Pre-Owned Car Market Bigger Than New Car Market: Study

The pre-owned or second-hand car market has been growing steadily over the past decade. Though there's still a long way to go for it to become organised, there's been a significant change in the way this market has grown over the years. A study done by Mahindra First Choice Wheels and published in the third edition of the "Indian Blue Book" points out to this very fact. The study says that in FY2018-19, the pre-owned car market has grown steadily and has crossed the 4 million unit mark making it bigger than the new car market. The new car market in FY2018-19 stood at 3.4 million units, though a big growth from FY16-17, it's still far behind the used car market.

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The study says that in FY2018-19, the pre-owned car market has grown steadily and has outperformed the new car market.

The study goes on to state that there's been a surge in the organised and semi-organised dealers. Infact, the organised dealers have gone up by 11 per cent, which is a hike of 2 per cent, while the semi-organised dealers have risen by 3 per cent to 44 per cent when compared to figures in FY16-17. In fact, over the past decade, the organised channel has almost doubled its share from 10 per cent in FY10-11 to 18 per cent in FY-18-29.

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The research study goes on to say that the average volume per month across segments shows that the organised sector sells 19 cars per month.

The good part though is that the unorganised dealers have gone down by 5 per cent to 45 per cent in FY18-19 but it's the gap in productivity between the organised and semi-organised market encourages dealers to move to a semi-organised set up.

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In fact, the research study goes on to say that the average volume per month across segments shows that the organised dealers sell 19 cars per month, the semi-organised dealers sell 10 cars a month while the unorganised dealers manage to sell 4 units.

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As far as preference is concerned, 75 per cent pre-owned car purchases comprise hatchbacks and sedans which is a trend seen in the new car market too. That said the outlook for FY 2021-22 for the used car business is very bright. According to the research, the pre-owned car industry in India will reach between 6.7 to 7.2 million car a year by FY21-22 and this means that the dealer productivity too will be close to 15 cars a month on an average which is clearly a big boost for this sector.