The used car market in India is expected to reach $40 billion by the end of this year. Tier 1 cities like Bangalore and Mumbai are among the major contributors to this growth as the sales of used cars in these cities is growing by 87% every year. While some part of this industry is still running in an organised way, entry of pre-owned vehicle platforms has opened doors for organised business opportunities. In this article, we will discuss why the rapid sale of used cars is proving to be a magnet for investors.
Why is the demand for used cars increasing ?
The reasons for the increased demand for used cars in India have been highlighted below:
1. Cost-Effective Option
Metropolitan cities are witnessing rapid growth in purchasing power. An aspirational class of car buyers has emerged who want to experience the thrill of driving luxury and premium vehicles. However, the increasing cost of luxury cars and high depreciation associated with the purchase of new cars is making them turn towards the used cars.
The car enthusiasts are not only going for regular cars from Tata Motors, Maruti Suzuki, Volkswagen, Skoda, Kia, Toyota, etc. but they also prefer the pre-owned luxury cars from BMW, Mercedes Benz, Audi, Land Rover, Jeep, and other brands.
The used cars are easily available at 40 to 50% less price as compared to the new ones. Also, organised players in the used car market ensure the easy availability of high-quality and well-maintained cars. This makes used cars a great deal for car buyers, especially those who are looking to buy their first car with a limited budget.
2. No Waiting Period for Used Cars
The increase in the sale of used cars in Bangalore is also due to the fact that the pre-owned cars are easily available. Once you complete the formalities such as RC transfer, you can bring the car home immediately.
On the other hand, the waiting period for some car models can be up to 6 months or even more. This is making the individuals buy the used car models that are available in good condition.
3. Easy Availability of Used Car Loans
Most second-hand car platforms provide used car loans at competitive rates. This makes it easy for car buyers to finance their used car purchase.
For instance, organized used car retail platforms provide used car loans starting from 12.99% are easily available with tenure options ranging up to 60 months. Due to the easy availability of financing options from organised platforms, it becomes easy for you to purchase premium pre-owned cars.
4. Reduced Ownership Periods
Car enthusiasts like to explore the ride-quality, comfort, tech-related features, and performance of different cars. This has reduced the average ownership period of cars which has eventually increased the influx of used cars, especially in metropolitan cities like Bangalore. This makes used cars from all brands accessible to the car buyers which eventually helps the pre-owned car market to grow.
5. Growth of Tech-Enabled Platforms
The growth of the organised used car market is also because of the emerging tech-enabled pre-owned car platforms. These platforms are making it easy for interested buyers to explore second-hand cars through their dedicated website and mobile app.
Key Investment Opportunities for Investors
The question remains how can investors benefit from the increasing demand for used cars in India. While the used car business grows in the country, young entrepreneurs working in the car refurbishment, insurance, and finance sectors can benefit hugely.
Garage owners can offer maintenance packages for used cars to enhance their revenue. Non Banking Finance Companies (NBFCs) can provide easy loan options for used cars to meet their targets.
Even those interested in starting a used car platform can find this a good opportunity to make good money by selling second-hand cars. It is because of the high margin involved in selling pre-owned cars. They just need to develop processes to evaluate the cars on the basis of their overall condition, performance, ride-quality, and other factors. Once that is done, they can target high-value customers looking to buy premium cars at good rates.
Final Thoughts
These were a few reasons behind the growth of the used car market in India. While the demand for used cars is growing, the buyers trust only the reputed second-hand car platforms. This behaviour is contributing to the growth of the used car market across the country. They inspect the used cars comprehensively with their 200-point checklist that ensures that the car buyers get thoroughly inspected and well-maintained cars. Also, with services such as fixed price assurance, money back policy, and free RC transfer, organized used car platforms are hugely contributing to the growth of the organised sector in the used car business.
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