Organised platforms will contribute 45% to the total pre-owned car market by FY25, from 25% currently, according to findings of a study commissioned by Volkswagen India through its pre-owned car business Das WeltAuto (DWA) and Frost & Sullivan.
As pre-owned cars are gaining momentum among customers, it is estimated that the used car market will touch 8.2 million units by FY25 from 3.8 million units in FY21.
As per the report, the demand for pre-owned vehicles is constantly growing and the ratio of used cars compared with new cars is expected to become 2.1x by FY25. And there will be a substantial rise in demand across the organised sector of pre-owned passenger vehicles business.
The findings said 94% of current owners are the final decision makers in the actual purchase of used cars, while spouses account for 57%. 66% of potential customers prefer warranty of at least one year in the purchase of a used car. The primary channel for used car purchase are primarily local dealers who contribute 40%, followed by 22% by individual direct sellers.
Even today 50% of customers prefer cash transactions. However, online payment mode is fast emerging as a preferred payment option with 21% customers opting for it, the report said.
Among current owners of used cars, 70% of respondents in the age group of 30-39 years preferred purchasing the mid variant of a car in comparison to base and top-end variants.
As the demand for individual mobility is increasing, 66% customers in tier 1 and 39% in tier 2 cities feel price would become the topmost factor considered by potential buyers of used cars. 42% of intended customers in tier 2 markets believe that used cars give better value over new ones.
Ashish Gupta, brand director, Volkswagen Passenger Cars India said, “The study highlights that the market share in the organised sector will touch 45% by FY25 from the current 25%. This is a clear indication of change in consumers’ preference in personal mobility.”
“Growth in the Indian pre-owned vehicles market is driven by rural and tier 2 and 3 cities in India, especially with the entry of OEM-supported channels. This has not only increased transparency and trust in the pre-owned vehicle business, but has also exposed potential buyers to newer generation vehicles with better safety, reliability, and quality,” said Kaushik Madhavan, VP, Mobility (Automotive and Transportation) Practice, Frost & Sullivan.