The senior executive director, marketing and sales, Maruti Suzuki, talks about the automaker’s re-selling platform True Value, expected sales, organised pre-owned car market, and more.
India’s used car market, which was already growing before COVID struck, got a further boost during the pandemic. The market is steadily rising now. As per reports, the market, which stood at approximately 4.4 million units per annum during the last financial year (FY22), is expected to grow by approximately 6% in FY23, to reach close to 4.6 million units.
Besides new cars, the pre-owned car segment also saw a spike in sales during the pandemic. Shashank Srivastava, senior executive director, marketing and sales, Maruti Suzuki, mentions that one witnessed a strange phenomenon during COVID.
“Many consumers chose personal mobility over public transport. They moved away from public transport and shared mobility (options), like Uber and Ola, towards personal transport. People who were unable to buy new cars, considered going for used cars, instead. So, the demand for used cars during COVID, went up substantially.”
However, used car sales didn’t go up. The reason is that older buyers didn’t want to upgrade their cars or buy new ones.
“The average holding time of a vehicle during COVID, went up from about 7.1 to 9.4 years. Consumers were holding on to their older vehicles for longer period of time and, therefore, the available pool of used cars started to shrink,” Srivastava points out.
"Consumers were holding on to their older vehicles for longer period of time and, therefore, the available pool of used cars started to shrink."
The actual sale (numbers) didn’t match up to the rising demand during the peak of COVID. But now, as the pandemic has subsided, the demand for used cars, continues to rise, with the supply being much better. Old car buyers are now open to upgrading to new ones. As a result, the availability of used cars in the market, has increased.
Since entering the pre-owned car market in India in 2001, Maruti’s True Value has aimed to make this market transparent and reliable. In its latest ad campaign, titled #SirfTrueValuePe, featuring actor Rajkumar Rao, Maruti highlights all its key USPs, such as free home evaluation, on-time payments and easy RC transfer.
Speaking about the campaign, Srivastava says, “As far as our True Value business goes, selling hasn’t been a major issue. In other words, if we have pre-owned cars in stock, then because of the reputation that we enjoy, we can sell them, as the consumers trust us. Through this campaign, we are also trying to encourage consumers to buy used cars.”
The total budget for the campaign is Rs. 24 crores and it will be largely focused on TV and OTT. About Rs. 4 crores would be spent on print, Rs. 15 crores on TV and OTT and 15% of the total ad budget will be allocated to digital mediums and out of home billboards.
Rao has been associated with True Value campaigns for quite some time now. Srivastava says that Rao isn’t ‘flashy’, like some other actors. “He has got a good fan following, comes across as the guy next door, and is down to earth. Hence, he is ideally suited for campaigns, like True Value, which isn’t about high-end features, but about being reliable and trustworthy.”
While the resale model doesn’t generate any direct revenue for Maruti, it’s important, as almost 25% of the new car business relies on exchange, informs Srivastava.
The campaign’s TG is middle and upper-middle class people, residing in metro cities, who are between the ages of 25 and 50. The most cars bought through the resale model, include hatchbacks followed by SUVs. As per Srivastava, “Last year, the total new car sales were about 30.7 lakh units. For this financial year, the sales are expected to reach 38 lakh units.”
Elaborating on the used car market in India, he informs, “Of this, the organised market is only about 18-20% of the total share. That means out of the 43 lakh used cars sold last year, about 8.5 lakh were sold through the organised route. This year, out of 53 lakh expected sales, used cars will contribute about 10.5 lakh through the organised channel. True Value’s expected sales for the upcoming year is about 4.5 lakh.”
"Out of the 43 lakh used cars sold last year, about 8.5 lakh were sold through the organised route."
There are many frauds or malpractices that take place, for example, people try to alter odometre readings, tamper with car parts, etc. All this may have an impact on the resale value. So, how does True Value address such issues?
“Because of its 376 quality checkpoints, True Value has become a trusted platform,” says Srivastava. The car’s engine suspension, transmission, whether it has been painted, or has it met with an accident, etc., are some important checkpoints.
As far as True Value cars are concerned, they have a verified history of ownership details. The odometer details are recorded each time the car goes for servicing in a Maruti showroom. Knowing the history of the vehicle enables the brand to catch any tampering with the odometer. Additionally, three free services and a one-year warranty on the used car, make it a win-win for the customers.
When buying a car, the showroom experience is quite crucial for the used car segment, reveals Srivastava. This is because every used car is different. Unlike new cars, pre-owned ones have gone through their own journey.
A new Swift will be the same, whether you buy it in Coimbatore, Ghaziabad, Jalandhar, or Kashmir. But in the case of used cars, even if they are bought at the same time, they will be different, in terms of kilometres and maintenance.
When you’re buying a car, whether it’s new or old, people tend to visit the showroom. They do their research online, but the actual purchase happens at the showroom, more so in the case of a used car.
“Here, Maruti’s strong network of 556 showrooms spread across 276 cities, plays a crucial role. Most car manufacturers don’t have this type of network that we have,” mentions Srivastava.