The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles. Infact, it is one of the world’s largest industries by revenue. This industry contributes almost 7.5 percent to the country’s overall GDP, and it accounts for about 49 percent of the manufacturing sector.
Unlike any other industry, year 2020 has been a nightmare for the auto industry as well. Infact, the auto industry was already going through its low points even before the covid thing since 2018.
But it goes without saying that the car manufacturing companies have faced a lot of challenges and huge amount of money loss during the entire lockdown period and more. The whole outbreak of COVID-19 followed by lockdown resulted into an estimated revenue loss of Rs.1500 crore per day. The auto industry witnessed the steepest downturn in years due to the pandemic. The industry which suffered losses of more than Rs.2,300 crore in turn-over for every single day of closure, unbelievable but true.
Talking about the same, the strict government guidelines, lockdown, travel restrictions and the resulting fallout have affected the automotive sector in a one-of-a-kind fashion.
Because of the widespread job losses, folks started saving more instead of making big transactions like car purchases, which further brought down the demand and supply and manufacturing.
But the industry is expected to realign in the upcoming New Year. The loss maybe recovered during the festive season but only up to a certain extent not completely. And the recovery is unpredictable just like the virus.
Quick fact: It took almost a decade for car sales in the European Union to recover from the recession that began in 2008. Nothing to be scared about but just so you know that the recovery takes time.
In the last few years we have seen a behavioral shift which leads to sales of pre-owned car. Infact, used vehicles are a growing trend in normal new vehicles.
For Indian families, four-wheelers are a status symbol till date. But earlier, purchasing new vehicles meant incurring tremendous expenses. But that outlook is now taking a backseat. Therefore, the market for used or pre-owned cars has recently witnessed a sharp rise and 2021 will bring in some great opportunities for pre owned car dealers.
Now the question is “Can pre owned car market accelerate the recovery for the Indian automotive sector or not”
Yes, Absolutely! Reason being, Given the unpredictable circumstances, as compared to the new car industry, it is expected that the used car market will see a much quicker recovery from the pandemic, considering the strong factors, such as the rising need for personal vehicles and budget constraints.
It’s a fact that only through the pre-owned vehicle room can the massively hit automotive industry see a revival. India is densely populated and folks out there are avoiding using metro or public transport in general. For a matter of fact the uncertainty looming on jobs, businesses and income is also driving consumer’s final purchase decision.
Quick fact: Did you know? 55% of first time car buyers purchase pre owned cars maybe because of the budget or maybe because they don’t want to splurge money on a specific model.
As mentioned above due to the COVID-19 pandemic the budget budgets are comparatively low, people have a dented budget to splurge on a brand new car so they go for pre owned cars instead. As in having a car is any day better than travelling in public transportation infact it’s safer than public transport looking at the current scenario people tend to buy pre owned cars. And the graph is all set to reach the new highs in the upcoming year.
Now even lower middle-class individuals intend to buy a pre-owned vehicle, while back in time things were completely different. People were a little hesitant but now that the pre owned car dealers have come up with revamped models people are looking forward to place their orders even before the car is available at the store.
Growing market for used cars in small towns.
Gone are the days when pre owned cars were limited to just tier 1 city. Interestingly, studies point out that the demand and supply of luxury cars is catalyzed by non-metropolitan cities and is levelling up with their metropolitan counterparts.
The thought process or the mindset that you won’t get enough options (in car colors or model) when buying a pre owned car is so old school.
Because nowadays used car dealers make sure they do all the inspection before handing over the car to the customer. They have a proper check list and a set parameter just like new cars.
People expect a very fair way of dealing with pre-owned cars because they have some fear of buying the right car model.
The market has shifted towards organized pre owned cars. As in now car dealers have some checks in terms of quality and transparency, just like you have when you buy a new car. So the process is quite transparent and hassle-free for the consumers.
Pre-owned cars are fits the budget!
Most automobile enthusiasts enjoy using multiple vehicles at the same time. In India, families sometimes purchase used cars or pre-owned cars in order to first learn how to drive and then buy a new vehicle. Pre-owned vehicles work into their budget for some individuals, while others don’t want to spend a significant portion in a new mode of transport.
Concluding on a note that, disruption caused due to the pandemic in the auto industry has resulted to a huge loss, with recovery years away. But let’s say that 2021 is going to be a year of hopes and their won’t be slump in car sales and the pre-owned cars market is going to help in revival. As car companies and pre-owned car dealers can sense that they are going to make the most of it in the next normal. In the upcoming year 2021, dealers expect used car transactions to increase. And the overall Indian auto industry is expected to see stronger growth.
Article By Mr. Ankit Saluja, Co-Founder and CEO, Premium Autoz