As those in the middle income group aspire to have their own cars, the demand for used cars rises. So, we now have so many OEMs in India entering the used car market. The segment has now got an organized outlook. Luxury car makers too are budging into the pre-owned auto market while existing players are expanding their network of outlets.
The used car segment is witnessing growth owing to factors like increasing numbers of OEMs entering pre-owned automobile industry, favourable demographics, the changing lifestyle of Indians and user choice. Also, car loans can more easily be availed on used cars and online portals too play an important role by educating users on the feasibility of buying used automobiles. However, the main challenges that the used car market in India faces are the boom of cheaper new cars, the restricted choice and the extra costs that pre-owned auto buyers bear in addition to the annoyance of checking various documents.
We already know that nearly 85 per cent of the used car market is unorganized. The car agents play a very significant role in connecting sellers and buyers. Purchasing a used car through an agent intensifies the risk for the buyer. That’s because these brokers usually swap the genuine OEM parts with sub standard, cheaper parts to increase profit margin. This in turn enables these agents to sell off their used car at a much lower price than certified cars.
The Rs. 1 Lakh Tata Nano created a lot of noise in the Indian car market early this year as the cheapest car in the world. A used Tata Nano car can be expected by next year at a rock-bottom price. What more can one want? This is surely going to further catalyze the growth of the second hand car market in India.
Maruti Suzuki with its Maruti Truevalue, Honda Siel Cars India Ltd. with its Honda Auto Terrace, Ford with Ford Assured, Toyota Kirloskar Motors with Toyota U Trust, Hyundai Motor India Ltd. with Hyundai Advantage and Mahindra and Mahindra’s with its First Choice have all already entered the organized used car market. India may witness the opening of nearly 270 outlets by 2012. Porsche and Bentley are among leading international brands that are expected to enter used car market in India.
As per one of the leading consumer portals, they receive around 25,000 second-hand or used car queries in a month. Research says that 40 per cent of these people actually buy the cars. In Bangalore, Delhi, Haryana, Jaipur and other major Indian cities, around 65 per cent of buyers go for pre-owned cars. Must say, the online portals are doing a great job helping people decide what car to buy. These portals drive second hand car sales in most Indian cities.