The pre-owned car market has been showing a promising growth trajectory in recent years. Where it marked a growth rate of 9 percent between FY 15 and FY 21, it is estimated that in FY 22, the sector will grow by 15-20 percent. This propensity for pre-owned cars amongst the consumers can be attributed to their changing behavior owing to the multiple value propositions the sector has to offer.
The rapid rate of urbanization encouraging a more liberal disposable income is triggering the change in the aspirations of the consumers where they aspire to upgrade to premium products while keeping intact their financial stability. This coupled with the progressive market reformations like the launch and availability of new models as well as new categories is widening the options of pre-owned cars in the Indian market. The OEM-supported exchange and introduction of buying back schemes are further giving the desired impetus to the pre-owned car market.
Furthermore, the disruptions created by pandemics worked in favor of the sector which fast-paced the digitization of the pre-owned car segment which otherwise would have taken years to materialize. The online presence came with a wide range of benefits for the consumers like purchasing convenience, financing options, and extended warranties which catalyzed the growth of the sector. Moreover, the preference for personal mobility in light of the instability of public transport and the rising fear of infection and hygiene standards strengthened the stance of the pre-owned car market.
Perceiving these revelations in favor of the emerging segment, it is expected that the pre-owned car market will touch 8.2 million units annually by FY 25 from 3.8 million units reached in FY 21. But to realize this number a lot still needs to be done in the sector. The sector is unevenly split between organized, semi-organized, and unorganized players. Though organized segments are making inroads into the market they constitute a mere 20 percent of the market and the major share of the market is taken over by the unorganized and semi-organized players which accounts for a supply-constrained market.
But a close analysis of the market will show that both the organized and unorganized segments inherently come with their own unique advantages which cater to the demands of the customers in their own differentiated way. Given the need of penetrating deeper into the market, the sector must bring about the confluence of both the organized and unorganized segments to give the desired boost to the pre-owned car market. The tie-up between the organized players and dealers can vouchsafe for a marked shift in the sector. Both segments coming with a diverse and distinct set of expertise can benefit each other and fill in for the gap that exists in each of them. The collaboration will help them widen their reach and at the same time also improve their services. Hence, cooperation rather than competition is the key mantra at the moment to take the sector to phenomenal heights of success.
With the help of the association, the organized players and even the startups can take leverage of the strong network and reputation built by the local dealers over the years. Even the individual dealers can benefit from the tie-up by tapping into a larger pool of buyers who are in search of a seamless experience, more options, assured warranties, etc.
A major issue impeding the growth of the sector is the lack of transparency and data availability. Here, the organized players can lead the forefront and bring in the integration of advanced technologies such as Blockchain that can help in the proper storage and maintenance of intricate information like vehicle ownership, parts replacement, and service history details giving an end-to-end insight into the actual condition of the vehicle. They can provide the capital support to the local dealers to become more digitally proficient and create a seamless interface for customer servicing.
The alliance can offer the best of both segments. Considering that car is a treasured possession, before locking a model people want to explore as many options as possible to decide on the type of vehicle depending on the price bands, colors, etc. for which the online market is the right place for exploration just within the click of the fingers. But they also prefer going for a physical check to get the real feel of the car and at the same time scan the actual condition of the car. This requires the industry players to have a presence across the online platforms along with the advantage of physical showrooms to meet the demands of the customers. The confluence of organized and unorganized sectors will be highly effective in bringing the amalgamation of online and offline interfaces to ease the process of selection.
This can also ensure the highest resale value where the organized sector can play an instrumental role in cracking the best resale deal for the car and the local dealers can bring to full advantage the trust and existing cordial relationship they share with the customers and the different stakeholders.
The cumulative advantage can go way beyond and bring about the integration of financing options, assured warranties, and even take the experience to the next level by giving delivery at the doorstep. All in all, the unified services can instill a sense of loyalty and trust amongst the buyers who are satisfied with the quality of products and services and can become the advocates of the pre-owned car industry.