Demand for pre-owned cars rose by 25 percent on OLX since February 2020
72 percent of the people surveyed have reduced their car buying budgets
55 percent of the respondents prefer commuting in their own cars
After the coronavirus pandemic and ensuing lockdowns brought the entire Indian automotive industry to a grinding halt earlier this year, there are now signs of gradual recovery, with the economy being reopened in a phased manner. While automakers have reported increasing sales in the past two months, it is the used car market that is showing a greater promise. A recent study by OLX, a digital consumer-to-consumer marketplace, highlights the trend and corroborates the expected surge in activity in the pre-owned car industry.
Increasing demand for pre-owned cars
In its latest ‘Auto Note’ car industry survey, OLX reports a substantial 25 percent increase in demand for used cars till early July, compared to the levels observed in February earlier this year when the effects of COVID-19 were yet to be fully realised. The pre-owned car industry already exceeds the new car market by almost a third in terms of volumes, and that is further expected to grow.
The OLX study includes responses from 3,800 individuals collected over the months of March-June 2020, in addition to inputs from 4,50,000 buyers and sellers on its digital platform.
The findings indicate that 56 percent of the respondents still plan to make a purchase in the next 3-6 months, although a fifth of them have shifted their preference from new to used cars due to financial stress. As such, 54 percent of these prospective car buyers plan to shop around in the pre-owned market.
New car prices rise, while car buying budgets decline
A spurt of emission and safety regulations has seen new car prices shoot up over the past few months, making used cars a more ‘value-for-money’ proposition. What has had a cascading effect is the economic toll of the ongoing health crisis, further nudging buyers towards the pre-owned segment.
72 percent of the survey’s respondents reported reduced car-buying budgets. Half of the pre-owned shoppers are now looking for a passenger vehicle priced around Rs 3 lakh, with nearly 40 percent new car buyers targeting a similar budget. To put things in perspective, the most affordable new car in the country currently is the Datsun Redigo 0.8 D, which is priced at Rs 2.83 lakh (ex-showroom, Delhi). With such inflated prices, buying used becomes an option worth considering.
Resurgence of private mobility
While public transport and shared mobility had been gaining traction in recent times, the spread of coronavirus and the associated need for social distancing have seen a renewed demand for private mobility. 55 percent of the people surveyed recently intended to opt for personal passenger vehicles for commuting, compared to 48 percent of them making the same choice before COVID-19. This resurgence of private transport is touted to give a fillip to the pre-owned segment.
The coronavirus outbreak has dealt an unprecedented blow to the automotive industry. While the road to recovery is long and hard, the pre-owned car market is certainly positioned well to catalyse the process. And the initial findings do seem promising.