The used car market in India has witnessed tremendous growth in the last few years. In fact, the growth of used car sales in India is such that it is expected to outnumber the new car sales volume in the upcoming years.
Before deep-diving into the used car market in India, let’s compare its growth with the new car market in India.
Used car market vs new car market
Used car market in India is currently growing at an exponential pace. Many reasons, including the fear of the COVID-19 pandemic, is fuelling this widespread growth. On the other hand, after a disastrous 2020, the new car market is back on track, as well.
The current ratio of new car sales to used car sales in India is 1:1.5. In the Financial Year 2020-21, a total of 3.8 million units of pre-owned cars were sold in the country via various registered second-hand car dealers. As per a study carried out by the research firm – Frost and Sullivan, the used car market in India can become twice as large as the new car market by 2025.
Let’s explore some of the reasons behind this sudden boom in the second-hand car market:
1. The fear of pandemic
The entire world is currently living under the fear of COVID-19 pandemic. In a bid to maintain social distancing, more and more people are preferring to use private cars and two-wheelers instead of public transport modes. However, not everyone can afford to buy a new car. As a result, many people have started buying second-hand cars, resulting in a huge surge in the volume of sales.
2. Plenty of used car dealers in the market
Till only a few years ago, used car sector was the most unorganised one. This resulted in a lack of trust among the consumers. However, the situation has changed vastly during the past few years. This sector has become organised, and many corporate companies have invested in purchasing and selling of second-hand cars.
As a result, there are plenty of registered used car dealers that provide consumers with a lot of options to choose from, along with a certificate of trust.
3. Changes in consumer behaviour
As the purchasing power of Indian consumers increased, their behaviour also changed during the past few years. Earlier, cars were seen as a big-ticket purchase and usually, the owners kept them for 8 to 10 years before selling them off. However, these days, cars have become more like a fashion symbol and people are changing their cars every 3 to 5 years.
As a result, second-hand car buyers can get good cars which appear as good as new. This has resulted in an increased popularity and demand for second-hand cars.
4. Affordable loan schemes for pre-owned cars
Taking a car loan for purchase of car is nothing new. However, in recent times, many banks and non-banking financial institutions have started offering affordable loans for second-hand cars, as well. As a result, consumers can buy pre-owned cars easily, without disturbing their financial plans. Moreover, availing of a loan for a used car in India is quite simple and hassle free.
For example, you can apply for a Poonawalla Fincorp Pre-owned Car Loan by simply visiting our website and filling up an online form.
The Final Word
The consumers are now aware of the advantages of buying a pre-owned car. With ever-improving infrastructure and purchasing power of the consumers, the used car market in India is projected to grow unprecedently in the upcoming days. Overall, the second-hand car market is expected to grow at a Compound Annual Growth Rate (CAGR) of 10% by 2024.
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