Tuesday, August 23, 2011
By Pranjal Gera
Used car sales set to leave behind the new ones in coming years
The Indian car industry has started showing signs of maturity after registering massive growth figures in last two years. The clear sign of the industry growing mature is the fact that the very first time in its history, the sales of used cars in the Indian auto market is all set to surpass the sales of the new car models in the country.
As per an estimate, the used car sales that is currently at around 18 lakh units per annum, is all set to register a growth of about 20 to 25 percent over a period of next five years. On the other hand, the sales of new cars are expected to grow at single digit in coming years, as compared to 13-15% growth registered during current year.
According to a statement given by Jagdish Khattar, CEO of Carnation, the current ratio between new and used cars in the country is 1:1.1. With used car segment is expected to register considerable growth in coming years, the ratio is expected to convert into 1: 2.5 – 3, for new/old cars.
Mr. Khattar said that the organized sector in the used car market should grow at a higher pace of 35-40%. The entry of a number of organized sector players has boosted the sales of the used cars in the country including Maruti True Value, Mahindra First Choice, Carnations, etc.
According to him, the consumer demography in the country is favourable for the used car market most of the used car buyers are the first time buyers. However, what could play a spoil sport for the market of used cars is the interest rate which is about 300 to 400 basis points higher as compared to the same for their new counterparts.