Used car sales cross 40 lakhs in India during FY 2019
A recent study revealed that the used car market crossed the 4 million unit mark in FY18-19, outperforming the new car market.
Mahindra First Choice Wheels has undertaken a study of the pre owned car market in India. Their third edition of the ‘Indian Blue Book’ has been published and draws attention to the steady growth in the pre owned car market in the country. The study concludes that in FY18-19, the used car market in India crossed the 40 lakh unit mark, while the new car market stood at 34 lakh units in the same period.
The rate at which the used car market in India is growing, it is expected to cross the 70 lakh mark by FY22. There are several factors that have caused this pre owned car market to gain in importance. Firstly, it is the downward revision in GST rate which has been reduced from 28 percent to 12-18 percent on used cars.
Secondly, India gears up to enter the BS VI period from April 2020. This shift has increased the value of the used car market as the cost of new cars escalate following added investments in updating engines to comply with new norms. The decision of Maruti Suzuki to stop production of diesel cars from April 2020 will also add further impetus to the used car markets.
The 2019 edition of Indian Blue Book also draws attention to the organized players in the used car market in the country which increased from 10 percent in FY11 to 18 percent in FY19. The survey conducted by consulting firm PremonAsia, which spanned 1500 respondents in 26 cities concluded that the used car market sees 62 percent of customer opting for a used car over a new car due to its affordability factor. 23 percent buyers prefer a used car for short distance travel while 15 percent were value seekers.
It was also found that buyers prefer to buy cars which are upto 5 years old though the market sees more sellers of cars above 5 years of age which in turn sees a major chunk of used cars being sold off at zero profit or even losses. Major buyers in this used car segment opt for hatchbacks while 25 percent opt for sedans and only a small percentage of buyers seek used cars in the C or higher segments.
Noting this outstanding demand, and registering 40 percent growth in FY19, Mahindra First Choice Wheels now targets 60-70 percent growth in the coming financial year. Expansion plans are being made to expand networks from 1,100 outlets to 1700 outlets by March 2020.
Where the new car segment is concerned, SIAM has also revealed that the Indian passenger vehicle industry has seen its worst performance in five years in the just ended fiscal. Car sales grew 2.7 percent in 2018-19, its worst performance since FY14 while scooter sales were at their lowest pace in 14 years.