Volkswagen eyes significant growth in used car segment by FY2025

Volkswagen India's pre-owned car business Das WelAuto worked with Frost & Sullivan to conduct"indian PRe-owned car market Study" to understand as well as analysis the used car market in India, customer buying patterns and opportunities to further develop the market.

The approach deployed by Frost & Sullivan was PESTEL analysis approach; this covers the political, economical, social, technological, environmental and legal elements, which influence used-car buying decisions.

In the study, it has been revealed that organized platforms may contribute nearing to 45% to the total pre-owned car market by the financial year 2025. By looking at the constant growth in sales of pre-owned car, the ratio of the used cars when compared to new cars is expected to increase by 2.1 times, that of new car sales in India by financial year 2025.

Due to Covid-19 Pandemic, the car buyer's preferences in the nation, has been changed. The car sales have been affected, during the past one year, however, it has been found that nearing to 72% of the current owners have indicated that the desire to own a car, is the most dominant purchase driver.

According to Indian Pre-owned Car Market Study, it has been further revealed that customers in Tier-1 and Tier -2 are choosing convenient and affordable mobility solutions along with financing options. There is strong demand for used car; this sector is expected to reach 8.2 million units by financial year 2025 from the 3.8 million units mark in FY'21.

Age of the vehicle and warranty

The average age of the preferred used is about 3.5 years because recent model provide better features such as modern technology, safety and powertrain when compared to older models. The study reveals that nearing to 66% of potential customers prefer minimum warranty for a period of one year.

Finance

Price is a significant factor by the potential buyers. Around 66% of the customers in Tier -1 and 39% of the buyer from tier-2 cities consider price to be topmost factor by the potential used car buyers.

Young buyers

According to the study, it has been found that about 70 % of the respondents are in the age group of 30 to 39 years and major of these customers prefer purchasing the mid-spec variant over the base or the top-spec variant.

Aspirational Value

The desire for car ownership is the major driver for purchasing a used car, whether it is an upgrade from a two wheeler to four wheeler, old car to new car or purchase of the first car. The report also reveals that about 63 % of the buyers are interested in owning a car even if shared mobility as well as public transport is economical.

Commenting on the announcement, Ashish Gupta, Brand Director, Volkswagen Passenger Cars India has stated that, study highlights that, the market share in the organized sector would reach about 45% by financial Year 2025 from the present 25%. This is clear indications that change in consumer's preference in personal mobility. Used car sales would witness further growth as compared to new car sales.