The used car market is witnessing unprecedented growth in India with the demand catapulting in the post-pandemic era. The demand has been exponentially growing and more users are now actively looking at the used car market to bring home their next major purchase. Highighting more data on user trends and potential, the FY2021-22 Indian Blue Book report was recently launched, promising the used the car market to grow up to 8 million units by FY2027. While the sector's organisation will be a contributing factor, the next push will also come from leasing and subscription buying models.
Also Read: Exclusive: India's Used Car Industry Will Grow Nearly 13% By FY2027 - IBB Report
Speaking to carandbike in an exclusive interaction, Ashutosh Pandey, CEO - Mahindra First Choice Wheels, emphasised on the same at the launch of the 2022 Indian Blue Book report. He said, "While the physical and digital presence will continue to grow, the availability of quick finance options will also spearhead the used car business. But innovation like leasing and subscription on used cars could be models which should be definitely explored because I feel there's a demand that we can cater to. These models will give ease of access to those wanting to buy a used car."
(L-R) Ashish Gupta - Brand Director, Volkswagen Passenger Cars India with Ashutosh Pandey, CEO - Mahindra First Choice Wheels at the launch of the FY2021-22 IBB Report
Leasing and subscription models essentially allow users to own the vehicle without having to necessarily worry about the maintenance, insurance, registration and more. It also helps them to upgrade as per their convenience. More importantly, the acquisition cost of owning a vehicle via subscription or leasing comes drastically down which makes access easier in several ways.
Also Read: Exclusive: Used Car Market In India To Surpass 8 Million Unit Sales By FY2027
At present, the new car market is booming with leasing and subscription models right from Mercedes-Benz to Maruti Suzuki, all offer leasing and subscription options. You also have companies like ORIX, Avis, Quiklyz, among others, who facilitate leasing options outside of automakers. At present, there are fewer players like Revv and PumPumPum that offer used car subscription in India. The segment is expected to see more players, new as well as existing used car companies diverging into the leasing and subscription space for pre-owned vehicles.
The Indian used car business currently stands at $23 billion and the number is expected to grow by 13 per cent by FY2027. There is already a strong supply shortage with a used-to-new car ratio between 1:4 and 1:6. There is an ever-increasing demand from Tier II and III cities and this demand is only going to grow further in the coming years. While traditional used car sales will be driven by conventional financing options, leasing and subscription could drive a decent chunk of volumes in the future.
