India’s automobile industry is the sixth largest in the world and SIAM (Society of Indian Automobile Manufacturers) report suggests that by the year 2020 India might come to number 3 position. The automobile market is expanding both in the fresh car sales as well as the used ones. If we talk of a decade back, there was the absence of organised market in the used car sector with nearly 60% of the people buying and selling through C2C (customer to customer) mode. The remaining 40% market was taken up by the unorganised dealers. All the dealings were based on the circle of trust only in the absence of organised players in the arena.
With Maruti taking the lead in this direction in 2001 through Maruti True Value, today the Indian markets have finally evolved in the used car sector. The Indian consumer is also well aware of the benefits of buying these used cars. The used cars sale in Mumbai and other major cities of India is growing at a good pace and it is expected that by 2020 the Indian pre-owned car market will hit a 7 million mark. While the new car market witnesses some rough patches from time to time, the used car market generally sees a stable growth.
There are majorly four factors that are fuelling the used car sector.
- The car ownership cycle, which was 7-8 years a few years back, has now come down to 4 years and it is expected that it will further get down to 3-4 years in next five years. Thus, the availability of used cars is enhanced with more choices.
- Car quality has improved, making it more reliable and hence feasible to buy a car that is driven for longer periods.
- The emergence of the organised sector has boosted confidence and instilled credibility.
- The society is maturing and buying a second-hand car is not seen as a taboo anymore. The social acceptance has played a big role in growing the market for used cars.
Until recently, the automobile companies dealing with used cars were catering only in their own make, but now some automakers have started looking beyond. They are dealing with multi-brand used cars and thus this sector is not only growing, but also evolving structurally.