Augmenting trust in used cars: How brands aim to organize the currently unorganized market

Split unevenly between the organized, semi-organized, and unorganized players, the pre-owned car market has grown 1.2 times the size of the new car market in 2019.

Updated: Oct 30, 2020 12:02 PM
volkswagen Tiguan AllSpaceSteffen Knapp, Director, Volkswagen Passenger Cars India with the Volkswagen Tiguan AllSpace

A car is a prized possession and a significant purchase made by an Indian household that is closely associated as a lifestyle choice and a trusted mobility companion. The rapid pace of urbanization, increase in disposable income of Indian households, and launch of new vehicle categories aided by multiple value propositions have driven the Indian car-buying behavior.

A substantial portion of these consumers, including first-time car buyers, prefer a pre-owned car as the stepping-stone towards buying a new car (move up from being two-wheeler owner to four-wheeler), as it allows them the perks of owning an affordable and quality personal vehicle. This sentiment is echoed by a recent survey by Ernst & Young, that found 57 percent of first-time car buyers were likely to buy a pre-owned car. In addition, customers also choose a pre-owned car to address their changing aspirations, it helps them upgrade to a premium product while being financially stable.

The pre-owned car market in India has been developing steadily over the past few years. Split unevenly between the organized, semi-organized, and unorganized players, the pre-owned car market has grown 1.2 times the size of the new car market in 2019, according to the Indian Blue Book (IBB). Although the organized segment has grown from 10 percent to 18 percent between 2011-19 (source: IBB), the unorganized and semi-organized players continue to dominate the segment which has led to a supply-constrained market.

Challenges faced by customers while buying a used car

Consumers can purchase pre-owned cars through various channels ranging from the traditional brick and mortar outlets to the new-age digital platforms. However, several issues such as misrepresentation of the real condition of the car or its history, unreliable paperwork, or lack of fair pricing are some of the factors that corrode consumer’s trust in pre-owned cars.

Unsuspecting and uninformed buyers end up with a poor purchase in regard to model and age of the car that brings them inconvenience and causes a financial loss, especially when they buy the vehicle from unlicensed dealers or sellers. In addition, there is no warranty option available on used cars unlike new cars in the semi or unorganized sector. Further buyers facing economic uncertainties and with a limited budget looking for a used car find no transparent financial support system in the unorganized sector.

das welt auto, volkswagen used cars

Consumers are now shifting towards organized sector

However, with the entry of mainstream OEMs in the pre-owned market, consumers can avail of certified used cars that assure quality, trust, and better customer experience in the organized sector. Along with credibility, organized players also offer uniformity and regulation in the otherwise haphazard industry. OEM-owned used car businesses offer professionally managed services along with value for money and customized propositions to customers in-turn enabling them to achieve their aspiration to upgrade to a higher segment with a pre-owned car through both online and offline presence. Hence, consumers can choose from a variety of pre-inspected and certified cars across small, mid, and large segments offering varied options like warranty, due diligence and easy finance options. On the other hand, even car sellers have realized the benefit of selling their vehicle through credible organized players to receive a fair and transparent price for the transaction, in comparison to other channels.

Organized sector instill confidence and trust amongst buyers and sellers of used car

Das WeltAuto, pre-owned car business of brand Volkswagen, a one-stop-shop for used car offers testing of the vehicle, expert evaluation and financial assistance all under one roof for the convenience of their customers. For consumers looking to buy, sell, or exchange cars, there are valuator apps powered by analytics that help sellers self-evaluate their vehicle and secure a fair price for the same. Today players in the organized sector are also providing expertise and assurance, along with services, accessories, warranty and service packages on their pre-owned models. To ensure confidence in consumers, multi-branded businesses offer thorough check-ups in accordance with a comprehensive 160-point checklist for due diligence on visual inspection, document scrutiny, system operations, test drive and check on vital components by trained evaluators.

Also read: Used car sales shoot up during lockdown as auto industry struggles for momentum
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OEM organized business ensuring holistic health and sanitization measure in used car

In the current prevailing situation, people are extremely careful of their everyday interaction with the outside world and instead seek a sanitized environment for the health and safety of their loved ones. Hence, for customers buying a used car at an OEM organized business can be rest assured of making a safer choice due to the sanitization procedures, social distancing protocols and recommended precautionary measures followed across various touchpoints to ensure safe and contactless delivery of the used car.

The overall care, dedication and practicality offered by established players like Das WeltAuto, of organized sector has been setting a new benchmark of efficiency for consumers looking to purchase pre-owned cars. While the demand for used cars is expected to rise in the near future and reach a volume of 7.2 million cars by 2022-23 (source: IBB); as new BS6 cars turn dearer and people turn towards accessible individual mobility due to health and safety reasons in the present situation. In order to sustain and augment this demand further, it is crucial for organized players to maintain the well-established value chain, continue building trust and innovate to address the needs of the evolving customers.

Author: Steffen Knapp, Director, Volkswagen Passenger Cars India

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.

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