Used car market trumping new car sales

New car sales might be on the downturn but the used car market is doing much better, according to a report in the Times of India.

With annual sales of nearly 25 lakh units, the Indian used car market is expected to grow by 10 % this year (compared to 3 % expected growth for new cars). Major used car sellers are aiming at double-digit growth in the market, as more customers prefer to choose organised players over neighbourhood brokers. A sluggish economy, coupled with high interest rates & rising fuel costs have kept new car customers at bay, the majority of who rely on loans for purchases. 

We @ Team-BHP.com have always believed that used cars provide a superb value-for-money proposition. Whether out of choice or compulsion, an increasing number of customers are now agreeing with the same. 

The best part is that options within the used car market has expanded considerably, due to the sheer number of launches over the last couple of years. It is also important to note that cars today are built far better and have superior reliability compared to cars from the nineties. It is not uncommon for currently sold models to serve dependably for 150,000 - 200,000 kms (and over). The presence of organised players is also increasing, as profit margins on used cars frequently exceed that of new cars. 

The most significant disadvantage of purchasing a used car is the high interest rate of loans on pre-owned cars. Bank officials have spoken about softening interest rates on used cars for salaried customers. 

In India, one used car is sold for every new car, which means that the market for both is roughly the same size. Some other markets see ratios of 3:1 in favour of used cars. The growth potential is definitely there. Maruti True Value is expecting a 20 % rise in sales this year, after selling 2,31,000 units last year. Meanwhile, Mahindra First Choice is looking at a 35 % growth in 2012, after sales of 34,000 units last year. M&M also plans to add a 100 more outlets to its existing network of 167 dealers across the country.

Related threads:

Buying a New Car vs Used Car

How to buy a *USED* Car in India