The used car market is experiencing a remarkable transformation in India and across the globe, with growing demand in a highly competitive and budget-oriented landscape. It’s common for practicality to take priority over luxury, which makes it easier for people to acquire second-hand vehicles. In this article, we will look at some recent news surrounding the used car market and gain a comprehensive overview of the current state of this market in India.
Tamil Nadu's Used Car Market Surges
In a news shared on August 22, 2023, it was revealed that the used car market in Tamil Nadu is booming, with Cars24, a prominent pre-owned and used vehicle e-commerce platform, reporting an astounding 80% surge in revenue from H1CY22 to H1CY23. According to Gajendra Jangid, the co-founder of Cars24, the company had achieved sales worth Rs 222 crore ($26.7 million) in H1CY23 in Tamil Nadu. Moreover, in another remarkable feat, the April-May-June quarter witnessed transactions valued at Rs 67 crore ($8.0 million), which reflects a 20.0% increase compared to the previous year.
In terms of volume, the Tamil Nadu market recorded a substantial 30%-40% growth, with the average selling price of used cars ranging from Rs 5.5 lakh ($6,600) to 6 lakh ($7,200). The majority of this surge can be attributed to the popularity of hatchbacks, making up 62.0% of Cars24's sales in Tamil Nadu, while SUVs accounted for 20.0% and sedans 15.0%. Financing penetration is also on the rise, with over 50.0% of buyers in Chennai opting for financing, especially among women. The growth in used car financing is higher in Tier 2 and Tier 3 cities compared to metros.
In addition to the impressive surge in sales in the region, another interesting piece of information to keep in mind is that while Maruti Suzuki models remain popular, customers in Tamil Nadu have begun to explore diverse options, including hatchbacks like the Renault Kwid, Volkswagen Polo, and mid-size sedans such as the Honda City. This shift signifies growth and evolution in buyer preferences, marking a departure from traditional choices. The demand for used cars in Tamil Nadu is driven by affordability and the absence of waiting time, making it an attractive option for first-time buyers and millennials alike.
The Indian Used Car Market Promises Strong Growth in the Next Five Years
It’s evident after looking at the above facts and figures that the Indian used car market is undergoing strong growth and transformation. This growth and transformation are driven by additional factors such as the presence of established original equipment manufacturers (OEMs) and the entrance of new-age tech startups in the organized sector.
Currently, the annual new car market is estimated to consist of around 3.8 million vehicles, while the pre-owned car segment has already surpassed this number with an estimate of more than 5.0 million units. The pre-owned luxury car segment has also seen substantial growth, surpassing new luxury car sales by 1.7 times. Due to all these factors, the organized sector's share is expected to rise from 20.0% to 45.0% in the next five years. This makes it important to keep an eye on this ever-evolving market.