Choice and affordability remain the key considerations for pre-owned car purchase for car buyers overall.
New Delhi: OLX’s 3rd edition of the Auto note reveals that Indian millenials are the driving force behind the fast growing pre-owned car market. The size of the pre-owned automobile industry is 1.3 times the size of the new car market, and is expected to touch USD 25 billion by 2023. This strong growth is spurred by millennials, who are digitally savvy, seek choices, maximize value and are conscious of their impact on the environment. Millennials – those between 22 and 37 years of age today – place emphasis on the resale value alongside the technology and safety features in the car, over other considerations like size and brand.
Estimated market size of pre-owned cars as per OLX Auto Note 3:
The pre-owned car market is currently estimated to be USD 14 billion, and OLX estimates that it will have risen to USD 25 billion by 2023. At 1.4 times the size of the new-car market in the coming years, pre-owned cars will have touched over 5 million units by 2020 and 6.6 million units by 2023.
In order to understand this trend further in the pre-owned automobile market, OLX and OLX CashMyCar conducted a study with over 1,500 respondents across India who have either sold or purchased a pre-owned car in the last 1 year. These insights and more are discussed in "OLX Auto Note" study: India’s most comprehensive consumer report on the pre-owned car market.
Value-seeking millennials are turning to pre-owned cars, influenced by their friends and families : Millennials are drawn by the availability of a variety of cars online,– 26 per cent say availability of choices among brands is important to them, compared to only 15 per cent of non-millennial buyers. They are willing to sacrifice affordability for choice – 38 per cnet of millennials compared to 51 per cent of non-millennials cited this as their primary reason for buying pre-owned cars online. (64 per cnet) millennials are influenced by their family & friends when it comes to purchasing a pre-owned car. Interestingly, millennials are twice as likely to give into influence/pressure from friends and peers (16%), compared to non-millennials (7 per cent).
Resale value, technology and safety are top 3 considerations: When it comes to key considerations that influence the purchase of a pre-owned cars, millennials and non-millennials display similar preferences – both place emphasis on the resale value of the car (this underlines the value conscious theme for millennials), technology features, and safety features in the car.
Online marketplaces empower millennials to realise better value on their existing cars: Millenials are not only deriving value through buying pre-owned cars online, but also through selling their cars online – 54 per cent affirm that they got a better value for their existing car by selling it on online marketplaces. The primary motive of 36 per cent of the millennials was to use the proceeds from this sale to upgrade themselves to a new car, while 17 per cent of them upgraded to a pre-owned car with better features.
Pre-owned cars are the leading choice for 1st and 2nd time car owners: Almost half of the millennials (49 per cent) who purchased a pre-owned car during the last one year were first time car owners. The other half already had an existing car.
Start compact, start early: Three-fourths (74 per cent) of all pre-owned cars bought online by millennials were hatchbacks and sedans, compared to two-thirds (66 per cent) for non-millennials. Millennials, it appears, are happier to start with smaller cars, if it can result in them getting to own a car sooner in life.
Selling is about maximizing value: Millennials sell a larger variety of cars on the platform, compared to non-millennials, who are partial to Hatchbacks and Sedans (two-thirds of all pre-owned cars sold by non-millennials). This is contrasted with hatchbacks and sedans comprising just half of all cars sold online by millennials. Millennials are helping broaden the online market for sales of all types of pre-owned cars.
Just over a quarter of all pre-owned cars sold online by millennials (27 per cent) were 4 years or less in age, compared to nearly half (45 per cent) among non-millennials. Further, millennials on average took longer to complete their selling transaction compared to non-millennials. They appear to be willing to wait longer in order to secure what they believe is the best price for their car. Both these preferences when viewed together, further lend weight to the value maximizing trait among millennials.
Commenting on the insights, Sunny Kataria, VP Auto, OLX India said, “At 440 million, millennials comprise over a third of India’s population, and nearly half of the total working population. Their attitudes, preferences, and life goals bode well for the continued growth of the pre-owned cars market. They are brand conscious, digitally connected, value maximizing and environmentally aware individuals. They exhibit financial discipline in managing their spending, and are defying stereotypes of first-ownership of products. It is not surprising then, that millennials’ decisions on buying cars are relatively more rooted in pragmatism and aspiration, thereby fueling the pre-owned cars business.” He further added, “Over the next three years, millennials will emerge as the largest consumer group in the automobile industry as the pre-owned car industry hits 6.6 million units in market size by 2023.”
Talking about the growth of pre-owned car retail, Bhaskar Bagchi, General Manager, OLX CashMyCar said, “Unlike other consumer sectors in retail, pre-owned cars retail is witnessing a resounding growth as millennials continue to seek the best possible way to sell off their existing cars. Instant payment, hassle free documentation and free inspection add to the level of seamless convenience. As we expand to over 150 stores by 2021, we are confident that we will be able to address the needs of this segment in a seamless manner.”
OLX is a pioneer in the pre-owned auto market in India, having strengthened its presence over the last 11 years. The auto category records 2.4 billion monthly page views on OLX, and registers over 10 million monthly active users in the pre-owned auto category. Over 50,000 business sellers present on OLX reach out to OLX’s user base across 4,000+ towns.