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Last Updated : Mar 24, 2020 04:02 PM IST | Source: Moneycontrol.com

Volkswagen looks to bolster used-car business

The maker of Polo and Vento aims to double multi-brand used car sales to 20,000 units this year.

German automotive giant Volkswagen has decided to cash in on the demand for used car in India that has grown despite a fall in new car sales.

The maker of Polo and Vento aims to double multi-brand used car sales to 20,000 units this year, a top company official told Moneycontrol.

Volkswagen started its own chain of used car outlets under the brand Das Welt Auto in end of 2012.

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"This year we are going heavily into used cars. There has been an increase of 5 percentage points in the residual value of the Volkswagen brand and that is huge. We have 105 outlets of Das Welt from where we did about 10,000 cars last year and this year we are looking to do 20,000," Stefen Knapp, director (sales and marketing), Volkswagen India.

India's used-car market is estimated to be $14 billion and is expected to rise to $25 billion by 2023. Though the new car market dropped 15 percent to 2.63 million units the used car market is estimated to have grown to more than 4 million units this year so far.

India ended FY19 with estimated sales of four million used cars, nearly 1.2 times the new car market of 3.3 million.

During the growth years of the new car market the used car industry was 1.4 times the size of the new-car market. With the fall in new car demand supplies to used car industry will take a hit and might fall short of the earlier estimated 5 million units by end of 2020, as predicted by Olx.

A majority of the used car market in India is made of unorganized players while Mahindra First Choice Wheels, Maruti True Value, H-Promise (by Hyundai) are some of the players from the organized sector.

The share of the organised market in the overall used car pie expanded to 20 percent in FY19 as against 11 percent recorded in FY11 and 3 percent recorded in FY09, as per a research conducted by PremonAsia, a consumer insight based consulting firm, on behalf of Mahindra and Mahindra.

The used car market thrives on two sources for supplies. The existing owner the car exchanges it for a new car being the one source and the open online platforms such as Truebil, Cartrade India, among others.

"What is essential in the used car business is the role of evaluator. We have a clear set of people who know this business very well. We have cooperation with all the major platforms. We are training our dealers on how to ramping up the evaluators and we are going massive on this business. The margins on this kind of business a dealer can earn is really nice in India," added Knapp.

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First Published on Mar 24, 2020 04:00 pm
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