Used Cars are Refueling the Automobile Sales
Author: Karthik Shivamani
Covid-19 pandemic has turned the world head over heel, making business come to a standstill and affecting the global economies. Lay-offs and pay cuts impacting the working professionals have left them with weaker purchase power. With the lift of the lockdown, the country’s workforce must get back to its workplaces. Mobility is the boiling topic.
In the busy metro cities of the country, it will be a difficult task for individuals to maintain safe distancing while commuting. Keeping this in mind, many customers are interested in purchasing their own personal vehicles to avoid being infected. But the lay-offs and pay cuts have already made the workforce with lower purchase power. Thus, many consumers are inclined towards purchase of cheaper used cars.
According to the Society of Indian Automobile Manufacturers’ (SIAM), pre-owned vehicle segment that accounts for 18% of the market share, registered estimated sales of 4.4 million units, whereas the new passenger vehicle sales in FY 20 stood at 2,775,679 units, dipping below the 3-million-sales unit mark for the first time since FY17. This clearly indicates the growing acceptance of pre-owned cars.
CARS24 tech-enabled used cars dealer, conducted a survey among the commuters that showed, 46% of respondents have lowered their budget for high-value purchases including bikes, cars and real estate because of the global pandemic. But 50% among them said they would buy second-hand cars once the lockdown was over. The survey also said 22.5% of the consumers who were contemplating buying a new car last year are now opting to buy a pre-owned car. In non-metro cities, 41% of the respondents wanted to buy two-wheelers. About 50% of cab users in the pre Covid times are now willing to buy cars, while 15% said they are willing to buy two-wheelers. The company surveyed around 3600 respondents from 11 metros and 37 non-metros.
What Matters in A Pre-Owned Car?
Reduced Period of Ownership
Owners typically sell their cars when it is 6-7 years old; whilst buyers prefer to buy a 4-year-old car. With newer models of cars being introduced at a faster pace, the need to own the latest models, ownership period has reduced to 4 years which augurs well for the buyer. According to statistics, the ownership period is expected to dip further to three and a half years which will further give momentum to more people looking to buy pre-owned cars.
Growth of Online Presence
With a rising demand for pre-owned cars the segment witnesses many organized sellers as entrants. Organized sellers like Mahindra First Choice, ToyotaUTrust, Maruti True Value, have deeper pockets to employ technology in their sales process. With more and more pre-owned car showrooms having an online presence, the search for the right kind of car within the budget is today at the tip of the finger saving time, energy and money for the buyer.
Mahindra First Choice Plans to Have 1,300 Dealerships By 2021
Keeping the rise of demand for used cars in mind, Mahindra First Choice Wheels, the market leader among the organized used-car players, is planning to have close to 1,300 dealerships by the end of the current financial year. The company is expecting a rise in demand for pre-owned four-wheelers once the lockdown is lifted. Being bullish on the used-car business, the company opened as many as 34 dealerships mostly in small towns across 12 states last month, taking the number of its dealerships to around 950 now. The company expects a huge growth in this segment given the pandemic and also the highly unorganized nature of the market.