Sale of old cars growing at double speed, new cars left behind

Sale of old cars increasing at double speed

The market of second hand i.e. old cars in India is now increasing rapidly than the sale of new cars. Due to the changing priorities of people, easy availability of digital platforms and resting in financeing, they are taking this segment to new heights. According to a report by CRISIL ratings, the current financial year can see an increase of 8 to 10% in the sales of old cars, which is doubled from the sales rate of new cars.

Tremendous boom in demand

This year, the sale of old cars in India can reach beyond 60 million units. The biggest reason behind this growth is that affordable prices as well as increasing facilities on digital platforms and easy loans.

Changes in used-to-new ratio

Five years ago, where only 1 old car was sold on every new car, now this ratio has increased to 1.4. This means that now 140 old cars are being sold as compared to every 100 new cars. This makes it clear that people are now upgrading vehicles more quickly than before and trust in second hand vehicles has also increased. Although this trend is growing rapidly in India, it is still far behind developed countries like America (2.5), Britain (4.0) and Germany (2.6). This means that there are still many possibilities left in the second hand car market.

Sale of old cars increasing at double speed

Today, companies like Cardekho, Cars24, Cartrade, Spinny and Mahindra First Choice are handling about 50% of the organized market and one third of the old car market. These companies have to spend a lot in connecting customers, cars repair, logistics and financeing, due to which they have not yet been profitable. But it is estimated that in the coming 12 to 18 months they can reach the operating brake-building. Now these companies are not only limited to the sale of cars, but are also offering services like investigation, finance, insurance and home delivery. This is getting better customer experience and is expected to improve margins.

Stability even after covid

Despite the lack of epidemic and semiconductor, the market of old cars remained stable. Now that the delivery of new vehicles is delayed and rare meaning magnets are coming out, then consumers are moving rapidly towards second hand options. Customers are now getting easy loans due to AI based finance scoring and banking partnerships with online platforms. Since 2019, more than Rs 14,000 crore has been invested in this sector.