It is the sheer size of the country’s used two-wheeler market, which is 1.5 times of the newly purchased market, that is driving two-wheeler manufacturers to tap it. The latest to join the bandwagon is niche bike maker Royal Enfield. According to analysts, even if 5% of the potential is tapped it offers huge volume opportunity.
In fact, at an estimated 30 million units a year, India’s used two-wheeler market is larger than the combined new two-wheeler market of Latin America, ASEAN and Africa.
The Chennai-based middle-weight bike maker has marked a re-entry into this space with a new brand name Reown. It had earlier forayed with the brand Vintage in 2018 that sold pre-owned, refurbished and restored motorcycles of Royal Enfield.
B Govindrajan, CEO, Royal Enfield said, “We see Reown as an initiative to address the issue of accessibility and trust that customers have when purchasing pre-owned Royal Enfield motorcycles”.
Though the segment is highly unorganised and fragmented, several two-wheeler makers have tried to ride their way in. Hero MotoCorp and Honda Motorcycle and Scooter India, two of India’s biggest two-wheeler makers, had entered this space several years ago.
While Hero relaunched itself in 2018 with the brand Hero Sure Honda has been running its business under the brand Best Deal for more than 8 years. Both these ventures have been low key and neither of the companies have shared any updates.
Suzuki Motorcycle India, Harley-Davidson, Ducati, Kawasaki and Triumph also ventured into the pre-owned segment. However, there have been exists among these players owing to muted response from the consumers.
“In the used car market, only 15-20% is organized. This rate is next to nil in the used two-wheeler market. But even if 5% of the market is tapped it represents a huge volume opportunity,” said a Mumbai-based automotive consultant.
India’s new two-wheeler market is dominated by the entry level (100cc) and commuter (125cc) category. The market for such bikes is mainly in the hinterlands and semi-rural where sale-purchase transactions are done in cash and in an informal manner, say market experts. Moreover, such bikes carry wafer thin margins.
The urban market however has evolved quickly to move to premium, higher powered bikes and has a comparatively larger stock of such bikes. Since the margins on such bikes are higher because of their purchase price, two-wheeler making companies have been inclined to limit their presence in these markets.
“Hero had entered this space in the late 90s and subsequently it got canned. They entered again in 2018 but there is hardly any news about it. Same is the case with other manufacturers. This shows that it is easy to enter the space but having a long-term sustainable business is not easy,” said an analyst based in Bengaluru.
According to a CRISIL-OLX study, the pre-owned two-wheeler market is projected to reach to about 38 million by FY28, growing at a compounded annual growth rate of 5-7% during FY23 to FY28.
“The pre-owned two wheelers also has significant potential and has a long way to go especially with changing powertrain dynamics,” Hemal Thakkar, senior practice leader and director, market intelligence and analytics, CRISIL said in his Linkedin post.
