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SUVs driving used car demand in India, Google report

Google India in association with Mahindra First Choice Wheels today launched a report, compiled by analysing the search trends of used cars queries and actual market behavior to understand the used car market in India. The report revealed that Utility vehicles were the most searched used car type on Google in India. Used utility vehicles take 47% share of all used car queries in India, becoming the primary driver of the online used car demand in India, followed by hatchbacks at 20% and the remaining sedans and luxury. This growth in demand also matches with offline sales for SUVs at Mahindra First Choice, in their outlets across India, which has seen SUVs sales grow from 6% to 10% in the past 3 years.

Indicating a growing a demand for used cars in India, the number of queries related to used cars on Google Search have grown 20 times in 6 years; with a 30% YoY in 2014. The used car buyers are increasingly relying on Internet for their research before they arrive at final decision. As many as 8 in 10 potential used car buyers starting their research from Google search seem to be undecided about which used car to buy. Most commonly searched queries involve questions around budget, brands, fuel type and ownership.

“Used car consumer is highly underserved in India as the industry is characterized by a lack of formal distribution and service networks. The industry suffers from a significant trust deficit between buyers and sellers. This is also reflected in the search behavior in India, there seems very low awareness as well as low curiosity to know about ‘certification’ or ‘warranty’ on used cars. We see a significant amount of queries for Certified used cars in developed markets like the US. This probably is a clue to the direction in which the market will evolve over the years as it gets more organized.” said, Gaurav Kapur, Industry Head for Auto vertical, Google India.

As per data available with Mahindra First Choice, proportion of first time buyers has declined while an increase has been registered in the “multiple car in the family” segment. However, the first time buyer still remains the largest category for a used car customer. Used car as the second vehicle in the household instead of a two wheeler is on an increase.  “The used car market is now not only larger in size, but also growing at a rate faster than the new car market, while undergoing structural changes and getting more organized. As user understanding evolves, organised used car market is likely to see 15-20% growth in the next 4-5 years” said, Dr. Nagendra Palle, CEO of Mahindra First Choice Wheels.

Another interesting trend is the fuel prices impacting decision making for consumers to go in for diesel or petrol cars. Sales data from multi brand cars at Mahindra First Choice outlets indicate growing preference for diesel cars, a trend which is also evident in growing preference of Diesel cars queries on Google search. Search queries see a huge spike in both overall search queries for diesel cars. And higher percentage share of diesel car queries of all car queries; as shown in the table:

 

% Petrol Car queries

% Diesel Car queries

2011

80%

20%

2012

80%

20%

2013

74%

26%

2014

66%

34%

The study also revealed that, most number of used car searches come from Maharashtra, followed by South India, West Bengal, NCR, Uttar Pradesh and Punjab. In the used car searches, Honda is most searched used car brand on Google with Honda City taking the top slot for most searched used car.

A car is believed to be the second most important purchase/investment (after a house) done by an individual or a household, and hence a very involved decision with a significant amount of time spent on analyzing and researching. Unlike new cars search queries which show a bit of seasonality, the searches for used cars are consistent throughout the year. Only 16% of the used car searches are for specific brands, and 84% queries are generic queries indicating that the buyers get into the market with an open mind and finalise their purchase after analysing and researching all options.

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