The increasing cost of new cars, coupled with the ongoing inflation, has made them a high-value purchase for many buyers. Furthermore, with car manufacturers constantly releasing new models, the market has become saturated with options, making it harder for buyers to decide on a new vehicle. However, this has led to an increased demand for used cars in recent years, as they offer a more cost-effective option for buyers.
According to industry experts, second hand cars sale in India are likely to almost double to 8 million units by 2027. This is due to a combination of factors, including the ongoing shift away from public transportation and shared rides in favor of personal mobility options.
The COVID-19 pandemic also played a role in this trend, as it led many people to prioritize personal mobility over public transportation, as they want to avoid crowded spaces and want to keep themselves safe. This led to a huge surge in demand for personal vehicles and as a result, many people started exploring second hand cars as they offer better deals.
Role of Global Chip Shortage
The COVID-19 pandemic was followed by a global chip shortage and manufacturing constraints in the automotive industry. This has resulted in a scarcity of new cars in the market, leading to long waiting periods for popular models.
Many car buyers who are in need of a vehicle immediately are turning to the pre-owned car market as an alternative. This shift in consumer behavior has led to an increase in demand for second hand cars as they are readily available and can be purchased without a long waiting period.
Established players in the market
Another factor contributing to the increased demand for second hand cars is the entry of established players in the market. Many major car manufacturers, such as Maruti Suzuki, Tata, Mahindra, Toyota, and Kia, now have their own certified pre-owned car dealerships.
These dealerships offer a range of pre-owned cars that have been thoroughly inspected and come with warranties and other benefits. Even luxury carmakers like Audi and Mercedes have pre-owned dealerships, which cater to buyers looking for premium vehicles at a more affordable price point. These dealerships’ entry has made it more accessible and trustworthy for buyers to buy used cars.
Change in perspective of the people
In recent years, there has been a change in people’s perspective towards used cars. The perception of used cars as unreliable or undesirable has shifted, as more and more people have started to realize the benefits of buying pre-owned cars. This can be attributed to the fact that people are now more financially savvy and are looking to make smart choices in light of the depreciating value of new cars.
The depreciation of new cars makes them less valuable over time, which is why many buyers are now turning to the pre-owned market, where they can find better deals on cars. Another reason for the changing perspective is the increased reliability of cars. With advancements in technology and manufacturing techniques, cars have become more durable and long-lasting, making it easier for buyers to find a car in mint condition at a good value.
Affordable purchase
Another major reason for the increased demand for 2nd hand cars is affordability. As mentioned earlier, used cars are generally less expensive than new cars, making them a more budget-friendly option for many buyers.
This is especially appealing for first-time car buyers or those on a tight budget. Moreover, the price difference between a new and used car can be significant and can make a big difference in someone’s budget. The affordability of a pre-owned car allows buyers to purchase a car that may have been out of their budget if they were to buy a new one.
Conclusion
The pre-owned car market is on the rise and is expected to continue growing in the future. The factors driving this trend include the affordability of used cars, the availability of a wide range of options, the entry of established players in the market, and a shift in consumer perspective towards used cars. The chip shortage issue is an exception, but other factors are expected to remain relevant in the foreseeable future.
Going forward, the pre-owned car market is likely to be further propelled by the rise of new-age online pre-owned car dealers. These retailers make it easier and more convenient for buyers to search, compare and purchase pre-owned cars, which is expected to drive the demand for pre-owned cars even more.
