How first-time buyers are driving pre-owned luxury car sales

The high rate of taxes, RTO/ registration fee, high-priced insurance policy of new cars has turned the wave towards the pre-owned luxury car market.

How first-time buyers are driving pre-owned luxury car sales

Given the physical opening of offices and industries after the pandemic, the pre-owned car segment is at the cusp of experiencing robust growth in the years to come. All the first-time buyers who had deferred their plan of buying a new car due to the emergence of rental cab services pre-COVID are reconsidering their chances to purchase their own car post-pandemic.

But considering the various hassles of buying a new car, the first-time buyers are ardently considering purchasing a pre-owned car rather than going for a new vehicle. Out of the total used car market, first-time buyers make up for nearly half of the used cars sold in India. Moreover, in 2021 during the pandemic, their share in the market further magnified and expanded by 8-10 % to compensate for the restricted availability of public transport which left the only viable resort of opting for personal mobility.

Most often belonging to the millennials group this set of emerging buyers harbor a desire to own a luxury car owing to their extravagant living and liberty of disposable income along with accessibility to financing options. It has widened their capacity to buy a luxury car but at the same time are conscious enough to not go overboard on their budget and hence, sensibly opt for pre-owned luxury cars to fulfill their dream.

The rising urbanization and nuclearization are further compounding for a favorable shift towards a luxury pre-owned car market. Recognizing the emerging group of enthusiastic buyers, many experts are of the opinion that the pre-owned car market in India will reach a compounded annual growth of 11% and is likely to reach a sale of 8.3 million units by the year 2026. Likewise, India accounts for close to 5 million used car sales around the year making it the fifth largest used car market in the world.

Looking at the favorable landscape, the luxury car segment is eagerly tapping on the opportunity and expanding into the used car segment to capitalize on the growth wave like never before. Flourishment of the used car segment is likely going to drive the business for the luxury car segment. For which the luxury car players are setting the stage to strategically build their presence in the pre-owned car space. They are coming up with innovative approaches to add to the experience of aspirational first-time buyers.

While ramping up their presence in the new vertical, they are offering refurbished cars with availability across their official channels. In order to amplify the reach, they are venturing into online platforms where they can offer a wide range of options and also list the availability of the cars. Additionally, the customers are given premium treatment just like the new car buyers.

Apart from the efforts made by the pre-owned luxury car players, various other factors are driving the growth of the segment. Pre-owned luxury cars have become a hit amongst first-time buyers in recent years because of their low ownership costs as compared to the new cars. This significantly lower cost is due to their high depreciation rate. In comparison to the other cars, the prices of luxury cars depreciate the most. A 3-4 years old used luxury car can be easily bought at a 40% lower price than its original purchase value.

Likewise, the high rate of taxes, RTO/ registration fee, high-priced insurance policy of new cars has turned the wave towards the pre-owned luxury car market. Also, the GST rates are promising for a used car in comparison to a new car. Along with this, the industry players are riding the digital wave and offering data monetization, in-vehicle connectivity, rental, subscriptions, charging facilities along with long-term maintenance packages to amplify their penetration into the market. Moreover, the short car ownership period amongst millennials is an important factor giving a boost to the luxury car segment. Even the government policies like the transition from BS-IV to BS-VI have encouraged people to opt for pre-owned luxury cars with alacrity.

The pre-owned luxury cars cater to the first-time buyer’s aspirations for a product that is similar to a brand new one. The services and the brand-new offerings give them a brand-new experience.

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.