More and more first time car buyers in India opting for a used car
The Indian auto industry is in the throes of falling sales over past two years. But, this has had no effect on the used car industry. The second hand or used car industry is seeing increased demand with several first time buyers considering second hand vehicles.
Leading automakers in the country such as Maruti Suzuki, Toyota Kirloskar and Mahindra & Mahindra have all noted increased growth in used car business. A recent study by Frost & Sullivan confirms that for every new car, there is one used car sold. Thus, for the first time, the ratio for new car buyers to used car buyers in India is 1:1.
Increased sales of 36%, 20% and 20% in 2014 were noted at Maruti’s used car unit True Value, at Toyota’s UTRUST division and at M&M’s Mahindra First Choice respectively. This increased demand for second hand cars is primarily due to high inflation, high fuel costs and rising interest rates. Car buyers have been noted to delaying purchases of new cars and opting for two wheelers or used cars instead while the youth in the country are jumping segments and opting for used sedans or premium hatchbacks over entry level cars.
Global market research firm JD Power has revealed that percentage of first time car buyers opting for used or second hand vehicles has increased to 17% in 2014 as against 4 % in 2011, in India. This is a huge jump, especially when the auto industry is struggling. (In 2013, Indian auto industry registered decline in sales for the first time in eleven years.)