India’s second-hand car market may be a bright spot amidst the overall slowdown that India’s automobile industry has been going through. The sale of second-hand cars through Maruti Suzuki’s True Value outlets have registered an 8.5 percent growth in FY20. The company’s True Value segment registered a growth of 19 percent in FY19.
In fact, the pre-owned car space has seen a steady increase over the last two years. According to a study commissioned by Mahindra First Choice, the pre-owned car market crossed the four million unit mark in FY19 and is 1.2 times the size of the new car market. The study also says that the share of the organised pre-owned car market has grown from 10 percent in FY10 to 18 percent in FY19. Mahindra First Choice Wheels, which has approximately 1,700 stores in 810 cities, plans to increase its franchisee network to 1,800 stores by 2020.
Officials at Maruti Suzuki told CNBC-TV18 that Alto, Wagon R and Swift comprise 55 percent of the True Value sales and most buyers are in the age group of 25-45. According to a study carried out by OLX, 49 percent of the millennials who purchased pre-owned cars were first-time buyers and 74 percent of all cars bought by millennials were either hatchbacks or sedans. The three most sold brands on OLX Cash My Car platform are Honda, Maruti Suzuki and Hyundai. The company claims that online listings have gone up to twenty thousand per day.
Several vehicle manufacturers like Maruti Suzuki also offer leasing services for entrepreneurs and corporate entities. “Services include vehicle insurance, maintenance and other value-added services like fuel, provision of drivers and leasing service is offered via partner leasing firms like ORIX, Leaseplan, ALD, AVIS India and others," said a Maruti Suzuki spokesperson. The spokesperson also said that the company has sold 6,700 cars under this model in FY19, registering a 71 percent growth over FY18.
Apart from second-hand car sales, car rental and subscription models are also gaining popularity. Car rental and subscription provider Revv is growing at 20 to 30 percent (MoM) in terms of subscribers, according to a company spokesperson.
Hyundai India had partnered with Revv in March this year for an exclusive subscription partnership. Santro, Creta and the i20 are the top-selling models under this partnership. Currently, Revv has a fleet of 3,500 vehicles and plans to increase to 10,000 in the next 12 months.
“The primary users of the platform are those who want flexible ownership and are in a moveable job. Also, those who may have just started their careers and may not get access to bank finance," A Revv spokesperson told CNBC-TV18,
While car leasing and subscription models are becoming popular, their numbers may still be too small to indicate a big shift in ownership patterns.