Volkswagen Passenger Cars India, through its pre-owned car business Das WeltAuto (DWA), on June 16 disclosed growth trends related to India’s used car market, customer buying patterns and the opportunities to further develop the market.
In the ‘Indian Pre-owned Car Market Study’, Frost & Sullivan deployed the PESTEL analysis approach covering political, economic, social, technological, environment and legal elements that influence used car buying decisions among potential and existing customers.
The study revealed the market outlook wherein organised platforms would contribute 45 pc to the total pre-owned car market by FY2025.
Today, easy and affordable mobility solutions with financing options, are some of the significant elements considered by customers in Tier-1 and Tier-2 cities for vehicle ownership. As pre-owned cars are gaining momentum among customers, the industry outlook estimates the used car market to touch 8.2 million units by FY25 from 3.8 million units of FY21.
The demand for pre-owned vehicles is constantly growing and the ratio of used cars compared to new car is expected to become 2.1x by FY25. Further, there has been a substantial rise in demand across organized sector of pre-owned passenger vehicles business.
According to the study desire for car ownership is the primary driver for purchasing a used car, whether it’s an upgrade from a two-wheeler to four-wheeler, old car to new car or purchase of their first car.
The desired model/vehicle is compelled by price amongst current and intended customers followed by other factors such as comfort, features and maintenance required
At the time of purchase, used car owners across all age groups preferred cars with an average age of 3.5 years. Availability of younger vehicles has made purchase of pre-owned vehicles more attractive than ever before.
Ninety-four per cent current owners are the final decision-makers in the actual purchase of used cars, spouse accounts for 57 pc and other family members and friends comprise 52 pc as the key influencers.
The study further said that 66 per cent of potential customers prefer warranty of at least one year in purchase of a used car. The primary channel for used car purchase, it said, are majorly local dealers contributing to 40 pc, followed by 22 pc by individual direct sellers
Even today 50 per cent of customers prefer cash transactions, however online payment mode is fast emerging as a preferred payment option with 21 pc customers opting for online transactions, said the study.
Organised players offering better financing options to differentiate themselves from unorganised players and strong demand for used cars in Tier-2, Tier-3 and rural markets jointly will drive finance penetration in used cars, according to the study.
Mr. Ashish Gupta, Brand Director, Volkswagen Passenger Cars India, said, “The study highlights that the market share in the organised sector will touch 45 pc by FY25 from the current 25 pc. This is a clear indication of change in consumers’ preference in personal mobility.”
