Robust growth in used two-wheelers

Bigger than entire new two-wheeler sales in all of Africa. Both Hero & Honda, biggest in the sector here, quite active in pre-owned market

At 16.5 million units sold a year, this country's two-wheeler market is one of the world's largest. And, these have doubled in seven years, with a boom in new model launches.

This has given rise to a market of pre-owned two-wheelers, which as of the past financial year was roughly 40 per cent of the new two-wheeler market. Presently, three in every 10 of two-wheelers sold in the country are used ones. At 6.6 million units, India's pre-owned two-wheeler market is bigger than the entire African continent's new two-wheeler industry. It is  estimated to have grown 20-25 per cent annually in the past five years.
 
This has attracted the attention of the two biggest two-wheeler manufacturers, Hero MotoCorp and Honda Motorcycle and Scooters India (HMSI). They've been keen to keep two-wheeler buyers loyal to their brand.

Y S Guleria, senior vice-president (sales and marketing) at HMSI, said: “Honda's customer base has crossed 25 million in India. We know some who even have five or six in the family. The used two-wheeler industry is very unorganised but gives us a great opportunity for a viable business. We are able to garner the loyalty of the brand and keep the customer in the same family.”

While India’s used two-wheeler market isn't of the same proportion as the used car market, more than twice the new car market, there has been a robust growth in sales, especially with the entry of online entities like Olx and Quikr. According to Ken Research, the used market has displayed strong growth on account of increasing income of households, migration of individuals in search of work or education and the greater availability of used two-wheelers.

“Honda reported used two-wheeler sales growth of 20-25 per cent last year. We have created a separate vertical for this business. As of now, we have 90 ‘Best Deal’ outlets, which we plan to take to 100 by the end of next month,” added Guleria.

Honda’s Activa is India’s largest selling two-wheeler brand, followed by Hero’s Splendor. These are also the most desired brands in the pre-owned market. Hero Motocorp had a few years earlier rolled out the Sure, a pre-owned two-wheeler brand. Refurbished bikes are sold by its dealers with a one-year warranty and two free services.

“This was a pilot project that enabled customers to upgrade to new vehicles through the exchange of their used two-wheelers. The programme currently operates though our existing dealer network. This initiative is expected to grow further once the goods & services tax gets implemented,” said a Hero MotoCorp spokesperson.

The industry has also provided start-ups the opportunity to enter and expand faster. CredR, a Mumbai-based used two-wheeler online marketplace, claiming to deliver 100 motorcycles a day, attracted the attention of private equity company Fidelity Growth Partners.  The latter has invested Rs 96 crore in CredR.

CredR estimates the country's used two-wheeler market at 12 million units, whose estimated market value is $8-12 billion.