulfilling a cherished dream of middle-class Indians who form a large segment of society.

Keep this in mind, the use of Tata Capitals online store comes in handy. You can use it with ease and book your brand new car that suits your budget.