Slowdown can't slow pre-owned car sales

Slowdown in the new car market is not really worrying the second-hand car players, given many buyers’ preference for such vehicles, which is sustaining the current sales momentum.

Although this market is still unorganised and does not maintain proper data, industry players vouch the pre-owned car business is growing comfortably at 10-15%.

“The second-hand car market is not as bad as the new car market,” said Kunal Khattar, vice-president, Carnation Auto, a multi-brand retailer of certified pre-owned cars.

Improved quality of second-hand cars and perceived better value-for-money are fuelling the demand for second-hand cars, according to experts.

Demand is also heralding change. “The business of pre-owned cars is getting organised with more certified cars in the market. As ownership of a car is getting shorter, people have started preferring a used car with improvement in quality. Buying a second-hand car is no longer a taboo,” said Nagendra Palle, CEO, Mahindra First Choice Wheels, which will end this fiscal with 250 outlets. It plans to double the figure by 2016.

According to industry experts, only 16% of the overall cars sold in India are pre-owned. “There is a huge untapped potential in the used car market,” said Palle.

Not only this, more and more customers are now exchanging their old cars for second-hand cars, unlike in the past when buyers would sell old cars to part-fund purchase of a new car.

“This trend is growing with more trusted brands entering the segment. For example, a person who bought a six-year-old car, is now graduating to a three-year-old car. We also give exchange bonuses in such cases,” said Khattar. 

Sourcing good quality vehicles is proving a challenge for second-hand car retailers. Given that the new car market has been slow for the past 18 months, buyers are postponing their purchases. “The challenge is in procuring good quality cars, not beyond that. People are extending their ownership. We are, however, focusing on developing the right resources for sourcing the right cars,” said Khattar.

“Sourcing has always been a bigger problem than selling car for this market. Things can get worse if the slowdown in sales of new cars continues for some more months,” said Banwari Lal Sharma, assistant vice-president-product and search marketing, Carwale.

@Yugac