Hatchbacks continue to be the preferred choice of Indian customers when it comes to buying pre-owned cars. However, after witnessing strong growth in their volumes in the new car market, SUVs (sport utility vehicles) are slowly gaining traction in the pre-owned car market as well.
At present, hatchbacks account for nearly 40% of the new car volumes in India, while the share of SUVs is close to 38%. According to Crisil, the total pre-owned car sales in the country are estimated to be between 4.2 million units and 4.4 million units in FY22 as compared to 3.8 million units in FY21.
The Indian pre-owned car market will reach a size of over 7 million vehicles by FY26, a joint study by Crisil and OLX Autos last year had said.
“Among the reasons for increasing growth in used car market are a structural reduction in replacement cycle from around 7-10 years to around 4-7 years, availability of better options and customer preference to upgrade to a higher-segment used car while spending similar to a lower-segment new car,” Pushan Sharma, director, Crisil Research.
“The pre-owned car market has witnessed an increase in demand for UVs as compared to other vehicle segments from around 17-19% in FY18 to around 19-21% in FY21. Because of the frequent launches, UVs are witnessing a faster replacement cycle, which increases the supply of used UVs,” Sharma added.
Maruti Suzuki India, which sells pre-owned cars through the True Value channel, witnessed a rise of 7% in volumes to more than 294,000 units in FY22 from nearly 275,000 units in FY21. While hatchbacks contributed 83% to the sales in FY22, their share was 84% in FY21. Sedans improved their share to 12% in FY22 from 11% in FY21, while the contribution of SUVs grew to 6% in FY22 from 5% in FY21.
Shashank Srivastava, senior executive director, marketing and sales, Maruti Suzuki India, said that sales of used cars in FY22 were predominately driven by an increased preference for personal mobility induced by Covid-19 safety concerns and the impact of the pandemic on income levels with customers preferring used cars as a more economical option to fit into their budget. Among the company’s top-selling pre-owned models in FY22 were Alto, WagonR, Swift, Omni and Dzire.
“Sourcing of used cars having low odometer reading was a challenge. Many customers postponed their decision of trading in their used car for a new car and this led to a lower supply of used cars in the market. However, as the demand kept increasing, the ticket price of used cars went up by 14%,” Srivastava said.
According to CARS24, most pre-owned car buyers still prefer hatchbacks. The share of hatchbacks, sedans and SUVs was 62%, 21% and 17%, respectively, in the company’s total volumes in CY21. In comparison, hatchbacks made up 66% of the total sales in CY20, while sedans and SUVs accounted for 24% and 10%, respectively.
“We observed a two-fold growth in demand for sedan and luxury segments. However, an interesting trend to note was the SUV segment registering the strongest growth (five-fold) as affordability drove demand for SUVs,” said Kunal Mundra, CEO, India, CARS24.
Maruti Suzuki Swift, Hyundai i10 and Hyundai Grand i10 were the largest-selling pre-owned hatchbacks for CARS24 in CY 2021, while Ford EcoSport and Maruti Suzuki Vitara Brezza were the top-selling SUVs.
“India’s used car market is logging a greater growth percentage than new cars. Owing to the waiting period on new vehicles and the preference of young Indians for personal mobility, the used car market has proven to be a more realistic choice amid pandemic and other factors,” said Niraj Singh, founder and CEO, Spinny. Maruti Suzuki Swift, Hyundai Grand i10 and Hyundai Elite i20 were the top-selling pre-owned passenger vehicles (PVs) for the company in FY22.
The contribution of hatchbacks to the total sales of Spinny came down to 48% in FY22 from 53% in FY21, and that of sedans to 23% in FY22 from 26% in FY21. However, SUVs witnessed growth to 29% in FY22 from 21% in FY21.
Droom claimed that it has seen a three-fold growth in business in the last few months with Hyundai Creta, Maruti Suzuki Vitara Brezza, Toyota Fortuner, Toyota Innova Crysta and Mahindra XUV500 being its five best-selling pre-owned PV models in FY22.
“The chip shortage has played a major role in our growth as the supply of new cars is limited. Besides, after Covid, people no longer prefer ride-sharing and public transportation, resulting in high demand for used cars. Overall, we have seen a three-fold increase in our business,” said Sandeep Aggarwal, founder and CEO, Droom.
OLX Autos India CEO Amit Kumar said that owing to the increasing need for personal mobility, affordability, more support from financers and low new car penetration in India, pre-owned car sales are expected to reach 1.5 times that of new car sales over the next five years. In FY22, Maruti Suzuki Swift, Maruti Suzuki Alto and Hyundai i10 were among the best-selling hatchbacks for the company, while there was huge traction for SUV models like Hyundai Creta, Mahindra Scorpio, Mahindra XUV500.
Given the increase of first-time buyers in the used car segment, preference for budget cars in the less than Rs 3 lakh bracket has witnessed a sharp uptick, Kumar said, adding that the demand for SUVs has also been registering high growth.
Big Boy Toyz founder and MD Jatin Ahuja said that the share of the SUV segment in the pre-owned car market will grow further in the next five years. The company, which sells only luxury used cars, witnessed a growth of almost 16% in volumes in FY22 with the sales of SUVs being substantially higher than those of sedans.
The five best-selling PV models for Big Boy Toyz in FY22 were Mercedes-Benz GLS, Mercedes-Benz GLE, BMW X7, BMW X5 and Range Rover Sport, all being SUVs.
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