Pre-owned cars seen emerging as next sunshine sector

For one, consumer preference towards pre-owned cars or used car segment has grown at over of 30 per cent CAGR for last five years, notwithstanding the fact that this market is largely unorganised, while the organised segment accounted for only 20 per cent of the total size of the second-hand car market, say market observers.

However, the landscape of pre-owned car market will change radically with more and more OEMs (original equipments manufacturers) seen contemplating to enter the pre-owned car market.  As a result, the ratio of the mix of organised versus unorganised will also undergo change drastically.  Currently, the size of the pre-owned car market in India is estimated at 1.5 million. The organised sector is upbeat over the growth of pre-owned car market in the country.  Mahindra First Choice CEO Shubhabrata Sinha stated recently that his company has targeted to sell 1-lakh used cars by 2014.  Sharad Agarwal, General Manager of Mahindra First Choice says: “The size of used car market will be in the ratio of 1:1 with respect to new car market in India. And this segment is expected to grow at 20 per cent CAGR over the next five years.”

Focus on services

With selling, purchase and exchange of used-cars picking up, corporate entities are now focussing more on rendering their manifold services to consumers through integrated multi brand outlets (MBOs) which incorporates wide range of brands under one-roof including trouble-free financing with lesser interest rates and insurance alternatives.

Most organised players offer ‘value proposition’ to customers with wide range of choice and being multi-brand players and the cars sold by them are reconditioned like new and have to pass our stringent quality tests.  Organised players in this segment have plans to grow organically as well inorganic, by having some ‘superstores’ of their own and remaining to come from franchisee models. 

Superstores, means customer gets a choice of over 100 cars on display at any given point of time and the range varies from Maruti 800 to high-end Mercedes.  

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