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The recent announcement from German-automobile manufacturer Mercedes-Benz India to launch a pre-owned cars under the brand, Mercedes-Benz Certified signaled the growing trend of owning pre-owned luxury cars among users.
Mercedes-Benz sold 1,700 cars in the period January-September this year, a growth of nearly 40 per cent compared to the same period last year. The top choice among buyers was the E Class luxury sedan followed by the more affordable C Class, according to a top company official.
"We have a market share of around 40 per cent in the organised used luxury space. This means the market for used luxury cars in India is around 4,500-5,000 units annually. There has been a tremendous growth in this market in the last few years", added Eberhard Kern, MD & CEO, Mercedes-Benz India. The number two German car maker buys used luxury cars and sells them to customers before doing a 120-point check refurbishment.
According to Kern buyers could expect a cut of around 25 per cent in the first year and 35 per cent in the second year in the value of a brand new luxury car to arrive at the price of a used luxury car.
The demand for the pre-owned luxury cars has been growing in sync with new cars. For every new Mercedes, Audi or BMW sold in India, there’s a second-hand luxury car changing hands somewhere in this country.
High depreciation—as much as 30 per cent in six months—makes used luxury car purchase an attractive proposition. According to online auto marketplace Cartrade.com, the trend is particularly visible in small cities and towns, where the newly rich who want to be part of the elite club of luxury car owners would rather buy used vehicles that cost much less.
"There is a rising demand for pre-owned luxury cars not only in metro cities, but also in tier-I and tier-II cities. It is growing at 50 per cent annually. The Indian pre-owned car market is of 2.5 lakh units per month. The luxury car contributes around 3 per cent of the total pre-owned car market,” says Vinay Sanghi, founder and CEO, Cartrade.com.
The portal, which deals in new and used cars, is connected to 1,200 used car dealers across India and believes that the luxury used car market to be around 28,000- 32,000 units a year. Most luxury car owners change their vehicles in three years, leading to a large supply of these cars in the second hand market.
Sanghi added that the major driving forces for growing this business are pricing and supply of luxury cars in the market. Luxury car brands like Audi, BMW and Mercedes are available in the range of ' 15 to 25 lakh depending upon the variant of car.
Mercedes is not the only one to focus on this space. With BMW Premium Selection, BMW India has launched exclusive pre-owned car showrooms, for the first time in the Indian luxury car segment in 2011. BMW Premium Selection vehicles come with a BMW warranty.
All BMW Premium Selection vehicles go through a comprehensive 360 degree check and are completely refurbished technically and visually. All cars selected under BMW Premium Selection are less than five years old and would have clocked under 120,000 kms. BMW Premium Selection vehicles come with upto 24 month / 200,000 kms warranty (whichever is earlier).
Another German luxury car manufacturer Audi- inaugurated its largest pre-owned luxury car showroom in India under its Audi approved Plus program where they not only sell their own used cars but cars from other manufacturers as well.
Hyundai also has similar model HPromise under the name ‘Advantage’ where they sell pre owned vehicles. The future of used car market looks so promising that even luxury car manufacturers are eyeing to open their exclusive showrooms.
