Expanding Horizons of Used Vehicles, Equipment Industry in India
Sameer Malhotra, Chief Executive Officer, Shriram Automall India Ltd, 0
For understanding the boom in the used vehicle industry, we must comprehend different factors that are responsible for increasing both the demand and supply in the market. At first, we expect higher numbers in the FY2022-23 due to growing demand among the middle-class consumers across the country. Few years back, Indians considered used vehicles & equipment with dubious mind. But recently, there are paradigm shifts in mindset as customers are considering ‘Used’ as the new ‘New’ due to several advantages over new vehicles.
The next factor which is boosting the craze of used vehicles in India is the falling ownership duration. Ove the years, average ownership period of a vehicle is reduced to three to five years from seven to eight years. This calls for the ‘value-heads’ to consider purchasing a used vehicle or equipment with almost all the latest features at much lower price. Previously, used vehicle meant low quality vehicle with no residual value but now, you can even get a used vehicle of previous year registration at a great price point.
Reduced ownership period is also keeping the supply of vehicles in the used market leading to the availability factor to play its part. With easier and wider range of vehicles & equipment models available, potential buyers are flooded with choices.
Furthermore, organized players like Shriram Automall India Limited, are taking advantage of the continuous supply of good-quality & good-condition used vehicles and offering them to their customers at well-organized offline facilities, advanced online portals and mobile apps with associated services for improved purchase experience.
Another factor that I would like to put forward is the growing trend of digitization in the used vehicle industry that is attracting more new-age buyers towards used vehicles. Speaking about the cars, according to various industry sources, over 4.4 million units of used cars sold in India in the last financial year which is 1.4 times that of new car sales of a little over 3 million units during the same time span. As per certain estimates, the new to used vehicles & equipment sales of all the other segments stands around 1:1 in the present time and are expected to grow with time. Of this volume, most of the contribution is done by the unorganized sector as organized used vehicle sector is
Earlier, no finance options were available for the used vehicles and the only way to purchase used vehicles was to get through onetime payment method which discouraged purchases in middle-class families. But tides have turned because a number of public & private sector banks along with NBFCs are offering loans for used vehicles. This move has not only boosted the sales of used vehicles but also provided the affordability factor to the used vehicles across all the segments. Finance options on cars and two wheelers are easily available and other segments are catching up slowly.
There is a great potential in the used vehicle market especially for the organized sector because new-age buyers look forward to each and every detail of the used vehicles of their choice right at the comfort of their homes before going out to purchase
Indian used vehicle & equipment market is still in a nascent stage with a great potential. When we speak about the used vehicle market of developed countries like USA and Europe, the new car to used car sales ratio stands around 1:3. As the used vehicle market expands, India will catch up to the global trends in the near future.
Moreover, exponential hikes in the price of Internal Combustion Engine (ICE) vehicles, steep initial cost of electric vehicles and still catching up electric charging infrastructure in the country is causing stagnation in the research and shortlisting process of potential buyers. These buyers, for time being, are picking up used vehicles to wait for the Indian automotive industry to go in a firm direction before investing into a new vehicle.
Being at the helm of India’s Largest Phygital pre-owned Marketplace of used Vehicles & Equipment, I’m pretty sure of the fact that used vehicle industry is on the path of aggressive expansion and it won’t be long before we will witness ratio of new vehicle to used vehicle sales to touch nearly 1:2 from current ratio of 1:1.4. This would mean for every 10 new car sold, 20 used cars will be sold as the market grows. There is a great potential in the used vehicle market especially for the organized sector because new-age buyers look forward to each and every detail of the used vehicles of their choice right at the comfort of their homes before going out to purchase.
Sameer Malhotra, Chief Executive Officer, Shriram Automall India
Sameer has over three decades of experience and has built a strong foundation for the exchange of pre-owned automotive, equipment, gold and property. A veteran in the commercial vehicle and infrastructure /construction equipment industry.