With rising disposable incomes & soaring aspirations, the second hand car market is on a roll
spirations have led man to the moon! The quest of being
the best among peers is what spears a man ahead of the race. But all these desires come with lots of constraints – lack of finances being one of them. One such aspiration that has remained long unfulfilled for many Indians is the desire to own a family car. But no more! The second hand car market has made all those dreams of driving an opulent vehicle come true. The growing used car market across the country in the form of both organised and unorganised players is a testimony to the vast potential of this segment.
According to the Society of Automobile Manufacturers in India, the used car market currently in India stands at over one million units, almost as big as the new-car market (1.3 million units). But the used car market in India is highly unorganised, with the organised players accounting for just 20-25%. The main organised players are Maruti (True Value), Hyundai (Advantage), Ford (Assured), Mahindra (Automart India) & Honda (Auto Terrace). The situation is however, completely different in developed markets like the US and Europe, where organised players have grabbed nearly 90% of the used-car market pie. “Consumers’ decisions are fast getting influenced by the quality of after sales service and the value addition. An organised channel definitely adds to the value proposition with quality assurance through warranty,” assures Nikhil Kumar, General Manager Marketing, First Choice, M&M. Buying decision of a consumer really begins with scouring the used-car market for the best bargains. And it’s a known fact that very few Indian buyers pay an expert to evaluate the vehicle and mostly rely on personal mechanics and friends. Thus, a decision of going to an unorganised player might result in a redundant purchase.
One thing that surely brings both the organised and unorganised players onto a common platform are the kind of bottlenecks and hurdles that the Indian used car industry is facing. Soaring oil prices, hardening interest rates, imminent entry of Nano et al, are making the ride bumpy and uncomfortable. Discounting the competition on this front, Ravi Bhatia, Chief GM, Sales & Support, Maruti Suzuki True Value asserts, “Nano will only make the market more lucrative. Also, the price of it is yet to be finalised, so the end picture can be totally different.” What’s more? The consumers in this segment have smartly shifted to CNG vehicles to balance the oil price rise crisis. “The recent hike in CRR by 25bp and Repo Rates by 50bp is expected to push the interest rates higher might impact demand of this auto segment,” explains Vaishali Jajoo, Automobile and Transportation Analyst, Angel Broking. However, on the flip side, since the second hand car has a higher interest rate than a first hand car, this might deter consumers.
Nonetheless, the industry is eying an unprecedented growth to support the shift from two-wheelers to four-wheelers or to a higher model. “Second hand car market is growing at 19% and the new car market is growing at 12%. With this outlook, used car market would overtake the new car market by 2012,” explains Bhatia of Maruti True Value. Be that as it may, the fast growing used car market has grabbed the eyeballs of at least three global players who are planning to park their moolah and set shop here. Japan’s Gulliver International, Britain-based Manheim & a Dubai-based operator are expected to set up local operations on the Indian shores. Rising interest rate and oil prices, notwithstanding, increasing income levels & soaring aspirations is sure to fuel the used car market to hitherto never before seen heights.
spirations have led man to the moon! The quest of being
the best among peers is what spears a man ahead of the race. But all these desires come with lots of constraints – lack of finances being one of them. One such aspiration that has remained long unfulfilled for many Indians is the desire to own a family car. But no more! The second hand car market has made all those dreams of driving an opulent vehicle come true. The growing used car market across the country in the form of both organised and unorganised players is a testimony to the vast potential of this segment.According to the Society of Automobile Manufacturers in India, the used car market currently in India stands at over one million units, almost as big as the new-car market (1.3 million units). But the used car market in India is highly unorganised, with the organised players accounting for just 20-25%. The main organised players are Maruti (True Value), Hyundai (Advantage), Ford (Assured), Mahindra (Automart India) & Honda (Auto Terrace). The situation is however, completely different in developed markets like the US and Europe, where organised players have grabbed nearly 90% of the used-car market pie. “Consumers’ decisions are fast getting influenced by the quality of after sales service and the value addition. An organised channel definitely adds to the value proposition with quality assurance through warranty,” assures Nikhil Kumar, General Manager Marketing, First Choice, M&M. Buying decision of a consumer really begins with scouring the used-car market for the best bargains. And it’s a known fact that very few Indian buyers pay an expert to evaluate the vehicle and mostly rely on personal mechanics and friends. Thus, a decision of going to an unorganised player might result in a redundant purchase.
One thing that surely brings both the organised and unorganised players onto a common platform are the kind of bottlenecks and hurdles that the Indian used car industry is facing. Soaring oil prices, hardening interest rates, imminent entry of Nano et al, are making the ride bumpy and uncomfortable. Discounting the competition on this front, Ravi Bhatia, Chief GM, Sales & Support, Maruti Suzuki True Value asserts, “Nano will only make the market more lucrative. Also, the price of it is yet to be finalised, so the end picture can be totally different.” What’s more? The consumers in this segment have smartly shifted to CNG vehicles to balance the oil price rise crisis. “The recent hike in CRR by 25bp and Repo Rates by 50bp is expected to push the interest rates higher might impact demand of this auto segment,” explains Vaishali Jajoo, Automobile and Transportation Analyst, Angel Broking. However, on the flip side, since the second hand car has a higher interest rate than a first hand car, this might deter consumers.
Nonetheless, the industry is eying an unprecedented growth to support the shift from two-wheelers to four-wheelers or to a higher model. “Second hand car market is growing at 19% and the new car market is growing at 12%. With this outlook, used car market would overtake the new car market by 2012,” explains Bhatia of Maruti True Value. Be that as it may, the fast growing used car market has grabbed the eyeballs of at least three global players who are planning to park their moolah and set shop here. Japan’s Gulliver International, Britain-based Manheim & a Dubai-based operator are expected to set up local operations on the Indian shores. Rising interest rate and oil prices, notwithstanding, increasing income levels & soaring aspirations is sure to fuel the used car market to hitherto never before seen heights.
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