Used car business shows all signs of becoming big

At a time when new-car sales in India are plummeting as a result of consumers’ reduced paying capacity, it comes as no surprise that several car companies are showing an active interest in the used-car business. Among those who entered the trade early are Maruti Suzuki, Toyota Kirloskar Motors, Hyundai and Mahindra.

The latest addition to the list is Tata Motors, which has come up with a certified pre-owned car business called ‘Tata Motors Assured’. Under the scheme, customers will be able to exchange their cars for pre-owned Tata Motors vehicles with a 1 year/20,000 km warranty. They will also enjoy three free services. Right now, 15 dealers in ten cities are offering the scheme. These are – Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Pune, Ahmedabad, Chandigarh, Ludhiana and Vapi. GM India, too, will soon start its used car programme called ‘Chevrolet OK’. It will involve 10 dealers to begin with, and will be extended further depending upon its success.

The pre-owned car business in India, which currently operates in the unorganized sector for the most part, has every chance of becoming big as it enters the organized sector. Almost half the cars currently sold in India  are used. In 2007-08, there were 1.4 million used-car sales as against 1.5 million new passenger car sales. 90 per cent of these transactions, however, do not get documented. This is what will change once car manufacturers themselves enter the picture in a big way.

The Tata Motors scheme, for instance, assures the customer of getting a reliable, good quality product. Under it, each pre-owned car will go through extensive quality checks and refurbishment before being offered for sale. The same will apply to schemes offered by all big manufacturers, for whom this will be an opportunity to further penetrate the market and make good their losses in the new-car business.