Used-car business seen as one bright spot in a slow growing automotive industry

New Delhi: As car makers have put on display their latest models at the recently concluded Auto Expo, a report said the used-car business has been one bright spot in a slow growing automotive industry in the last few years.

According to the report by Deloitte India, though the customers have a budget in mind, they were open to fully utilise it or even extend it to acquire the pre-owned vehicle if they felt was right.

"The customers are willing to extend their budgets up to 20 per cent and the nature of the dealership seems to have an influence over this decision," said the Deloitte India report.

The report titled 'Driving Through the Urban Used-Car Market' is based on a survey conducted to gauge the pulse of the used-car market in India.

The survey was conducted across 16 cities including Ahmedabad, Bengaluru, Chandigarh, Chennai, and Delhi NCR.

The used-car market is "estimated at the same size as the new-car market", it said adding that the survey was done to provide perspectives on customer profile, buying process, decision factors, norms and benchmarks related to the trade.

"The used-car business has been one bright spot in a slow growing automotive industry in the last few years. The rush to buy diesel cars a few years ago with the prices of petrol being pegged to the open markets and then, the sales going down on account of inability of the customers to buy new cars led to a visible growth in the used-car volumes," it said.

Further, this growth supported by the investments by the manufacturers in the dealer network, branding and reliability of processes made it possible for the customers to consider used cars as a viable option.

"With formal networks growing, it is increasingly becoming cool to buy used cars. Among the urban buyers, there is a clear preference for branded players who enjoy a large share of the market. This is seen across the regions, suggesting the coming of age of this business," said Kumar Kandaswami, Partner, Deloitte India.

The survey also talks about the age of the car where most of the customers prefer to buy a 2-4 years old car. This trend is largely similar across regions and from both customer and dealer perspectives.

The OEM-affiliated and multi-brand dealers sell a relatively higher percentage of used cars that have run more than 50,000 km in comparison with local traders and other types of dealers, possibly indicating the comfort with the warranties that are provided with refurbished cars.

A majority of the used car customers are first-time buyers and majority of them buy for personal use.