Transforming automotive aspirations of India in 2020
Indians moving to pre-owned cars and bikes amidst economic slowdown
The pre-owned car industry is doing well today as consumers continue to aspire for upgrading their lives amidst the Indian economic slowdown. In this case, pre-owned cars offer a distinct pricing advantage versus new ones. Data from OLX platform suggests that pre-owned cars, as good as new (termed bas unboxed cars), can be almost 20-30% cheaper as compared to new cars.
While the new-car market witnessed a muted single-digit growth in FY18-19, the market for pre-owned cars grew at an impressive rate of 15%. Rising inventory, economic slowdown, regulatory changes, escalating international trade woes, and industry developments meant fewer sales of new cars even during the festive season. The performance during the festive season period of August-November 2019 will be critical to gauging the health of the new-car market, and the industry waits with bated breath. The market for pre-owned cars, on the other hand, is poised to continue to grow healthily, driven by steady and increasing customer appetite.
In times of tempering economic growth, customers tend to scout for value deals, and defer purchasing new items. This is a catalyst for the rising sales of pre-owned cars; pre-owned cars can be bought at 20-30% lower costs compared to their newer counterparts. Coupled with the key role technology is playing and will continue to play in making the market more organised, makes the market well positioned to continue to grow in the future. The pre-owned car market is currently estimated to be $ 14 billion, and OLX estimates that it will have risen to $ 25 billion by 2023. At 1.4 times the size of the new-car market, pre-owned cars currently comprise a majority of the overall automotive sales in India and will have touched over 5 million units by 2020 and 6.6 million units by 2023.
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