In FY21, the used automotive to new automotive ratio in India was 1.4, however it’s projected to succeed in 2 by FY26, in response to the report ‘Used Car Market in India’ launched by Praxis Global Alliance. “While the Indian passenger vehicle market was valued at $32 billion in FY21 and is projected to grow at a CAGR of 8% till FY26, the used car market was valued at $18 billion in FY21 and is projected to grow at double the rate, at a CAGR of 15% till FY26,” the report famous.
“Rising motorisation rate, lowering vehicle replacement cycle, and increasing penetration of used car financing are the key growth drivers of the used car market,” Mohit Mittal, associate, know-how & web, Praxis Global Alliance, advised FE.
The used automotive market is benefiting from not solely monetary and regulatory modifications, but in addition behavioural modifications amongst customers submit the pandemic.
“There is an increasing preference for personal mobility post-Covid-19, and second-hand vehicles are no longer stereotyped with downsized social status,” added Mittal. “Then there is the safety aspect as well. Entry-level used cars are perceived to be safer than two-wheelers—less prone to accidents. New-age millennial consumers prefer experiences over ownership. Organic searches for ‘used car’ and other relevant keywords on digital platforms grew by 40% from January 2020 to January 2021.”
The report famous that the typical automotive alternative cycle has decreased from six years in FY11 to 4.5 years in FY20, and that has additionally fuelled provide of used vehicles available in the market previously decade.
Then there are regulatory causes which have fuelled progress of used vehicles. One, the revision of the GST price on used vehicles from 28% to 12-18% has made these extra inexpensive; two, BS-6 emission norms have elevated costs of recent vehicles, and so price-conscious prospects have been opting used vehicles.
Mittal stated the semiconductor scarcity resulting in lengthy ready intervals in new vehicles might even have presumably led to a bit of consumers shifting in the direction of used vehicles, that are available.
The rise of auto-tech gamers has additionally led to progress in demand for used vehicles. Earlier, the method was comparatively cumbersome, however now auto-tech gamers maintain all the things from begin to end. “The share of non-OEM organised dealers in used car sales is estimated to grow 30% by FY26 from 8% in FY21, and wholesale auctions are likely to be a significant component of the buying side (estimated to be 40% in FY26 versus 15% at present) as used car auto-tech players simplify the buying and selling experience,” stated Mittal.
The oldest gamers on this area are CarDekho (based in 2008) and CarCommerce (2009), after which got here Droom (2014), Spinny (2015) and Cars24 (2015). These auto-tech gamers present an enhanced worth discovery mechanism to used automotive consumers and sellers, and produce belief and transparency to the system.
The report added that the typical worth of a brand new automotive in India has elevated persistently at 2% CAGR since FY16. In FY16, it was $11,100 (about Rs 733,000, as on March 31, 2016), and elevated to $12,000 in FY21 (about Rs 876,000, as on March 31, 2021).
Prices of used vehicles, nonetheless, haven’t elevated so sharply—rising at simply 1.3% CAGR since FY16. In FY16, the typical used automotive was priced $4,300 (Rs 284,000), which elevated to $4,600 (Rs 336,000) in FY21.
The report added that used automotive gross sales are anticipated to develop at 15% CAGR in quantity until FY26, and develop into twice the dimensions of the brand new automotive market. “The used car auto-tech players will gain market share, more and more car sales will move online, and vehicle replacement cycles may reduce to less than three years in the near future. All this will further fuel growth of the used car segment,” Mittal stated. “The market may also see the emergence of new selling channels such as used car dealership trade-ins as auto-tech players drive sourcing with increased retail demand of used cars.”
Source: www.financialexpress.com”