Pre-Owned Automobile Industry Is Expected To Touch $25 Billion By 2023: OLX Report
This strong growth is spurred by millennials, who are digitally savvy, seek choices, maximize value and are conscious of their impact on the environment.
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OLX, online marketplace for pre-owned cars, having strengthened its presence over the last 11 years. The auto category records 2.4 billion monthly page views on OLX, and registers over 10 million monthly active users in the pre-owned auto category. Over 50,000 business sellers present on OLX reach out to OLX’s user base across 4,000+ towns.
OLX’s 3rd edition of the Auto note had revealed that the Indian millennials are the driving force behind the fast-growing pre-owned car market. The size of the pre-owned automobile industry is 1.3 times the size of the new car market, and is expected to touch $25 billion by 2023. This strong growth is spurred by millennials, who are digitally savvy, seek choices, maximize value and are conscious of their impact on the environment. Millennials – those between 22 and 37 years of age today – place emphasis on the resale value alongside the technology and safety features in the car, over other considerations like size and brand.
The pre-owned car market is currently estimated to be $ 14 billion, and OLX estimates that it will have risen to $ 25 billion by 2023. At 1.4 times the size of the new-car market in the coming years, pre-owned cars will have touched over 5 million units by 2020 and 6.6 million units by 2023.
In order to understand this trend further in the pre-owned automobile market, OLX and OLX CashMyCar conducted a study with over 1,500 respondents across India who have either sold or purchased a pre-owned car in the last 1 year. These insights and more are discussed in "OLX Auto Note" study: India’s most comprehensive consumer report on the pre-owned car market.
Millennials are drawn by the availability of a variety of cars online, – 26% say availability of choices among brands is important to them, compared to only 15% of non-millennial buyers. They are willing to choose affordability for choice – 38% of millennials compared to 51% of non-millennials cited this as their primary reason for buying pre-owned cars online. (64%) millennials are influenced by their family & friends when it comes to purchasing a pre-owned car. Interestingly, millennials are twice as likely to give into influence/pressure from friends and peers (16%), compared to non-millennials (7%).
However, when it comes to key considerations that influence the purchase of a pre-owned car, millennials and non-millennials display similar preferences – both place emphasis on the resale value of the car (this underlines the value conscious theme for millennials), technology features, and safety features in the car.
Millennials are not only deriving value through buying pre-owned cars online, but also through selling their cars online – 54% affirm that they got a better value for their existing car by selling it on online marketplaces. The primary motive of 36% of the millennials was to use the proceeds from this sale to upgrade themselves to a new car, while 17% of them upgraded to a pre-owned car with better features.
Almost half of the millennials (49%) who bought a pre-owned car during the last one year were first time car owners. The other half already had an existing car.
Three-fourths (74%) of all pre-owned cars purchased online by millennials were hatchbacks and sedans, compared to two-thirds (66%) for non-millennials. Millennials, it appears, are happier and are willing to start with smaller cars, if it can result in them getting to own a car sooner in life.
Millennials also sell a larger variety of cars on the platform, compared to non-millennials, who are partial to Hatchbacks and Sedans (two-thirds of all pre-owned cars sold by non-millennials). This is contrasted with hatchbacks and sedans comprising just half of all cars sold online by millennials. Millennials are helping broaden the online market for sales of all types of pre-owned cars.
Just over a quarter of all pre-owned cars sold online by millennials (27%) were 4 years or less in age, compared to nearly half (45%) among non-millennials. Further, millennials on average took longer to complete their selling transaction compared to non-millennials. They appear to be willing to wait longer in order to secure what they believe is the best price for their car. Both these preferences when viewed together, further add weight to the value maximizing trait among millennials.
Sunny Kataria, VP Auto, OLX India, stated, “At 440 million, millennials comprise over a third of India’s population, and nearly half of the total working population. Their attitudes, preferences, and life goals bode well for the continued growth of the pre-owned cars market. They are brand conscious, digitally connected, value maximizing and environmentally aware individuals. They exhibit financial discipline in managing their purchases, and are defying stereotypes of first-ownership of products. It is not surprising then, that millennials’ decisions on buying cars are relatively more rooted in pragmatism and aspiration, thereby fuelling the pre-owned cars business.” He further added, “Over the next three years, millennials will emerge as the largest consumer group in the automobile industry as the pre-owned car industry hits 6.6 million units in market size by 2023.”
While talking about the growth of pre-owned car retail, Bhaskar Bagchi, General Manager, OLX CashMyCar mentioned, “Unlike other consumer sectors in retail, pre-owned cars retail is witnessing a resounding growth as millennials continue to seek the best possible way to sell off their existing cars. Instant payment, hassle free documentation and free inspection add to the level of seamless convenience. As we expand to over 150 stores by 2021, we are confident that we will be able to address the needs of this segment in a seamless manner.”