For the past few years, while the sales of new cars have been decelerating, those of used or pre-owned cars are growing annually. In fact, used-car sales overtook those of new cars in 2019. Where new car sales stood at 3.6 million units in FY 2018-19, used-car numbers topped four million units.

In the above period,the sales of new cars only grew 2.70 per cent, recording the sector’s slowest growth in four years. Besides other causes, a major reason is an economic slowdown that has hit overall consumer sentiments.

Many benefits

In the past few months, the Covid-19 pandemic has only aggravated the situation for new-car sales. Conversely, pre-owned cars are finding increasing favour with customers pan-India. Interestingly, a full-stack used-car platform has even recorded a 400 per cent jump in queries from female buyers.

Given the ground realities, used-car portals are witnessing maximum demand coming from urban centres. The ease of driving due to lower traffic volumes has also emboldened many women to take to driving during this period. Therefore, more young women are cohoosing to go behind the steering wheel of used cars now.

One reason for more sales of pre-owned cars during the Covid-19 outbreak is that people believe these offer more value for money vis-à-vis new vehicles. Since lockdown restrictions have been lifted in many regions across the country, it is now possible for people to move out and travel to their place of work or business.

Also, under the current circumstances, the need for personal mobility is emerging as an overriding concern for urban families. Even those using two-wheelers feel more comfortable travelling by four-wheelers as infected airborne droplets from likely coronavirus carriers in the open are now perceived as a threat. Most purchase queries are from first-time buyers, who earlier relied on public transport/shared cabs. This is a positive sign that people are willing to take the step for personal safety while motivated to resume their working lives. Therefore, the pre-owned car industry needs to shoulder the responsibility of providing value as well as quality to customers. The key criteria are safety checks, quality and the ease with which customers can buy a car.

Paying heed to the sentiments of buyers, used car portals are taking utmost precautions in ensuring all their orders are handled with extra care during this period. One of the USPs in attracting prospective buyers is a contactless delivery mechanism backed by home test drives.

The overall units’ demand has bounced back to more or less similar to the pre-Covid days.

Transparency, clarity and choice

It is universal knowledge that driving and owning a car is a matter of pride for all people, particularly the upwardly-mobile middle class. In the past decade, the introduction of alternative car ownership models has stoked interest in some buyers since it makes car ownership convenient. This includes car subscriptions and leasing programmes. But these service offerings attract monthly premiums.

Despite the convenience, such alternatives deprive users of the pride and joy of moving around in an owned car. Although such services have attracted some traction, sales haven’t taken off as envisaged.

On the other hand, used car sales are going from strength to strength every year via various schemes. These include fixed-price assurance and buyback programmes. For instance, fixed-price assurance leverages the fact that customers are wary about overpaying for a used car and prefer closing deals without hard negotiations. By offering clarity and transparency across parameters, it is possible to eliminate subjectivity from decision-making. Furthermore, customers can contemplate decisions from the comfort of homes, researching at their own pace and without the pressure to buy.

Buyback schemes offer similar benefits, eliminating the worry about long-term ownership costs. This is done by assuring a future resale value for the used car during purchase. Buyback benefits include flexible ownership tenures, easy upgrades and a guaranteed future value along with transparent and fair pricing.

Finally, used cars offer an additional advantage via freedom of choice. Customers can drive away with a model and colour of their choice while also opting for a preferred transmission and tenure. Once the predetermined tenure ends, users can opt for one of three choices — retaining the car, exchanging it for an upgraded version, or simply returning it for the assured buyback value.

Considering the plethora of benefits and options, it isn’t surprising that used cars are stealing a march over the sales of new cars.

The writer is founder and CEO, Spinny

Published on August 25, 2020