India is one of the fastest developing economies in the world. In the past one decade, the car makers in the country have produced a number of vehicles and owing to this, the aspiration of the customers has also increased. This has lead to the shortening of the life cycle of a car, bringing it to almost half of what it used to be and thus it is just 3-4 years now. The used car segment has seen a good demand due to this. It’s a pretty unorganized sector, but it is now an integral part of the automobile world. Now a days, the trend to use the car for a brief period of 3-4 years and then selling it off is noticed. On the contrary, ten years back, a car would have been used at least for 5-8 years before being sold.
This change in the usage is mostly due to the launch of newer models by car makers, even within a segment. Customers like to upgrade the models regularly. Market gurus estimate that the sales of used cars may beat that of new cars. The organised segment of the market is pegged at 13%, while the rest of it is dominated by the unorganized players. Many factors like the after sales service, finance non-availability and warranty issues hinder the growth of this market.
Some used car companies claim that customers have the choice to buy a used car in a higher segment compared to a new car in the lower segment. The current laws for taxation in inter-state transfer of vehicles is affecting the sales. Issues like octroi and transfer charges affect the business a lot. Lack of co-ordination amongst the states is yet another issue and thus a uniform system across the states will benefit the business. Many manufacturers have a used car arm in India, including Maruti, Hyundai, Mahindra, Toyota, Honda and Ford.
Source – EconomicTimes
