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Used car market in India
Buying a second hand car has a lot of advantages. The cost of car is significantly lower than new car, the depreciation is lesser, the loans are easier and to top it is readily available. According to a recent estimate the used car market demand is 1.4 million cars annually.
Interestingly, at least 90 percent of the used car market remains unorganized, while the organized market is a mere 10 percent. In the unorganized sector, used car vendors constitute 30 percent, while majority of selling/buying car is carried out between buyer and customer. The volume of these transactions is very huge, but within the limits of law. The direct transactions are done between two individuals who are known to each other.
But consumers should beware that this sector is susceptible to individual impulse and fancies. The pricing, claims for maintenances, and clear ownership records and others can be fabricated. People like mechanics who check the vehicle and middlemen who handle the deal can influence a decision. For first timers who have no clear idea of cars, are gullible victims to unscrupulous car seller who want to sell their old cars for good price.
The second hand car sellers too can trick the buyers who go looking for a good car but end owning damaged cars. It has been noted that second hand car dealers use fake parts or sub-standard equipments to offer an attractive price. The second hand car dealer make anywhere from 5-10 percent by settling the deal through low quality parts. It has been the experience of many a car owners who brought cars from second hand car dealers that they had to spend a handsome amount on repairs.
However, this should not deter second hand car buyers - as most car owners want to sell of their well maintained cars and upgrade to bigger cars. Also second hand cars are valued lower than new cars. Hence the loan amount will be considerably lesser. Also they do not undergo the rapid depreciation in value compared to new cars and they can be customized to owner’s preference.
A second hand car has a lot of promises, but falls short of few things that new car gets, -warranties, OEM equipments, insurance and taxes. This is where car manufacturers have ventured to bring in a system of checks and balances. The certified used car outlets monitored by car manufacturers offer a good deal with peace of mind.
For the sellers, the certified use car outlets offer the best market price, thorough assessment by experts, and an option to choose any other car from the manufacturer portfolio. For the buyers, these outlets offer a lot more- warranty (depending on the outlet brand), insurance, assistance taxes, repairs make use of OEM parts and meets high quality standards and thorough check up by trained technicians. To top it the buyer gets to own a car at attractive price after dealer/manufacturer discounts.
Some of the well known certified used car dealers in India are – Maruti TrueValue, Honda Auto Terrace, Ford Assured, Toyota U Trust, Hyundai Advantage, Mahindra and Mahindra’s First Choice and many more are yet come to India. The branded used car chains have realized the potential for used car market.
Some industry watchers predict that 50 percent of the used cars sales will be brought under organized car market by 2013. Mahindra plans to increase its numbers to 300 outlets in five year’s time. Maruti TrueValue already has 270 outlets and plans to increase them a few hundred more in five years. Other car manufacturers plan the same. Used car outlets will spread into II tier cities in the next couple of year.
Car manufacturers’ have realized fast that the used car market can generate large revenue. Leading car players say that their used car ventures are paying handsome dividends. Hence the companies are now making it mandatory for their dealers to run used car outlets also.
The branded used car outlets are now dealing in multiple brands. They know that they can win over customer loyalty by offering one-stop shop for all queries. They are offering not only assistance in sales and buying, but in offering finances, insurance and many other services.
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