During the last couple of years, Indian Automobile Industry has gone through structural changes and has faced several roadblocks like national and state-level lockdown due to Covid-19 and a shortage of semiconductor chips which have disrupted production and demand substantially. However, the pre-owned Automobile Industry remained poised even during the Covid-19 era. Although, India’s Pre-owned Automobile Industry is still nascent stage but it has become equal to the new one if not bigger than that. For example, 1.5x used cars are being sold in India compared to one new car sold.
The pre-owned Automobile Industry is still highly unorganized in India. During the last decade, the emergence of organized players like Shriram Automall India Limited (SAMIL) and many semi-organized channels have empowered buyers and sellers to transact with confidence in a transparent manner. Now, Indian Pre-owned Automobile Industry is moving towards the growth phase from the introductory phase with so many emerging new trends and paradigm shifts in customer behaviours.
Personal Conveyance has become the preferred mode of transportation in the post-Covid-19 era
COVID-19 has encouraged people to travel in personal conveyance over public transportation & shared mobility due to health & safety concerns. According to our recent LinkedIn Poll, 92% of respondents have chosen personal conveyance as their most preferred mode of transportation in the Covid-19 era which has significantly fueled the growth of the pre-owned Automobile industry due to affordability and several other benefits.
Used is the new ‘New’
Yes, Used or Pre-owned is the new, ‘New.’ According to our recent LinkedIn Poll, 67% of respondents think that Used or Pre-owned is the new, ‘New’. It has established the fact that there is no more stigma attached to used or pre-owned vehicles & equipment. So, there is a paradigm shift in customers’ mindset to buy a used vehicle over a new one which has been helping the industry to grow.
Demand Supply GAP
A sharp decline in replacement buying (customers selling their existing vehicles in exchange for a new one) and delays in repossession due to the extension of the moratorium period has hit the supply of popular models in the space. Replacement vehicle buying has reduced in the covid-19 era, leading to a short supply of popular models in the used-vehicle space.
Surging in Average Selling Price
A very common phenomenon of surging in the average selling price of pre-owned vehicles & equipment has been witnessed across the world in the post-Covid-19 era. And India is no exception. The average selling price of pre-owned vehicles & equipment has surged by double-digit due to ever-increasing demand for pre-owned vehicles & equipment but a shortage of supply.
Innovative Technological Solutions are evolving at a fast pace
Phygital (Physical plus Digital) has become the new normal. Technological solutions i.e., Live Streaming of Physical Auctions via the MySamil App and right and unbiased price solutions for used vehicles & equipment via ThePriceX are going to transform the industry at a fast pace.
Greater Penetration of Finance
The current finance penetration in used vehicles & equipment space stands at much lower than new vehicles & equipment finance. To grab the huge opportunity in the pre-owned Automobile Industry, banks and NBFCs have begun to provide lucrative loan offers. Further development in this area would like to boost the pre-owned automobile industry.
Vehicle Scrappage Policy is likely to push used vehicles demand
Although we as a country have a long way to go, setting up the required infrastructure like a testing facility and scrappage yard to make the most of this policy but vehicle scrappage policy can drive the growth of used vehicle volumes as customers start replacing their old vehicles with younger vehicles.
Future Outlook
According to several reports and prophecies, overall used car sale is likely to grow by 10% by 2025. Similarly, we are also very hopeful that sales of pre-owned vehicle segments will grow at a double-digit rate in the upcoming years.
