Organized Used-Car Platforms Will Make Up 45% Of The Total Pre-Owned Market By FY25 : Survey

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

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The used car market in India will touch 8.2 million units by FY25 from 3.8 million units of FY21 forecasts a survey commissioned by Volkswagen India to Frost & Sullivan. The study titled 'Indian Pre-owned Car Market Study’, states the demand for pre-owned vehicles is constantly growing and by the financial year 2025, the ratio of used cars compared to a new car is expected to become 2.1x with the organized used car platforms accounting for 45% for the total used car segment in India.

Even with the New Car Sales slowing down due to the Pandemic 72% of the current owners indicated that the desire to own a car is the most dominant purchase driver. Meanwhile, with Social distancing and sanitization being the key drivers, 63% of respondents showed interest in owning a car, even if the shared mobility or public transport seems economical. 66% of the respondents perceived Car ownership as a matter of status. 46% of respondents also preferred the inherent flexibility of owning a car

Price continues to be the compelling factor, amongst current and intended customers followed by other factors such as comfort, features, and maintenance required. 66% of customers in tier 1 and 39% in tier 2 cities feel the price will become the topmost factor considered by potential buyers of used cars. In fact, 42% of intended customers in tier 2 markets believe that used cars give better value over new ones.

Mr. Ashish Gupta, Brand Director, Volkswagen Passenger Cars India said “Used car sales will see further growth as compared to new car sales. With the aim to tap this growing opportunity, we are relentlessly working towards strengthening our offerings for customers through our national pre-owned car network, Das WeltAuto (DWA). In addition, we believe that tier 2 markets will play a critical role in our used car business volumes and the customer insights from the study will further aid us in addressing their requirements through our customized solutions.”

In terms of the age of the vehicle, used car owners across all age groups preferred cars with an average age of 3.5 years. While 66% of potential customers prefer a warranty of at least one year in the purchase of a used car. Local dealers accounted for 40% of the primary sales channel for used cars, followed by 22% by individual direct sellers. The Study expects used car finance penetration to touch 35% by FY25 from the existing 21%, but Cash is still the King in this sector, with 50% of the respondents preferring cash transactions, 21% preferring online transactions, and 17% who preferred finance options.

"Growth in the Indian pre-owned vehicles market is driven by rural and tier 2 and 3 cities in India, especially with the entry of OEM-supported channels. This has not only increased transparency and trust in the pre-owned vehicle business but has also exposed potential buyers to newer generation vehicles with better safety, reliability, and quality," said Mr. Kaushik Madhavan, Vice President, Mobility (Automotive & Transportation) Practice, Frost & Sullivan


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