Indians Are Buying More Second-Hand Cars. Here’s Why

Demand for second-hand cars increased in the last financial year amid a slowdown in sales for newer vehicles.

The overall used car market grew 10-12 percent year-on-year in the fiscal ended March, according to a report by JM Financial Institutional Equities. One of India’s biggest used car dealers Mahindra First Choice registered 40-50 percent year-on-year sales growth during the period.

The used car market is at an advantage over new car market as most buyers switching from two-wheelers to cars opt for second-hand vehicles first and switch to new cars later, M Sathiyanarayan, head of marketing at Mahindra First Choice Wheels Ltd., said.

Shashank Srivastava, executive director (marketing and sales) at Maruti Suzuki India Ltd., said new car sales saw “de-growth” due to various reasons. “There was some uncertainty because of the elections in April and May, and sentiment also dampened due to liquidity issues, especially among non-banking lenders,” he told BloombergQuint during an interview.

Still, the ratio of used-to-new car sales was at 1.2 times, in line with previous two years, the report said.

While the strong demand for used cars has impacted new car sales, it’s not too significant, Srivastava said. The problem is a little more complicated and not due to a single factor, he said. “These two markets are heading differently.”

Most people who upgrade themselves to used cars may wait to buy a new car if the economy remains sluggish, according to Srivastava.

While Srivastava expects the ratio of used-to-new cars to rise to 1.7-1.8 in the next two to three years, Sathiyanarayan said the presence of organised players will help bring in transparency to the used cars market.

Watch the full interview here: