The pre-owned car market has recorded more than 80 per cent recovery between June-October. CARS24 and CarDekho share recent buying trends in the space.
We are almost eight months into the Coronavirus pandemic and the country has finally started to unlock. Following the social distancing norms, public transport is back on the roads. However, the trust in it still seems shaky. People now want to own their own vehicles and have, therefore, started exploring the pre-owned car market.
“Due to COVID-19 outbreak, the demand for used cars has gone up drastically, as compared to pre-COVID levels because of safety apprehensions on the customer's end,” CARS24’s co-founder and CMO Gajendra Jangid tells afaqs!. Founded in 2015, CARS24 is a tech-enabled used cars disruptor.
Jangid mentions that when the government-mandated (COVID) lockdown was announced in March, the brand’s business came to a complete standstill. “Our teams worked and developed new products and solutions that would be relevant in the new normal, including introducing and scaling home inspection pan-India.”
As of August, CARS24 had exceeded pre-COVID sales numbers and witnessed more than 100 per cent recovery.
“This increase in the number of people opting for used cars over new cars can be attributed to safe mobility during unprecedented times. Pre-owned cars are the perfect solution, not just for an individual, but an entire family to travel safely under a budget. We have transacted 15,000 (15K) cars in the month of August,” Jangid says.
According to CARS24’s internal research, 60 per cent of first-time buyers are opting for pre-owned cars, as compared to less than 50 percent in pre-COVID era. These first-time buyers are purchasing and looking for options in the pocket-friendly hatchback category. These buyers base their selection on multiple factors, such as the condition of the car, kilometres driven, number of past ownerships, etc.
Jangid mentions, “Such a category of customers always aspires to have a wide assortment of cars to choose from that falls under their budget. Plus the added benefits like warranty, on-spot loans, buyback guarantee, etc., have resulted in better conversion of transactions at CARS24.”
As per the brand’s data, first-time buyers mostly prefer hatchbacks and sedans because of easy driveability and low maintenance costs. Families prefer SUVs and MPVs for comfort and the boot space they offer. The company has seen a trend of people selling their smaller cars in order to upgrade to pre-owned premium SUVs and sedans available at around half the prices of a new one.
When we asked Jangid about the gender profile of used car buyers, he says that the automotive industry is predominantly tilted towards males. Similar is the case with the company’s platform. The majority (85 per cent) of traffic on both buyers and sellers side is males only. And the majority of these males belong to the millennial generation. “However, times are changing. Women are taking a front seat and becoming more independent. We expect to see a surge in female traffic in the near future.”
Jangid reveals that all the regions have performed in an exponential fashion, in terms of demand. However, demand in certain regions for used cars is quite notable.
“Bengaluru has emerged as one of the leading markets in capturing the same growth trend, in comparison to recovery in cities such as Mumbai, Pune and Delhi-NCR in August. This is a promising trend in Bengaluru for the pre-owned car industry.”
CARS24 recently launched a campaign ‘Duniya Boli Lagayegi’ to empower sellers with a wide network of buyers and complete support. The ad film features a car owner asking his ‘mamaji’ to help him sell his car. While the ‘mamaji’ does manage to line up prospective buyers with limited options for the car, a CARS24 executive hops into the pictures. He helps the car owner with multiple buyers from different parts of the country and ensures full responsibility of driving the conversations with all the buyers.
Conceptualised by Ogilvy (North), the film focuses on the network of genuine buyers on the platform and its ‘unique bidding system’ that will help sellers fetch the ‘best deal’.
CarDekho, another brand from the category, has also launched a campaign ‘Karo India Forward, Karo Gaadi Forward’, with brand ambassadors Rahul Dravid and Mahesh Babu. The campaign highlights how easy it is to sell a used car, whether you are sitting at home, office or anywhere. It talks about moving ahead in life, despite all odds created by the pandemic.
Speaking about the campaign, Gaurav Mehta, chief marketing officer, CarDekho, says, “India is a supply constrained market when it comes to pre-owned cars. The objective of our campaign is to help people sell their cars from the comfort of their home.”
Mehta adds that there are always more buyers than sellers in the used car space. And this has been the case for at least the last eight years, as per his knowledge.
On the CarDekho platform, every car that is listed has about 15-16 interested buyers in the first week itself, reveals Mehta. This demand comes from across India.
Mehta says that most sellers of used cars come from bigger cities, and the buying demand comes in largely from Tier-II, III and IV cities. “The demand from the smaller cities has accelerated in the past couple of months. Selling on the platform has also seen an increase, however, not as much as buying.”
According to Mehta, the distrust in public transport due to the pandemic has resulted in a boom. “From the recovery perspective, the used car segment has bounced back much faster, when compared to fresh car buying. What used to be the entry-level segment (Rs 2-5 lakh) has become stronger since the unlock period began,” he says. However, he opines that the used car segment is still not structured, like the new car buying space.
The entry-level used car market accounts for over 60 per cent of sale on the platform and has seen a major recovery, when compared to the sale of used luxury cars.
Post COVID outbreak, CarDekho only started seeing online traction from June. Most buyers on the platform make their choices based on the maintenance cost and resale value of the car. “Also, a recent trend that we have seen emerge, post-Corona, is the family aspect. Buyers, within the hatchback segment, are looking for cars that can accommodate 4-5 members comfortably and have enough luggage space,” Mehta mentions.
There has also been a change in the age and gender profile of the buyers. “It is in favour of males. There is more male participation,” he signs off.