• that an increase in the overall

•       India
has emerged as one of the world’s largest markets for cars. In the past decade,
there has been a significant increase in the demand for pre-owned cars in
India.

•       In
2016, used car market in India was pitched at 3.3 million units (worth rs. 96
crore) and is estimated to cross 7 million units by 2020 owing to rapid
urbanization and population growth.

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•       The
market for used cars has been projected to grow at a rate of 15% per year in
India.

•       According
to market estimations, by 2020, India will be a part of the top five markets
for automobiles.

•       Economical
rates of used cars is one of the most dominant factors that  influences consumers.

•       Relatively
lower prices and a wide range of selection make it easier for first time car
owners to obtain technologically advanced cars at fair prices.

•       Families
that require multiple cars tend to choose the option of a pre-owned car.

•       Used
car market provides consumers with the ability to upgrade their vehicle quality
without having to spend too much.

•       It
has been noted, that an increase in the overall purchasing power has enabled
consumers to change cars more frequently. Duration of ownership has reduced
from 6-7 years in 2011 to around 4 years in 2016 and is estimated to drop to
3-3.5 years by 2021.

•       Perception
of society towards owning used cars has taken a positive turn, allowing more
and more people to opt for pre-owned cars.

•       Other
factors contributing towards the increasing popularity of used cars are:

•       Low
rates of depreciation, easier financial options, improved car quality, etc.

•       Organized
players have played a highly significant role in diverting consumers’ attention
towards used car market in India. Before organized players, used car market was
riddled with lack of trust and consumer dissatisfaction.

•       Currently,
only 20% of the pre-owned car market is organized and the rest is still
dominated by the unorganized sector.

•           But who are these organized and
unorganized players?

•       Up
until a decade ago, unorganized players who were not Government of India
certified, dictated the used car market in India. These unorganized players
were mostly self appointed dealers, car mechanics, etc. Previously, used cars
were purchased only through family and friends.

•       In
2001, Maruti Suzuki entered the market with “Maruti True Value”, soon after
which vendors like Mahindra First Choice Wheels, Toyota U Trust, Honda Auto
Terrace, Tata Motors Assured, Hyundai H Promise, Ford Assured, Chevrolet
Certified followed suit.

•       Organized
players offer certified cars at competitive rates. They provide hassle free
financial options along with insurance incentives. Warranties, better service
guarantees, assured after sale services are all part of the new and improved
package deals designed to attract consumers. The organized sector is projected
to have a growth rate of over 25%.

•       IT
HAS BEEN ESTIMATED THAT APPROXIMATELY 60% OF THE TOTAL SALES VOLUME OF USED
CARS COME FROM THE NORTH AND WEST ZONES. 

•       CAR
SALES IN EAST ZONE ARE CONSIDERABLY LOWER THAN OTHER ZONES THROUGHOUT THE
COUNTRY.

•       It
can be inferred from the above data, maximum number of cars are bought in the
country’s capital city, Delhi. (From April 2015 – March 2016) Next in line is
Bangalore, closely followed by Mumbai (including Thane and Navi Mumbai).
Surprisingly, Kolkata is placed very low on the list.

•       Notably,
smaller cities have given considerable competition to larger metros. Which
bring us to the following question:

•       Metros
v/s Non-Metros

•       MORE
THAN 50% OF THE USED CARS SALES ARE ACCOUNTED FOR BY NON-METROS, EXPANDING AT A
HIGHER RATE THAN METROS; OWING TO THE AVAILABILITY OF SEVERAL ECONOMICAL
ALTERNATIVES.

•       The
market for used cars in India is approximately 3.5-4 million units. With the
number of online portals like olx, carwale, cars24, etc., for buying and
selling cars, rapidly increasing along with the provisioning of extended
warranties, easier financial options, rigorous quality checks, etc., online
platforms have become a lucrative business.

•       The
Hindu Business Line in its January 16, 2018 article stated that OLX sells
approximately 72% of the pre-owned cars in the country, also implying that
Olx’s monthly sales are higher than the combined sales of two of the biggest
players of the automobile industry.

•       However,
it is important to note that most of the used cars in India are still sold and
purchased through the unorganized sector which takes up approximately 80% of
the total market for used cars. Unauthorized dealers, dealers who are not
registered, family and friends are not obligated to maintain sales data.

•       Unfortunately,
secondary data only gives a limited information picture of 60-70% online sales
and about 30% offline sales. Primary data would be required to provide a
clearer picture of the offline (both organized and unorganized) used cars sales
scenario.

•       Having
said that, my research also indicates that more and more consumers are being
attracted towards the convenience and availability of a variety of brands and
models that is offered by online platforms such as Olx. However, keeping in
mind that it takes significant time to change consumer sensibilities, there is
still a long way to go before an online platform becomes more successful than
an offline store.

•       Consumers
in India are known to use such platforms for research, yet will prefer making
purchase transactions offline.

•       RESEARCH
SUGGESTS THAT THE  SALES OF SMALL CARS
STILL DOMINATE THE USED CARS MARKET TAKING UP ALMOST 80% OF THE TOTAL MARKET
SHARE, EVEN THOUGH THE DEMAND OF UTILITY VECILES IS ON THE RISE.

•       Used
car market in India is undergoing a dramatic transformation, with the organized
sector gaining popularity among consumers. Unlike mature markets like Europe,
India has been undergoing a reverse in its demand for used cars over new cars.

•       More
Indian and global car manufacturers are entering the used car market as it
enhances their market penetration and boosts the business.

•       Upcoming
online platforms coupled with improving societal notions and purchasing power,
not only provide consumers with convenience but a wide variety of brands and
technology at fair prices.

•       Organized
players are forcing dealers in the unorganized sector to match their sales
quality standards, hence promoting professionalism.

•       Research
implies that in the coming decade, used car market in India might double in
comparison to the new car market.