When Dilip Singh was looking to sell his seven-year-old SUV whose odometer had clocked nearly 1 lakh km, he was surprised to find that he managed nearly 70% of the cost of the vehicle.
With new car prices soaring over the last few years, the value of used cars has also gone up. In the last two years, the average ticket prices in the used car market has gone up to 6-6.5 lakh from INR 3-3.5 lakh, said Vinay Sanghi, CEO, CarTrade group “Since new car ticket size has also gone up by around 30%, it’s spilling over to the used car market too as in all types of cars, people opt for buying the top-end variant,” he said.
Used car marketers say the demand pull means a slightly older SUV is available for the price of a hatch. “Currently, used SUV prices can start from as low as INR 3.5 lakh while hatchbacks prices can start from INR 2 lakh only,” said Gajendra Jangid, co-founder and CMO, CARS24 Services.
Compact SUVs have become top draws, and in the luxury space specific models like the Mercedes-Benz C-Class, Audi Q3, and BMW X1 Series are particularly popular, said Niraj Singh, founder and CEO of Spinny. The platform’s top models range from just under INR 2 lakh to INR 7.5 lakh. While the Grand i10 starts from 1.5 lakh, a Baleno is priced between 4.7 lakh and INR 7.1 lakh, while a used Kwid is available from around INR 2.49 lakh to INR 4.9 lakh.
“The new car product mix has been changing in favour of SUVs which are pricier and these have started to come to the used car market as well. Also, many new entry-level car buyers are preferring to buy better equipped, bigger B-seg used cars at the same price. This has also led to the decline of the entry level segment which has not seen any new offerings,” said Ravi Bhatia, president, JATO Dynamics The used passenger vehicle market is currently estimated at 5.5 million units, growing 10-12% annually, compared to the new PV market of just over 4 million units.
What is also helping is easy availability of finance. CarTrade, which acquired OLX last year, for instance offers a financing marketplace for used products both auto and non-auto. Typically, second hand car finance comes at a higher cost of 11.4-15% compared to 8.2-10.5% for new ones.
That trend is also true for used two wheelers which is witnessing the kind of premiumization that the passenger vehicle market is going through.
“There is growing demand for higher end two wheelers including Royal Enfields and Pulsars with a 30-40% rise in ticket sizes in the last 2-3 years,” said Sanghi of Car Trade. Part of the reason for prices firming up is the demand bounce back, he added.