At a time when the mass car segment is going through tough times, the used car industry is doing well. According to the latest study on the sector, the Indian used car industry possesses a significant potential, with overall market expected to grow at a CAGR of around 22 per cent during 2011-2014 to reach 3.9 million units by 2014-end. The future market looks so promising that even luxury car manufacturers like Audi are looking to open more exclusive showrooms – it has built a pre-owned showroom at Gurgaon under its ‘Plus’ program, where it not only sells its own used cars but also offers vehicles from other manufacturers as well.
Has a ‘ProvenExclusivity’ pre-owned cars programme. These cars are available through the authorized Mercedes-Benz dealerships where the customer will also receive additional support in areas such as financing, documentation and delivery.
Taking advantage of this burgeoning business is Cartrade.com, which is connected to 1,200 used car dealers across India. The portal’s founder and CEO, Vinay Sanghi shares some insights into this growing trend in an interaction with financialexpress.com. Here are the excerpts:
How is the luxury used car market evolving in India?
Vinay Sanghi: The luxury used car space has seen top-gear growth in the last two years and the trend is only growing. While the luxury new car market is speeding ahead despite the slowdown, the luxury used car market is doing even better with an expected growth rate of 30-40% per year. Our own traffic growth (in the luxury segment) has been 100% in the last one year, and the industry growth in this niche has been around 50-60%. When individuals are unable to afford a luxury car due to high range factor, they opt for their second-best option which is used luxury cars. According to the latest study on the sector, the Indian used car industry possesses a significant potential. The overall market is expected to grow at a CAGR of around 22% between 2011 and 2014 to reach 3.9 million units by the end of 2014.
Since when has this trend been prevalent?
Vinay Sanghi: The used car market has come a very long way in India owing to a combination of several factors. The first company to venture into this field was Maruti Suzuki which introduced the concept of true-value stores. Owners of Maruti cars who wanted to sell their cars were assured of the best price. With the number of brands which are present in the Indian market, it is unlikely that the popularity of second-hand cars will ever diminish.
The customer is no longer dependent on friends and contacts to find a second-hand car for sale or purchase at an arbitrary price. Automobile manufacturers have put in place a clear assessment system whereby the price of the car is calculated based on depreciation, condition of the car, the number of times it has changed hands and so on. Easily understood by all parties, this method of valuation ensures that both the buyer and the seller get the best value from their purchase or sale.
What is the price range and demand for these cars
VS: The average price of a new luxury car ranges anywhere between Rs 30 lakh and Rs 50 lakh, while the same in used car segment commands a price of around Rs 17-25 lakh, which is quite affordable for the new set of emerging buyers who want to enjoy these cars but don?t want to spend as much as they would have to on a new car.
The demand of these cars is definitely going up as manufacturers like Audi and Mercedes have also put similar programs in place.
Who are the buyers and sellers of luxury used cars?
VS: The upwardly mobile Indian middle class is increasingly headed for the ?affordable? pre-owned luxury four-wheelers. Typically, business class people who already own a new Rs 15-20 lakh car and looking to buy luxury for status are the buyers in this segment. It has aspiration value and people believe they have arrived in life when they buy such a car.
The buyers and sellers are in the age groups of 25 to 45 and are from high-income groups.
Future plans of Cartrade.com…
VS: We are already the leading auto portal in India and want to build on this leadership. The market is still at an early stage and we feel that there is a fantastic opportunity for growth here which we hope to capitalise on.
