Omicron threat revs up demand for used cars

Hyderabad: The pre-owned car market is witnessing a huge demand across India once again. The demand is driven by a number of factors such as need for individual mobility amid Omicron scare, long-waiting period for new cars due to chip shortage and availability of best-selling models in second-hand car showrooms. This is likely to continue for next year also. Thanks to the price hike announced by almost all car makers.

As the air travellers from other countries use cabs for their commuting needs, many people are worried about booking taxi services. Owing to more Omicron cases being reported across the country, majority of them prefer to move in their own vehicles. After seeing the havoc caused by the first two waves of the pandemic, even the below-middle-class individuals are looking to buy a four-wheeler for safe rides.

"Till the end of Covid-19 second wave, there was a tremendous demand for pre-owned cars. Later, the buying spree has come down for some time. Again, the enquiries for used cars have improved dramatically in the past few weeks. This demand can be attributed to fears of Omicron as well as shortage in supply of new cars," says S Nohit Kumar, a second-hand car dealer and proprietor of Ashoka Motors.

He further said: "Several customers want to upgrade their cars. Those, who don't find their favourite vehicle in the new car showrooms, are knocking the doors of pre-owned car showrooms. We see a number of enquiries for car models like Maruti Suzuki's Swift, Hyundai's Verna and Mahindra's Thar that were not readily available at brand retail outlets." "Whenever there is a dip in auto retail, the used car demand grows up. First-time buyers' percentage has increased very much in recent times. Earlier, it used to be only 10-15 per cent of customers who upgraded from two-wheelers to four-wheelers, but this fiscal year the share has gone up to 30-35 per cent," said Vinkesh Gulati, President of Federation of Automobile Dealers Associations (FADA).

Only 40 per cent of the pre-owned vehicles market is organised in the country. Numerous new players are entering into this market through various online and offline platforms. Online ride-hailing app Ola has recently forayed into this space by launching pre-owned car marketplace 'Ola Cars'. Along with this, it is offering vehicle finance and insurance.

Sudhir Shukla, Chief Marketing Officer of Cars24 told Bizz Buzz: "We have seen a massive opportunity in online transactions of the old cars. Millennial customers are leading the charge when it comes to buying pre-owned vehicles in the country. There is a 50 per cent growth in women buyers of pre owned cars over a period of last one year." "It's about two in 100 people own a car in India. The overall car penetration is still very low in the country. In the last 18 - 24 months post pandemic, the use of the pre-owned car segment has really witnessed a lot of growth. One of the key drivers is safety at the wake of the pandemic and we see a big opportunity in terms of driving the shift from offline car purchase to online," he added.

According to a study by Cars24, the market share of the online segment of the overall pre-owned car industry is just about 4-5 per cent at present. It aims to get around 20 per cent market share over the next five years. Among the online players in the used car market, it claims to have 90 per cent market share already.

Other organised used car-selling platforms include CarDekho, CarTrade, Droom, Olx Cars, TrueBil and Spinny. Each player is innovatively listing the used cars on their platforms to ramp up the sales and to encash on the demand for second hand vehicles. Latest unicorn Spinny is planning to strengthen its teams and capabilities with the recent round of funding.