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Jun 21, 2021 , Read 2 min

The Indian used car market will grow from 38 lakh units in FY2021 to 82 lakh units in FY2025 and Volkswagen India is eyeing a bigger share of this with a keen focus on tier 2 cities.

Volkswagen bullish about used car market in India; will focus on tier 2 cities

The used car market in India has been growing for years. However, the pre-owned car market in India has witnessed substantial growth over the last few years and this trend is expected to continue in the near future. The COVIV-19 outbreak in India has pushed people away from public transportation and towards personal mobility. But taking into account the financial and economic implications of the pandemic, many people are now turning towards used cars instead of new ones to fulfil their mobility needs. This presents a vast opportunity for carmakers to use this trend to their advantage. Several carmakers in India are now eyeing a larger share in the used car market here. This also includes Volkswagen that recently commissioned  Frost and Sullivan to conduct a market study in order to better growth trends and buying patterns to further the share of its vehicles in the used car market here. As per this study, the Indian used car market is poised to grow twice as much by 2025. The market research revealed that used cars sold in India by FY2025 will be around 82 lakh units as opposed to 38 lakh units in FY20-21. 

Such growth in the used car market in India will be propelled by the organized sector. Currently, the pre-owned car market here is dominated by local dealers that contribute 40 per cent of the sales while the organized sector (used car businesses run by car companies) contribute only 25 per cent. However, the market share in the organized sector will touch 45 per cent by FY25, as per Volkswagen’s market research. This is because used car businesses run by OEMs (like Maruti True Value) offer more reliability, increased transparency, and systematic transactions.

The research also revealed that the growth in the used car market in India will be spearheaded by rural areas and tier 2 and 3 cities. According to the research, around 42 per cent of intended customers in tier 2 cities believe that used cars offer better value over new ones. As a result of this, Volkswagen is now actively focusing on the used car market through Das WeltAuto (DWA) business arm and is relying on tier 2 markets to boost its used car business. The German brand is also bullish about the used car market here because the research highlighted that customers are now increasingly opting for used cars with an average age of around 3.5 years. Such vehicles are equipped with modern technologies and provide better safety than older vehicles.

Some other key findings that VW will take into consideration in an effort to improve its share in the used car market include observations like 66 per cent of potential customers prefer a warranty of at least one year while buying a used car
while 20 per cent of customers prefer lease options and subscription models. 

Ashish Gupta, Brand Director, Volkswagen Passenger Cars India said, “The study highlights that the market share in the organized sector will touch 45% by FY25 from the current 25%. This is a clear indication of change in consumers preference in personal mobility. Used car sales will see further growth as compared to new car sales. With the aim to tap this growing opportunity, we are relentlessly working towards strengthening our offerings for customers through our national pre-owned car network, Das WeltAuto (DWA). In addition, we believe that tier 2 markets will play a critical role in our used car business volumes and the customer insights from the study will further aid us in addressing their requirements through our customized solutions.”

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