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Used car sales reach top speed and prices rise by 10-15%

Used car sales reach top speed and prices rise by 10-15%

Chennai: Are you planning to buy a used car? Chances are that the model you are looking for has become somewhere between 12%-15% more expensive. According to organized used car sales platforms such as Dream, Mahindra First Choice Wheels and Spinny, the demand for higher gears from the hinterland markets is driving used car sales, leading to a price increase of 12%-15%. In the unorganized sector, the price increase is up to 20%.
“Used car prices have risen over the past five months, driven by a sharp rise in demand and inflationary pressures. In the past, a three-year-old vehicle would be 40% cheaper than the new version, now it’s 30-34% online and for physical platforms the difference is about 25%,” said Sandeep Aggarwal, founder and CEO of auto retail unicorn Dream. Technology The price spike is understandable given the demand for used vehicles.”For us, growth was 55% last quarter,” said Ashutosh Pandey, CEO of Mahindra First Choice Wheels.
Used car sellers say a number of factors drive this turbocharging. New car buyers are turning to used vehicles as new car prices have risen sharply in the past 24 months due to BS6, increases in commodity prices and a shortage of chips. “In the first quarter of 2022, more than 55% of car buyers on Spinny were first-time buyers. People aged 25-40 bought most of these cars, 26% of whom were women and 80% opted for the convenience of home delivery, while 41% of Spinny buyers opted for online purchase,” said Niraj Singh, founder & CEO of Used Car Unicorn Spinny. In addition to starters, consumers from the hinterland also contribute to the demand.
“The demand for used vehicles has now moved deeper into the Tier-2, Tier-3 and Tier-4 markets,” says Droom’s Aggarwal. Its platform has nearly doubled its presence to 1,164 cities, up from 600-700 just four years ago. This expansion of the organized retail footprint is also driven by the demand for larger vehicles. “There has been a huge demand for SUVs over the past six odd months with models such as Mahindra Scorpio and Maruti Suzuki Vitara Brezza, along with newer ones like Kia Seltos and MG Hector, but there is a shortage of supply in this segment,” said Pandey of MFCW. “The demand for luxury used cars is also high, with Rs 27-45 lakh being the sweet spot,” he added.
The growing demand for more premium used cars means that the complexion of the used car market is also changing rapidly. “Previously 50% of our sales were mass-market cars (Rs 3-5 lakh), while the mid-market (Rs 5-10 lakh) was 30%,” said Droom’s Aggarwal. “Now that split is 40:40, showing that the masses have declined and the mid-market has expanded.” Models such as Hyundai Creta, Mahindra XUV500 have grown three times faster than mass-market cars. According to a Frost & Sullivan report, used car sales are estimated at 3.8 million units. “Studies show it will become a $50 billion industry by 2026, indicating that the used auto industry could reach a CAGR of 15% over this time frame,” said Spinny’s Singh.

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