Until a decade ago, buying pre-owned cars was for those willing to go through multiple tedious processes involving countless interactions. Navigating through the unorganized market proved a herculean task for most, the process involved different legs from dealing with sellers to dealer hopping to negotiating prices and finding the right mechanic for a quality check. Leaving aside the countless trips one had to undertake for the right documentation, there was never a guarantee that you would end up with a lemon or a cherry.
The last few years however are a different story; consumers have now embraced the ongoing digital transformation more than willingly and the idea of buying cars online is no longer farfetched, just another step forward in this progressive age. The industry, in parts, has been adapting to digitalization – it is interesting to know that Millennials and Gen Z have an increased appetite for buying pre-owned cars and young buyers account for 80% of online transactions. Furthermore, car buying is no longer a man’s sport with an increasing number of women embracing the idea of owning their vehicle. As per the recent “Future of Mobility India 2022” report, when compared to 2020, women buyers grew by a significant 80% in 2021.
Propelled by continuous technological advancements in the last few years, the pre-owned car market has transformed by leaps and bounds. Pre-owned e-commerce brands are now working towards analyzing and fulfilling the gaps of this largely unorganized sector to provide consumers with a rich, seamless, and interactive online buying experience. The organized sales channels of the used-car market in India have witnessed a substantial increase in the last few years. Today, India is considered one of the highest potential markets for pre-owned cars, as the car ownership continues to stay at a meagre 2% indicating only 2 out of 100 people are car owners as compared to our international counterparts.
Till a few years back people felt embarrassed about buying used cars, however, the overall sentiment towards the category has seen a drastic shift. People no longer feel shy about buying a used car, rather it is considered a more practical option. The pandemic accelerated the advancement of digitization and increased internet penetration across the country, which is evidence of how the economy has remodelled itself to operate and execute. As per a recent IPSOS study, 40% of the respondents would prefer to buy their next car online. Customers adore the idea of having a wide assortment of thousands of cars in their pocket without having to go from one dealership to another in search of what they want and being able to shop from the comfort of their homes or on the go via their smartphones.
The Indian pre-owned industry is at the cusp of an offline to online shift. The advantage of a better experience via easy-to-use online platforms is enabling an ever-increasing number of consumers to opt for affordable pre-owned cars.
Nowadays, buying a used car is just as seamless or even easier than buying a new car. A buyer can book a test drive or avail financing of the car completely online, bringing in the much-needed consolidation into a highly fragmented market. Used car platforms now offer finance options as per the needs of the consumer, as per our recent “Future of Mobility India 2022” report around 76% of millennials availed financing for buying a pre-owned car. In addition to this, with brands offering 0% down payment on car financing, a 3X increase in the total amount of loan disbursements in 2022 is expected.
The Indian pre-owned market is worth 25 billion dollars and we expect the market size will grow to 50 billion dollars by 2025. The pre-owned car market in India is witnessing progressive gender shifts, a rise in upcoming metro markets, a growing preference for pre-owned vehicles and a cumulative upswing in pre-owned car buyers opting for financing. This consistent upward trajectory is a byproduct of the sector becoming more organized and the ever-growing demand for personal mobility, coupled with the consumer-focused innovations in the sector and we have a recipe for success.
This article is authored by Kunal Mundra, CEO India, CARS24. All views expressed are personal.
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