Why Pre-Owned Luxury Cars were all the rage during the Lockdown?
The COVID-19 pandemic has hurt the demand for luxury cars in India, which have seen a strong growth in the last two decades. The Indian luxury car market was already in decline as 35,000 luxury cars were sold in India in 2019, compared to 40,340 in 2018 owing to slowdown in the economy. The double whammy of the lockdown has affected demand by up to 40% by some estimates. Not to mention, India’s luxury car market only accounts for about 1.2% of the overall auto sales, compared to 10% in mature markets like US and China.
The tightening of purse strings means that consumers are prioritising affordability more than anything else, which has created an opportunity for players in India’s used car market to grow. “In terms of pre-owned vehicles, overall the segment has shown great resilience as demand has surged by 133%, while supply has surged by 112% in the recent months vis-a-vis the pre-COVID period. Owing to constrained budgets people have gravitated towards pre-owned cars,” noted Amit Kumar, CEO, OLX Autos India.
The fortunes of used car start-ups like Cars24 changed as it became a unicorn after a $200 million Series E funding round led by DST Global. The used car market is pegged at $ 24.24 billion, with plenty of competitors like Carwale, CarTrade, Droom, CarDekho, Spinny, and OLX Auto.
However, the bigger trend is the shift of consumer preference away from a brand new luxury car and shedding the stigma attached with ‘used cars’, especially in the luxury segments. Abhishek Patodia, Senior Vice President (Used Cars) at CarWale, said, “As per the demand figures on our consumer platforms – CarWale and CarTrade – and sales numbers from our dealer partners, the sales for pre-owned luxury cars have grown by 20-30% in the last 3 months, when compared to the previous quarter. This growth rate is due to the dual effect of lockdown pent up demand and the festive season. Moreover, sales for luxury cars have been at similar levels this festive season, as compared to last year's festive season.”
The bestselling pre-owned luxury vehicle brands were Mercedes Benz, BMW, Audi, Bentley, Rolls Royce, Land Rover and Lamborghini. Krishna Veer Singh, President & Head, Marketplace, Droom, observed, “The best-selling luxury cars are Mercedes-Benz E-Class, BMW 5 series, Mercedes-Benz C-Class, Audi A6, Audi A4 and the top bestselling luxury bikes are Yamaha YZF-R1M Triumph and BeneliTNT 600i.”
Digitalisation of purchase pathway means that these players can offer online vehicle research, door-step test drive, door-step delivery, online documentation, and digital payments. Consumers are making these big ticket purchases without stepping into the showroom even once, claimed Jatin Ahuja, Founder & MD/ CEO, Big Boy Toyz. He further said, “We launched our BBT Mobile app recently, which has itself seen more than 1 lakh downloads, we have introduced 360 degree virtual tour of our headquarters via the BBT website, which gives the consumer the feeling of being in the HQ to at least 80% accurately. Post covid it was a very surprising trend to see that almost 70% of the consumers made their purchase by visiting the website and not the showroom.”
Why are consumers gravitating to pre-owned luxury vehicles? OLX Auto’s Kumar explained, “On OLX you can find a pre-owned luxury car for 10%-30% cheaper than it’s the new version. Every pre-owned luxury car is unique, hence interested buyers could stumble upon a well maintained barely driven pre-owned luxury car at a great price. This value is what drives people to purchase a pre-owned luxury car on OLX. Demand for pre-owned luxury cars is up by 33% in the recently concluded festive season, compared to the same time period last year. This indicates a huge pent up demand for the same and we may see the trend continue well until December.”
Droom attracted customers during the festive period with exciting festive offers. Singh said, “In this festive season, we have witnessed over 60% peak in sales. This year, in new vehicles sales of cars has witnessed 60% surge and premium cars accounted for 100% growth. Two-wheelers also saw a huge demand as more people are opting for personal mobility in the times of COVID-19 and witnessed growth over 240%.”
The pent up demand for luxury vehicles was such that players like BBT who only deal in pre-owned luxury vehicles saw an overall growth during the pandemic YoY. “Due to the global crisis we were initially afraid to achieve the set target, but due to our excellent strategy and far sightedness we have been able to sell a total of 140 luxury cars since the pandemic and the cars within the price range from Rs 50 lakh to Rs 1.50 crore has seen the maximum off take in terms of consumer preference. We are looking at clocking in an overall growth and not just a festive season spike,” signed off Ahuja.