Chennai: Used car sales have surpassed new car sales in India and the market is poised to grow strong in the next 10 years to achieve metrics comparable to developed markets.
With an annual volume of 4 million, used car market has outgrown the new car sales of 3.6 million. The business is still in a sweet spot of multi-year growth opportunity as it lags behind developed countries, where the used car sales is two to three times that of the new car sales.
As per the estimates by Bengaluru-based RedSeer Consulting, used car sales will cross 8 million by 2030 and will grow bigger than the new car market of around 6 million units.
A key driver of this growth will be the upwardly mobile and aspirational Indian consumer base, especially 200 million two-wheeler users who want to upgrade to a four-wheeler. Increasing income and more number of working women also will continue to fuel dual car ownership by families.
Further, consumers are replacing their cars in shorter intervals.
A co-relation exists between a country's economic growth and used car business and as the economy grows more used cars will be available in the market.
However, the used car market continues to be majorly driven by consumer-to-consumer and unorganized used car dealers whose business model thrives on information asymmetry. Over the past five years, business models built around technology and Internet have been trying to close this information gap between buyers and sellers.
However, the traditional classified model which worked well in developed markets have had limited success in India, with sub-par value creation, said Nikhil Kumar, Engagement Manager, RedSeer Consulting. The model suffers from longer turnaround time and the seller becomes desperate in his wait to close the deal.