Pre-owned car market: Major factors driving the sector’s growth in India – The Financial Express..

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There is a huge reduction in the ownership period of cars. There was a time when customers preferred to own a car for 6 to 8 years which has now considerably reduced to 4 years.

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During the last few years, consumers have shown greater interest and trust in used or pre-owned cars. Several factors are driving the growth of the used car market, so much that it is outpacing the new car market share in India. Owning to the COVID-19 crisis, new car sales contracted by 17.8% while used cars sales increased by 5% YoY in FY20. Furthermore, the pre-owned car sales in India is currently 1.5 times more than the new car sales. The  gap is projected  to increase in the coming years.

Factors that are driving this incremental trend of pre-owned car sales are listed as  affordability, availability, increased need for personal mobility and the emergence of online players working to organize the pre-owned car sector.

Current scenario of used car market

Even though the pre-owned car market is almost twice as big as the new car market, it is still unorganized. It is bifurcated into multiple players focusing on online lead generation or some players concentrating on the physical sale of cars through independent organized and unorganized dealerships and balance are focusing on the (C-2-B) market. All these segments are collectively contributing used car sales graph in India.

Earlier, there were only prominent automobile manufacturers like Maruti SuzukiMahindra & Mahindra, Tata Motors, etc. owning dedicated pre-owned car sales channels. Considering the digital transformation across industries, new-age Auto Tech startups are emerging to disrupt the pre-owned car market.  Thus, playing a crucial role in driving the sale of pre-owned cars online and bridging the gap between physical and digital sales.

Major factors driving pre-owned car sales

The Indian pre-owned car market has opened up a myriad of options for price-sensitive consumers. Though it was too fragmented earlier, the outbreak of  COVID-19 pandemic has resulted in making the customers more value-conscious resulting in the opportunity for new players to enter the market and organize it. Additionally,  dream possession of luxury and imported cars that are comparatively affordable as a  pre-owned vehicles provide greater value for money. Witnessing the shift in automobile industry, the customers are gradually shifting their choice of new cars to pre-owned cars.

The shift in customer behaviour

Customers’ behaviour is the major force behind the growth of the sector. India has always been a price-conscious market given the multitude of options available. Unlike before, used cars today have more societal acceptance as people have understood the concept of cost depreciation in a new car by 30% in the first year of the purchase itself. Hence, buyer finds used car as a better option that meets their price sensitivity and value consciousness.

Apart from this, there is a huge reduction in the ownership period of cars. There was a time when customers preferred to own a car for 6 to 8 years which has now considerably reduced to 4 years. It is further expected to dip to 3.5 years in the coming years. This has led to a steep rise in the choice of pre-owned cars.

Demand for personal mobility

Increase in population has surpassed the public transport facilities in almost all cities of the country, thus resulting in decrease in reliance on public transport. Pandemic has also shown the vulnerability of such mediums. People travelling in public and private buses, availing carpooling or shared services have shifted their focus to personal mobility mediums. From metro to even non-metro cities, people are focusing more on social distancing norms, health safety being the prime concern. Eventually, giving rise to demand for personal vehicles. People from diverse and even lower-income groups are likely to hold their disposable income to deal with any future uncertainty. Thus, the trend of personal mobility is expected to see a surge driven by affordability.

Customer convenience and affordability

The Indian Automobile Sector was already undergoing tremendous digital transformation but the onset of the COVID-19 pandemic has accelerated the emergence of Auto Tech players in the pre-owned car segment. The new-age startups in this domain are backing their online presence with physical outlets to enhance customer experience.

Since the demand for pre-owned cars is high in non-metro cities, the customers can find it convenient to browse a used car of their choice & budget online and purchase it after due inspection on the physical outlet. These startups are integrating new-age technologies such as 360-degree view, augmented reality and virtual reality to give complete view of the car to customers. Apart from this, the online players are building a robust sales network by providing complete vehicle history, offering buyback options/ extended warranties and addressing finance or post-sales problems.


Given the forced tough market conditions in 2020, India’s large population is aspiring to hold car ownership with widely available and affordable pre-owned cars. Though the sector is unorganized, it is likely to have a stronger foothold in the market in the coming years that will be highly driven by new-age online pre-owned car retailers.

Author: Vaibhav Sharma, Founder & CEO, CarzSo

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.mail logo

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