It’s said that the used car market in India is easily more than twice the size of the new car market. While a major chunk of used car sales comes from the mainstream models, there’s a rising number of used car buyers that are putting their money on second-hand luxury cars. Various reports suggest that while the used car market is growing at a rate of 15% per year, the used luxury car market is growing much faster.
Used car dealers have reportedly told ET Auto that sales of hatchbacks and mid-size cars have shown an average growth but the demand for high-end cars from Mercedes, Audi, and BMW has seen a sudden rise in the last few years. “Till about 2011, we used to sell four to seven luxury cars in a year but now that number has grown to around 35-40,” said one of the dealers. The reasons for this growth in demand are –
Second-hand cars, in general, are more affordable than brand-new ones. However, luxury cars depreciate like there’s no tomorrow, which means that a car loses half its value within, say, three years of ownership. Also, luxury car owners are often in a hurry to upgrade to a newer model and hence, sell off the existing car without waiting to get a really high price for it. In the end, it’s the used car buyer who benefits. One can easily get a sparingly used Audi A4 for the price of a top-end Honda City. This plays an important role in the high popularity that used luxury cars enjoy.
Increased Purchasing Power
The purchasing power of the service-class has increased many folds in the last two decades or so. This enables them to splurge on finer things in life, including a luxury car. While they might still find it tough to afford a brand-new luxury car, they can always take the second-hand route and get an Audi or a Mercedes for the price of a midsizer from Honda or even Maruti Suzuki.
Growing Consumer Aspirations
Who wouldn’t want to buy a luxury car at least once in his or her lifetime? Gone are the days when buying a small hatchback was all an average Indian dreamt of. Today, our car market has grown several times and so have the consumer aspirations. Like we said, not many can afford a brand-new luxury car and hence, they often go for a second-hand vehicle to meet their aspirations.
Another factor that has played an important role in the growth of the used luxury car market is the large variety of luxury cars that are available in India. Today, we have luxury car marques like Audi, Mercedes, BMW, and Jaguar operating in the country. The consumer is spoilt for choice. In the used car market, one can easily pick up the models that have a higher depreciation than those of their rivals.
Another reason is the fast improving infrastructure. Today, the Indian road network boasts of some world-class expressways and well-paved highways. Even the condition of city roads has improved in the last few years. This has brought down the wear and tear that a car experiences. Reduced wear and tear leads to lesser visits to the service station and hence, reduced maintenance bills. All of this has led to a larger number of people opting for a used luxury car.
via ET Auto