Consumers may not be buying new cars anymore but their appetite for second hand cars remains as high as ever.
Organised used car firms like Maruti True Value and Mahindra First Choice are targeting a high double-digit growth for their business this year even as the outlook for their own new car sales is subdued.
“Our used car business under Maruti True Value is the only positive sign in an otherwise dull market,” said Mayank Pareek, managing executive officer (marketing and sales), Maruti Suzuki India Ltd.
“Last year, we sold 231,000 cars under True Value and are confident of a 20% growth this year. If True Value were a separate company, it would have been the fourth largest car company in the country,” he said It is a similar situation for the largest multi branded used car firm, Mahindra First Choice Wheels. It sold 34,000 vehicles last year and is hoping to grow the business by about a third this year.
The potential is huge as well. The used-cars segment has grown over the years to become as big as new cars in India at nearly 25 lakh cars per annum. It is still a far cry from developed markets like US and Europe where 3 used car are sold for every new one.
“I would assume that as the industry evolves, the size of this segment will only go up,” said Rajeev Dubey, M&M’s president, group HR and after market, and member, group executive board.
“Currently the used car segment in India is as big as the new car segment. As organised players proliferate and expand, this will increase to maybe double or more the size of new cars. That is bound to happen.”