Trust deficit drives first-time car buyers to new models, says new study

Most first-time car buyers last year preferred new over used cars, citing mistrust in the used market. Many feel used car prices are inflated, sometimes matching or exceeding new car costs

A majority of first-time car buyers in India now prefer new vehicles over used cars, primarily due to trust issues, legal complexities, and high prices in the pre-owned market, according to a new survey by Park+ Research Labs.

 

The nationwide survey, based on responses from more than 9,000 individuals who bought their first car in the past year, found that 77 per cent of them chose to purchase new vehicles instead of used ones. The shift is being driven by what Park+ describes as a “trust crisis” in the used car market.

 

Price of used cars inflated 

According to the report, nearly 81 per cent of respondents felt that used car prices are ‘artificially inflated’, particularly by larger, organised players in the market. In some cases, prices for pre-owned vehicles reportedly matched or exceeded those of new models. This sentiment comes despite data from Deloitte suggesting that 90 per cent of used car transactions in India happen below the ₹10 lakh mark.

   

Digital used-cars platforms struggle

The survey also points to a growing distrust of digital-first used car platforms. While many buyers considered used cars initially, 65 per cent dropped out of the process due to negative peer experiences, legal concerns, or adverse online reviews.

 

“Even well-run platforms were unable to inspire trust,” the report mentioned. Legal issues were the most commonly cited deterrent (43 per cent), followed by delays in transfer of registration certificates (22 per cent) and negative online reviews (11 per cent). 

 

Local dealers steal the deal

Interestingly, 73 per cent of respondents said they trust local car dealers more than organised startups. The reasons include stronger personal engagement (53 per cent), the ability to negotiate directly (31 per cent), and what buyers saw as more transparent communication. Organised players, in contrast, were viewed as “impersonal, overpromising, and underdelivering” by 14 per cent of participants.

 

The survey further highlights legal and regulatory concerns as a major friction point in used car transactions. Buyers frequently cited issues such as fraud, unclear documentation, and ownership disputes, and called for more streamlined processes.

 

Respondents said there was an urgent need for better oversight of the used car ecosystem, including smoother RC transfers, clearer accountability, and more transparent pricing mechanisms.