The semiconductor shortages have hit the global automotive industry in a big way and the ever-growing waiting periods for vehicles have made the situation even worse, there lies a blessing in disguise for another automobile arm, the pre-owned cars market. In fact, there is a significant demand in the used-car segment. According to a CRISIL study, the pre-owned car market is expected to reach a market size of over 70 lakh vehicles by 2025-26, up from 38 lakh vehicles in 2020-21.
The new-age consumer is thoughtful, and so exists the used cars sector. The long waiting period, and increase in prices of new vehicles, has thus made owning a luxury car at a heavily discounted cost a lucrative alternative. This, however, comes with a risk factor, especially in the unorganised sector. Hence, there have been new players entering the luxury used-car segment to target the customers. In a conversation with Express Mobility, Sumit Garg, Co-founder, and MD, Luxury Ride shares his views about the pre-owned luxury car market trends.
How has the global chip shortage impacted the used-car industry? Do you think this has made a way to create that shift to pre-owned cars?
Though there are many factors cumulatively driving the growth of the pre-owned car industry, the global semiconductor shortage can be considered to be the major factor leading to the rapid growth of the segment.
Also, given that the new car prices are soaring as a consequence of the chip shortage, customers are acutely considering pre-owned cars coming in the same price bracket as the new car that too without any compromise on the performance of the car.
What has been your turnover for the last three years? What is the average sales, ticket size, and the most expensive vehicle sold?
Though the market for the past couple of years has been disruptive, still we were able to clock a decent growth of 45 per cent annually where we have sold approximately 1,500 cars and serviced around 14,000 cars since our inception.
What is the average turnaround time from acquiring a vehicle to the final sale?
The average time span for procuring and selling a pre-owned luxury car takes approximately 6-8 weeks. At Luxury Ride we ensure a value chain across the lifecycle with our 100 per cent cars that are supported by in-house service, 6-months engine transmission warranty, and one year buying back facility. We enable all India sourcing of vehicles that have undergone through 150 point checks and OEM quality repairs.
The pre-owned car sales segment is still very unorganised. How do you think the industry will mature up?
Considering that the pre-owned car industry is growing at an exponential rate, it is even more important than ever before to bring about revolutionary changes in the market. Though many organised players emerged in the pre-owned car sector during the pandemic, they still make up for only 20 per cent of the market.
It is the need of the hour that organised and unorganised assets are brought together to provide the best of both to the consumers.
The association will help the organised players and even start-ups to take leverage of the strong networking of the unorganised players and build their reputation in the market. Likewise, the unorganised players can benefit from the technological advancement at the disposal of the organised players.
There is a significant development taking place in the electric vehicle segment especially the luxury or premium segment. Do you think there will be a separate pre-owned market for EVs in the near future?
The EV industry is in the nascent stage, and it will take some years for EVs to fully overtake the mainstream market.
Right now, the focus must be on investing in the right technology for establishing a robust infrastructure for EV resilient country. However, given the efforts being made the future seems promising for the EV sector which will be followed by the pre-owned EV segment riding the growth wave likewise.
What are your future plans for Luxury Ride?
Currently, at Luxury Ride we have 50-55 cars in the inventory at any given point in time. We want to increase this number to 100 cars by the end of the year. Along with this, we have plans to expand our offerings and services to new markets. We are working towards growing our business three times by catering to customer needs with our seamless technological interface.
At present how many outlets do you have, any future expansion plans?
Today, Luxury Ride has showrooms in 7 cities across north India namely, Delhi, Gurugram, Karnal, Chandigarh, Jaipur, Dehradun, and Ludhiana, and aspires to add 50 more showrooms in the next 4-5 years. The showrooms are a mix of company-owned and franchise operations. Luxury Ride focuses on more premium brands like Audi, BMW, Mercedes-Benz, Porsche, Volvo, Jaguar, Lexus, Mini Cooper, Volkswagen, Land Rover, Bentley, and other exotic cars between the price range of Rs 12 lakh to Rs 2 crore.
In the future, we want to organise the pre-owned luxury car market by raising the service standards under one roof. Luxury Ride aims to build an integrated platform for end-to-end pre-owned luxury car solutions.
What is the overall growth rate for the pre-owned luxury vehicle market? What is the split between demand from urban customers versus tier 2-3 markets?
As per the 2021 estimate, India’s pre-owned luxury car market is clocking a 15-20 per cent growth annually where the sales volume averages over 60,000 units a year. Given the digital transformation happening, experts are estimating that the total sales of the sector will leap from 20 per cent in FY 2021 to 30 per cent in FY 2026.
If we look at the demand portrayed by urban and tier 2 and 3 markets, metro cities have always been the hub attracting large transactions in terms of selling and purchasing pre-owned luxury cars. Though, till date, the metro cities register the maximum purchase, over time the market is making inroads into the tier 2 and 3 cities namely Jaipur, Chandigarh, and Dehradun to name a few. The masses in these cities are showing a preference for high-end premium cars with unmatched performance that comes within their budget.
Can you share some insights on the latest trends that you have witnessed?
If we look at the current trend, the premium sedan owners like Toyota Corolla or the Honda Civic are upgrading to pre-owned luxury cars. Even people owning SUVs within the price range of Rs 15-20 lakh are joining this trend of shifting to a more premium pre-owned luxury car. It has been observed that consumers already owning cars like Toyota Innova or Mahindra XUV500 are eying pre-owned models like Mercedes Benz CLA and C Class, the Jaguar XE, and the BMW X1 all in the range of Rs 25-35 lakh.