The used luxury car market in India is growing at double the speed of new luxury vehicles segment
The used luxury car market in India is growing at double the speed of new luxury vehicles segment. Growing prosperity among buyers, including increasing number of women buyers, demand from smaller towns, high disposable income and attractive price points see companies such as Droom and Truebil grow at manifold. According to sources, while the new luxury car market is growing at 12%, that of pre-owned, or used luxury car market, is growing at 22%. With the GST bringing in uniform taxation system, both sellers and buyers of used luxury cars are benefiting immensely.
One can buy used luxury cars such as BMW, Audi or Merc in a price band of Rs 10 lakh and Rs 15 lakh, which is equal to buying a top-end Honda City or Hyundai Creta, said Sandeep Aggarwal, founder & CEO, Droom, a leading player in this segment, which is recording 80% growth in the last two years.
“One of the key reasons behind remarkable growth trajectory is the pre-owned luxury cars that have become an attractive option for the aspirational buyers enthusiastic about driving a two-and-a-half-year-old BMW 3 Series over a new Skoda Superb. Presently, the used luxury car market is growing at double the speed of new luxury vehicles market,” Aggarwal said.
Shubh Bansal, co-founder & chief of marketing and growth, Truebil, another used luxury car player in the market, said: “Majority of these luxury used car purchases are from car enthusiasts, who love trying out different brands but don’t wish to shell out a huge sum for a new car. They prefer opting for used vehicles as the cost comes down considerably while the performance remains top notch. Plus, another advantage is each of the German giants – Mercedes-Benz, BMW, and Audi – has an assembly plant in India, which allow companies to keep their products affordable by availing lower taxes on assembled cars. This has also contributed to the growth in India market.”
According to him, the growth in used luxury cars market has increased to 22% compared to last year’s 12%. Droom’s Aggarwal claimed that the overall market for luxury cars in India is on an upward trail and it can be attributed to higher disposable incomes, better lifestyles and more evolved consumer aspirations. As per research firm IHS Markit, India’s luxury car market ranked 27th last year, which was a significant jump from its 48th position in 2007. Having said that, it is also true that the exorbitant prices, taxes and import duties make the purchase of a new luxury car near impossible for many, which in turn force the aspirational customers to look at used car models.”
According to him, “The biggest reason driving the growth of used luxury cars in India is the increasing purchasing power of the country’s service class that has increased manifold in the last two decades. Moreover, considering the fast-paced depreciating value of the luxury cars, the owners are always in a rush to upgrade by selling the used models. This means one can easily get a sparingly used Audi A4 or a BMW for the price of a top-end Honda City or a Hyundai Creta.”
“Wherein for online platforms like us, you will find multi-brands of vehicles, be it Mercedes, BMW, Audi, or Porsche. If we compare with regular car brands with online platforms, we get many options concerning brand and value,” said Bansal. “So, the choice of brands is one of the significant aspects. Moreover, using algorithms as well as technologies like AI, a customer can easily get or access to data-driven intelligent assessment of a car’s condition and current value, based on complex pricing models. Apart from these, improved insurance coverage, warranty and a host of other services (which are offered in new luxury cars) help customers go for used luxury cars. By FY22, we aim to achieve an annual revenue run rate of $300 million with 6,000 cars sold per month across eight cities.”
“We at Droom provide funding, insurance and guarantee on not only luxury cars but also on all the vehicles listed on our platform. We have an ecosystem tool which helps a buyer get a paperless loan approval on any used vehicle in just 30 seconds,” said Aggarwal, adding that best selling luxury models are BMW 5 Series, Mercedes-Benz E-Class, Mercedes-Benz C-Class, Audi A4, BMW 3 Series, BMW X1, Audi A6, Mercedes-Benz M-Class, Audi Q7, Jaguar XF. The reason is that these are premium cars that are in excellent condition and available at a much lower price than their showroom cost, he added.