Used car market trumping new car sales

[DukeNukem]

New car sales might be on the downturn but the used car market is doing much better, according to a report in the Times of India.

With annual sales of nearly 25 lakh units, the Indian used car market is expected to grow by 10 % this year (compared to 3 % expected growth for new cars). Major used car sellers are aiming at double-digit growth in the market, as more customers prefer to choose organised players over neighbourhood brokers. A sluggish economy, coupled with high interest rates & rising fuel costs have kept new car customers at bay, the majority of who rely on loans for purchases.

We @ Team-BHP.com have always believed that used cars provide a superb value-for-money proposition. Whether out of choice or compulsion, an increasing number of customers are now agreeing with the same.

The best part is that options within the used car market has expanded considerably, due to the sheer number of launches over the last couple of years. It is also important to note that cars today are built far better and have superior reliability compared to cars from the nineties. It is not uncommon for currently sold models to serve dependably for 150,000 - 200,000 kms (and over). The presence of organised players is also increasing, as profit margins on used cars frequently exceed that of new cars.

The most significant disadvantage of purchasing a used car is the high interest rate of loans on pre-owned cars. Bank officials have spoken about softening interest rates on used cars for salaried customers.

In India, one used car is sold for every new car, which means that the market for both is roughly the same size. Some other markets see ratios of 3:1 in favour of used cars. The growth potential is definitely there. Maruti True Value is expecting a 20 % rise in sales this year, after selling 2,31,000 units last year. Meanwhile, Mahindra First Choice is looking at a 35 % growth in 2012, after sales of 34,000 units last year. M&M also plans to add a 100 more outlets to its existing network of 167 dealers across the country.



Related threads:

Buying a New Car vs Used Car (ARTICLE: Buying a New Car vs Used Car)

How to buy a *USED* Car in India (ARTICLE: How to buy a *USED* Car in India)

[libranof1987]

I have a feeling most of the 2nd car sales are of petrol cars. People must be lapping cars that they could't afford as brand-new which are now available at throwaway prices. Prime examples being the '08 City, Accord etc.

Let's see how well this holds true once the rumoured diesel hike takes place.

[drmohitg]

This is the best time probably to pick up a car in the used car market. The fuel pricing fiasco has ensured that some very popular cars depreciate alarmingly fast. Also with ever increasing models and new cars being launched including refreshed variants, a new car loses a lot of its value in 2-3 years. So no doubt that there sales are increasing and I can see this trend going only north from here.

[mayankjha1806]

You forgot to mention one of the important finds in the report.

The report corroborated that 60% of used car sales happen between individuals and not through these used car dealers, further 28% happen through the friendly neighborhood broker. The organized car market is hardly 11%. This says a lot about trust the customer has on the organized used car dealers.

Anyways here is the link - Used car market growth to more than double this year - The Times of India

[rajeev k]

Many first time car buyers source used cars and now with manufacturer's used car arms like Truevalue and Advantage there are more choices. Even there are pages of used car classifieds.
Likewise when there is an upgrade to a new car, the old car is sold in majority of cases.

[smartcat]

Isn't this a statistical reality? After a point, there will be more old cars in the market than new cars purchased every year. No wonder developed markets see old Vs new sales in 3:1 ratio.

[DCEite]

Well I bought a new car for the price of a Used car

Exchanged a 2004 WR for a new WR, and the net cost for me was Rs. 2.67 L which included accessories like Remote locking, steering cover, flaps, wheel covers, side moulding, gear lock etc.