High demand for second-hand luxury cars entices Daimler Benz, BMW and Porsche.
A robust growth in demand for pre-owned cars and sports utility vehicles in the domestic market has enticed the country’s premium auto makers to join the party.
Daimler Benz (owner of the Mercedes brand), BMW and Porsche are either looking to enter the used car market by the end of this year or next year or are expanding their customer reach.
The luxury pre-owned car market is not very big but its rate of growth is much faster than the market for new luxury cars, say experts.
Ashwin M Sanghi, director, Sanghi Motorcar Company (dealers of Mercedes Benz), says: “The used luxury car market is a fast-growing segment with demand flowing from owners of small cars as well as those of mid-sized premium sedans. There has been no slowdown in demand for such cars despite the downturn.”
For every 100 new cars sold in the luxury segment, there is a demand for 15-20 used luxury cars, according to estimates.
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However, the growth of the new car market has been slower than the used car market, which has more than doubled in the past two years.
The growth will be much higher when taking into account the unorganised sector, which accounts for 80 per cent of the market.
Porsche India aims to sell 200 new cars this year, but the target for its used car business will be higher. Says Rod Wallace, managing director: “Our aim is to let our customers get an opportunity to drive a Porsche. We have sold 600-700 cars till date and there is a sizeable number of people who would want to upgrade to a new Porsche. Our used car programme will help them achieve that.”
Porsche is planning to enter the pre-owned car business by the end of this year. It will also increase its dealerships to 11 from two at present.
Similarly, BMW is looking to tap the used segment by next year. The company has a high brand value in India with solid demand in the unorganised market. Says Peter Kronschnabl, president, BMW India: “Looking at the demand for BMW vehicles in India, we will enter the pre-owned market next year. Our cars will be thoroughly checked and serviced before being sold.”
Analysts say at the rate the used luxury car segment is moving forward, it will be as big as the market for new cars in the next few years.
Knowing that the main concern of the buyers of used cars is maintenance and spare part costs, Daimler has been able to reduce prices of its spares significantly in recent years. Current owners, who have been regularly servicing their cars at a specified dealership, may also sell their car back to the dealer.
BMW has, this financial year, sold 2,316 units, a growth of 51 per cent, while Mercedes-Benz has sold 2,474 units, a growth of 23 per cent.
During the last financial year, ending March 31, 2008, BMW India sold 2,162 units, a six-fold growth from the previous year. Mercedes Benz, meanwhile, has sold 2,899 units, a growth of 48 per cent.