Ratio Of Used Car To New Car Sales Expected To Double By 2025, States New Study

The study projects a 20 percent rise in pre-owned car purchases through organized platforms in the next four years

Volkswagen’s pre-approved car business Das WeltAuto (DWA), in collaboration with Frost and Sullivan, has published studies related to pre-owned car market trends. The study predicts a 20 percent rise in market share of used car platforms like Cardekho Gaadi Store and DWA by 2025.

The study further states that the demand for pre-owned vehicles is steadily growing. The ratio of used cars bought to that of new cars is expected to more than double (2.1x, to be specific) by 2025. This uptick in demand for pre-owned vehicles can be attributed to the COVID-19 pandemic.

The report focuses on political, economic, social, technological, environmental, and legal factors influencing pre-owned-car buying decisions among potential and existing customers. Some of the key findings are:

1. The desire to own a budget car is the key driver of purchase. The reasons can be either upgrading from a two-wheeler to a four-wheeler or purchasing one’s first car.

2. Used car owners across age groups prefer vehicles not older than 3.5 years on average. This is because these not-so-old cars are still relatively modern, offer more features, are safer, and have been ridden less.

3. As per the report, 66 percent of potential customers prefer a warranty of at least a year on a used car.

4. As much as 66 percent of the customers in Tier-I and 39 percent in Tier-II cities consider price to be the most crucial factor while buying used cars. Other determinants are the make, maintenance costs, fuel type, and safety features.

5. Based on inputs from existing used car owners, 70 percent of customers between 30 to 39 years would prefer purchasing mid-spec variants to base and top-end variants.

6. Even today, 50 percent of the buyers prefer cash transactions, 21 percent vouch for online payments, and 17 percent are all for other financing options.

7. Used car financing options are expected to increase up to 35 percent by 2025 (from the existing 21 percent). This should allow buyers to increase their budget and explore more options.

8. Organized platforms like Cardekho, Gaadi Store, and DWA offer better financing options, leading to a more robust demand for used cars across Tier-1, Tier-II, and rural markets.

In conclusion, 63 percent of the participants wanted to own a car despite economical shared and public transport options. This suggests a slightly higher demand for cars compared to past years.