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COVID-19 to further fuel used car sales, volumes expected to hit 8 million by FY25

The share of the organised sector, which has players like Maruti True Value, Mahindra First Choice and a host of such businesses started by car companies, is projected to rise to 45 percent in FY25 from the current 25 percent.

June 16, 2021 / 08:28 PM IST

India’s used car market is expected to expand to 8.2 million units by FY25 from an estimated 3.8 million in the last fiscal, helped by increasing preference for personal mobility and higher supply of new cars in the market.

According to the ‘Indian pre-owned car market’ study commissioned by Volkswagen India to Frost and Sullivan, India’s appetite for used cars will grow exponentially aided by the general aspiration to own a vehicle.

The pandemic has revved up used-car sales as hygiene and sanitation concerns drive people away from public transport, although it has disrupted the market for new cars.

“The demand for pre-owned vehicles is constantly growing and the ratio of used cars compared to new cars is expected to become 2.1x by FY25. Further, there has been a substantial rise in demand across the organized sector of pre-owned passenger vehicles business,” the report said.

There is no accurate data for sale of used cars as three-fourths of this market is controlled by unorganized players. At present, the estimated ratio of new to used car sales in India is 1.5 against 2.8 in the US and 4.1 in UK.

The report predicted the share of the organised sector to rise to 45 percent in FY25 from 25 percent presently. Players like Maruti True Value and Mahindra First Choice belong to the organised sector in addition to a host of used car businesses started by car companies.

German automotive company Volkswagen has seen significant growth in its used car business branded as Das WeltAuto (DWA). From the 105 DWA outlets Volkswagen clocked sales of 20,000 units in FY21 compared with 10,000 in FY20 and about 3,000 in FY19.

Ashish Gupta, Brand Director, Volkswagen Passenger Cars India said, “Used car sales will see further growth as compared to new car sales. With the aim to tap this growing opportunity, we are working towards strengthening our offerings for customers through our national pre-owned car network, Das WeltAuto. In addition, we believe that tier 2 markets will play a critical role in our used car business volumes and the customer insights from the study will further aid us in addressing their requirements through our customized solutions.”

The study found that 63 percent of the respondents were interested in owning a car, even if shared mobility or public transport seemed economical.

“Car ownership is largely perceived as a matter of status as believed by 66 percent of the respondents followed by the intenders, preferring to use cars beyond personal use as 49 percent and the inherent flexibility of owning a car by 46 percent of the respondents,” the study added.

While COVID-19 disrupted the new car demand the used car market has seen positive after effects of it. Personal mobility has taken preference over public transport due to hygiene and sanitation issues leading to growth in demand for used cars. Used car owners across all age groups preferred cars with an average age of 3.5 years which is run for 40,000 kms.
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Moneycontrol News
first published: Jun 16, 2021 03:07 pm