Chennai: When the Maruti 800 was introduced in 1983, the manufacturers’ tag line was to introduce the dream of a car to the middle class Indian family. Three decades later, the iconic first small car might have gradually been phased out but it has brought about a revolution that even the makers of the vehicle could not have imagined.
In Chennai, which is now called the Detroit of India, cars are available for even as a low as Rs 25,000/-, thanks to the booming used car market. Cars have now become so affordable that most families, even middle and lower-middle class, can afford a decent used car, mostly for weekend outings.
A casual search on any of the popular e-commerce websites used to buy and sell used cars reveals dozens of used cars, most of which are in good condition, at prices below Rs 50,000/-.
“Low prices do not necessarily mean that the cars are in a bad condition,” says John Xavier, a photo studio owner from Avadi who bought a Hyundai Santro for Rs 35,000/- recently.
“While I still drive a motorcycle, I bought the car so that my wife can drop and pick up my children from school which is just four kilometers away,” he says. While sending his children by a school bus cost John Rs 16,000/- for six months, his children now commute to school in the comfort of a car.
Used car retailers in the city point out that they get quite a few customers like John who need a second or even a third car, mainly for a specific purpose. “I had a customer who bought a car for his aged parents, just so that could visit nearby temples once a month.
His price range was around Rs 50,000/- and we could identify a car that suited his needs,” says K. Manikandan, a used car retailer from Kolathur which is now turning into a hub for used cars in the city.
However, cheap cars are usually available only on online forums and newspaper advertisements as established used car dealers claim that there is not much of a margin in such sales.
“The price of a used car is determined only from the price of the same vehicle when it was new. So it is not possible to say that used car prices have come down,” says K. Mahalingam, partner at T S Mahalingam & Sons, which has been in this business for several decades now.
“It is true that there are a lot of cars available in the market now and that could drive down the prices a bit. But generally, the customer’s focus still remains on quality and not price alone,” he says.
According to industry experts, for every 100 new cars sold in the country, there are about 120 – 130 used cars that get sold. While the ratio is about 1.2-1.3:1 in India, it is much more healthier in more matured markets where the ratio is 3:1 in favour of used cars.
The used car market here is trying to move towards the organized sector, from being driven largely by the unorganised sector. However, the industry is still dominated by individuals and small players.
For every 100 used cars sold in India, only 16 or 17 are sold by organized players, with the rest being accounted by individuals, consumers and brokers. Experts claim that the used car market in India is growing at about 15 – 20 per cent per annum.
Rakesh Srivastava, Sr. VP, Sales and marketing at Hyundai says that the manufacturer driven certified used car programs command approximately 18% market share which is growing rapidly.
“Hyundai offers its organized certified used car programs like “H-promise” that provides trust, reliability, certification and warranty back up to customers. Besides, H promise offers the convenience of a one stop solution to customers willing to exchange their cars for a brand new Hyundai car,” he says.
