Pradeep Gaur/Mint
Pradeep Gaur/Mint

Car buyers in India getting younger, changing cars more frequently

CarDekho.com's Umang Kumar speaks about the new-age Indian car buyer and other trends in the new and pre-owned car segments

Car sales rise during the festive season and the trend is expected to gain further momentum this year with good monsoon and higher liquidity due to 7th pay commission payouts. Today, the car market in India also constitutes the pre-owned car segment. CarDekho.com, one of India’s leading auto portals, had acquired Gaadi.com in 2014. Umang Kumar, president, CarDekho.com, and chief executive officer and co-founder of Gaadi.com spoke to Mint on the new-age Indian car buyers and other trends. Edited excerpts:

What should one look for when buying a new or a second-hand car?

While each car buyer has a different preference, new car buyers generally look at a couple of things. One is brand – which captures the features, reliability, service and second is value for money – pricing, its resale value and current ongoing offers.

When people are looking to buy a used car, they need to additionally check car condition – whether it is has been in an accident or not, its age, kilometres driven and lastly if proper papers (registration certificate) are available for transfer.

How has the profile of a car buyer changed over the last 5 years?

Car buyers in India are getting younger and buying cars early in their careers. The numbers of second cars in the households, and second-time owners, have gone up considerably in the last 5 years. While 90% of car buyers in India still continue to be male, we currently see more women researching and deciding the car choice.

We expect this segment to only grow. Also, people are more open to buying used cars, which provide significant value for money and the opportunity for buying their aspirational car.

Lately, with the rise of taxi aggregators like Uber and Ola, a new segment of ‘investor’ owners has also come up, who buy multiple cars and put them on these platforms as income-generating assets.

In India, cars also have an aspiration value, how does this reflect in the consumer behaviour?

Car purchase is one of the most significant purchases for people and the first purchase has a high emotional attachment. What we have seen is that Indian car buyers today know what they want, are brand conscious, demand features and don’t mind exceeding their budget if it adds to their social image. The growth in sports utility vehicle (SUV) segment and launch of feature led cars in entry segment are testament to this evolution. On the used car side, we clearly see a majority of customers trading up to a used sedan, compared to new hatchback in the segment. A 3-year old Maruti Swift DZire is a great buy versus buying a new Maruti Alto or Wagon-R.

At the entry level, is there an upward shift in the choice of a car? Are people buying more expensive cars as their first one?

Consumer’s choices have definitely evolved. While entry segment pricing has not increased substantially, the choices and features in today’s cars are more comprehensive than earlier.

Consumers today spend considerable time researching online about their car purchases on our platforms, are very knowledgeable and are willing to look beyond traditional brand choices.

Does financing also play a role in this change? Has financing become easier these days?

Financing clearly brings affordability to the car purchase and decisions today are driven by the equated monthly instalments (EMIs) people can afford.

Buying cars on full down payment is no longer popular, with over 70% of new car purchases being through loans. Banks have also been aggressive with competitive interest rates, zero pre-payment charges and easier process to drive auto purchases.

In fact, today you can walk-in to a new car showroom and walk-out with a car on loan in couple of hours.

What are the financing options available for buyers of a pre-owned car?

On used cars, finance penetration remains low, closer to 10-15% due to multiple issues related to car quality, consumers having limited credit history and lastly a broken process of registration transfer.

We have recently launched our digital loans platform to help our partner dealers and consumers overcome these challenges and make used-car loans as easy as new-car loans.

Has the average age of car-ownership come down over the years? Why is this happening?

Consumers today are changing their cars faster: from 7-8 years earlier to 4-5 years now. In fact, at the top end of the luxury segment we have seen customers change cars even within 2 years.

It is being driven by trends such as: a growing middle class and larger disposable income, combined with more feature-led choices across both new and used cars.

Is there also an increased shift towards premium and luxury cars in india?

Premium and luxury car segments in India have grown faster than the other segments. Luxury OEMs (original equipment manufacturers) have also launched products at more aggressive pricing.

The aspirational and brand value associated with such a car purchase is a major motivator. On the used car side, luxury cars purchased 3-5 years ago are now coming into the market and are a great value for money.

Motor insurance is mandatory but has major non-compliance. How can this be addressed?

While motor insurance is a mandatory product, it does not see 100% compliance. It can be addressed by better law enforcement, heavier fines, ensuring ongoing insurance by seller at time of sale, auto-renewals and creating more awareness amongst buyers.

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