These days many first-time buyers prefer to purchase pre-owned cars for a host of reasons.
By Sameer Malhotra
Buying a car is a significant decision because you don’t buy a car every year and would like to use it for at least a few years. These days many first-time buyers prefer to purchase pre-owned vehicles. It is true that buying the right used car can be more difficult than buying a new car. However, a pre-owned vehicle, in most parts of the India, satisfies one of the most important family aspirations — affordability of the car.
Although affordability is a big reason, but it may not be the only one. Many people go for pre-owned cars because these are value for money. You can get a good vehicle at a relatively low price. For instance, a top-selling sedan/hatchback, which is 4 to 5-year old with less than 60,000 km on the road, can be bought for around Rs 2.5 lakh. These small cars cost almost half as much the new ones.
An advantage of buying a used car is that these days many of them are fairly new. Earlier, first owner of a car would like to sale at least after 72 months. This time period has now come down to around 48 months. This means that you can buy an ‘as good as new’ car at a much lower price and use it for longer.
Benefits of Buying a Pre-Owned Car
Buying a pre-owned car has many advantages and the most prominent ones are price and variety. Used cars are inexpensive and are available in many models. With great options available to choose from, buyers are at advantage in this segment, from where they can buy cars that are available in inventories and may not be available in the market. Also availability of a wide collection of used cars provides customers with great value for money products.
Variety – It is possible that you might want a model that is not available in the new car market; however you may find the same model as used cars. This makes you not limited at a particular make or model but to explore from the wide line up available.
Price – Price is the most important benefit of investing in a used car, from saving your money to upgrading your choice to upper model is only available in the used car market. The price gap between used and new cars is certainly much, which in turn gives the freedom to the consumers to choose from different models and save their money.
Less Depreciation – Cars lose their value over the time or when travelled a mile. Much of the cars value is declined in the first year of its existence and consecutively goes on decreasing. But with used car, this is not the case, as depreciation does not hit you because it is a pre-owned vehicle. Also, there is less of mental stress associated with the used car as compared to new one.
Avoiding Extra Costs – Extra costs associated with the new car is the addition of money involved for features and fees that are implied and are to be paid by the customer. So, whenever you opt for a pre-owned car this extra fee can be avoided, which saves the money of the customer.
Currently, 1.2 used passenger vehicles are sold for every new one sold in India. As per the trend, around 36 lakh used passenger vehicles were sold across India in 2016-17. Thus, it makes the lucrative size of the market around Rs 1 lakh crore. However, the organized used car industry is still in nascent stage as the pre-owned car industry is largely dominated by unorganized players.
Over the time, India’s pre-owned automobile industry has also evolved significantly. Earlier, most of the pre-owned cars sales used to happen through C2C (Customer to Customer) channel or personal sources or unorganized brokers/dealer. But now the scenario is completely different, and people’s preferences have been changing with times. Emergence of organized players like Shriram Automall has given the pre-owned automobile industry a new dimension to expand significantly. A wide variety of cars through organized players, easy finance options, and hassle-free documentation along with clean history are helping the industry to grow. Currently, the used car industry is growing at a CAGR of 15% in India.
In the coming days, organized players will play a pivotal role to win the trust of customers through their professionally managed and transparent platforms to buy and sell used cars.
(The author is CEO, Shriram AutoMall India Ltd)