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The Used Cars Market of India A Quikr Review

In India, nearly 80 percent cars are bought on loan. Cars, like many other consumer goods have their resale value

as a significant parameter driving sales. The amount your car will fetch in the used car market is important

because its this amount which will partially fund the purchase of your next car later. If you get a good resale

price, your loan for the new car will reduce accordingly.

Quikr, Indias leading online classifieds company, has Cars as one of its busiest categories. Being in the car resale

service for over five years it was time to have a look back. A research was carried out on the online data created

from the ads posted by consumers in the last 1 year in the cars category. Four brands of cars with the most

number of ads on average were picked for some in-depth research. These were Chevrolet, Honda, Hyundai and

Maruti. Visibly, having different price belts, these brands also form a price segregation of sorts. The cars were up

to a maximum of 10 years in age.

It was discovered that most brands show a typical resale lifespan of 5-6 years. While the total demand for used

cars was askew towards certain brands, the time taken to sell a used car was around 20 days and consistent

across different brands and price segments. Resale value of medium to premium segment cars fell faster

compared to entry segment cars. Details of the above findings and more are shared in the sections below.

1. In India, used cars have a best resale lifespan of around 5-6 years

The adjacent infographic summarizes the percentage of used cars by age for sale on Quikr all over India for each

of the four brands. Hyundai, stands out as a clear outlier from the general trend and stays resale friendly for a

considerably long period from the year of make. While Chevrolet and Maruti, after approximately 5 years fall fast

in resale strength, Honda does so comparatively slowly and after 6 years.

Since beyond the 5-6 years age period the prices generally fall, we see that more than 50% of the cars are back

on the resale market by their 6th year. The trends show that the average period that a car spends with their first

buyer is 5-6 years, which seems to be the purchasing cycle for most of the car brands.

2. Resale value of medium to premium segment cars fall faster than entry level segment

Car resale prices for the above mentioned four brands were aggregated according to their year of make to find the

trend these prices follow, as a function of car age. The approximate dropping rate for car resale prices for each

segment was found to be:

Chevrolet: INR 38,000/year

Honda: INR 58,000/year

Hyundai : INR 31,000/year

Maruti : INR 32,000/year

Hyundai and Maruti, effectively belonging to a similar price segment, also show a similar trend in depreciation in

resale value, here. Chevrolet, although being a generally expensive brand name shows a much slower depreciation

rate compared to Honda. However, reasonably, the diminishing price was divided by the average price of the

segment to proportionally find the resilience of cars of that segment, with age. Evidently, Honda shows the

maximum slope. This quantified diminishing utility was then divided by the average price of the brand just to

further find, that it still stayed the highest. Thus, taking average prices of each of the brands above, the effective

diminishing utility in terms of resale was found to be the maximum of a Honda car. Thus a Honda loses worth

fastest. That a Chevrolet, which belongs to the premium price belt among the listed cars shows much better resale

prospects, is pretty good news for the Indian buyer.

3. Average time taken to sell a used Maruti or Hyundai car was less than other brands

The average time needed to re-sell your goods is an important parameter to determine the market demand. It so

turns out that, for cars it doesnt take more than a month, in India, to sell it in the used cars market.

Feedback received from Quikrs consumer base was evaluated to investigate the average number of days it takes

for a person to sell a particular brand of car through Quikr. Maruti Suzuki and Hyundai emerged as the most resale

friendly brands taking the least time for a sell-off compared with other brands found most commonly in the

market. This indicates that there is a fairly larger liquid resale market existent for these cars compared to other

brands.

4. The highest demand was found to be for used cars priced between 1-2 lakhs and declines

consistently with increasing price

It is intuitive to think, that, for a car, higher the price, lower the interest of purchase shown by a person. More

than 90% of the consumer population is seen to show interest in used cars below 5 lakhs in resale value. The

demand for used cars peaks at 1-2 lakhs and steadily decreases as we move to higher price points.

Trends like purchasing cycles getting shorter, used cars fetching good prices and getting sold quickly are a clear

indication of the fact that appetite for used cars in the Indian market is growing at a healthy pace. One can

purchase a new car and hope to sell it off at a good price in a few years.