MUMBAI :

Millennials are keen to buy used cars in order to travel safely to work as well as for their leisure in the Post-Covid world. In fact, an OLX Study, OLX Auto Note 4th Edition, conducted between April and July 2020 said 70% of respondents in semi-urban areas want to go in for used cars and have budgets in the region of INR 3 to 3.5 Lakhs. Inquiries on auto websites that sell cars have also gone up considerably. Fewer lockdown restrictions in smaller towns and an improving agri-economy have also boosted the prospects for used cars in the hinterland.   

Savvy used car dealers will guide customers through online platforms – many of them millennials -- and will play a major role boosting used car sales in the post-Covid era. These are among some of the key findings of a study of 3800 buyers by OLX,  which says that 56% of those surveyed, plan to buy a new car (new as well as used car) in the next 3-6 months. 

Of these, a whopping 54% are keen to buy a used car with their preference being for entry-level models. The key reason being that 72% of respondents have reduced their car-buying budget due to COVID-19. The need for personal transport which is seen as safe, and fears about the risks associated with shared mobility and public transport is making potential buyers consider even a used one.

According to Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India, "Physical distancing norms and the increased concerns regarding safety and hygiene are likely to give an impetus to the used car business. There is a renewed interest in the used car segment due to the emphasis on personal mobility. At Maruti Suzuki True Value, we have seen an increase of around 20% in the used car enquiries in July 2020 as against March 2020."

Used car buyers want much more than basic mobility. Many are first time buyers driven by aspirations for independence, security and social appreciation. The COVID-19 pandemic is expected to shift customers' buying preferences towards personal mobility increasing the number of first time buyers.

Ashutosh Pandey, MD and CEO of Mahindra First Choice says, “We have seen a 2.5X increase in used car inquiries on both Mahindra First Choice and www.carandbike.com. Clearly the preference towards personal mobility is driving this growth. While the company does not collect millennials data, walk-ins, test drives and sales interactions indicate that millennials form a larger part of the transactional audience, many of them are first-time car owners.”

Mumbai-based used car dealer, Raj Kalra, whose family owns Satguru Motors, said inquiries from young buyers has gone up; many want cars to travel to their hometowns. Cars such as Maruti’s Swift and WagonR are among their hot favourities.

While the slowdown over the last year or so has affected new car sales, sales of used cars have been on a roll with estimated sales crossing the 4 million mark in FY19, and were reportedly up by another 10% in FY20.

The OLX study suggests that the green shoots of recovery will come from rural demand and be led by millennials. The hygiene factor and to need to avoid exposure with fellow passengers have motivated 55% of respondents to consider a personal car in the future as against 48% in the Pre-Covid period. 

Furthermore, the OLX study suggested that 70% were keen on buying used cars and only 30% wanted a brand new one. In the metros, however, the narrative is reversed -- 70% were considering a new car. In terms of budgets, across the metros and non-metros, 50% of respondents said their budgets were lower than Rs 3 lakhs for a used car. 

Interestingly, the OLX study suggests that the non-metros are revving up both demand and supply for luxury cars. Among the brands that buyers were interested in were the BMW 3 and 5 series, and Jeep. 

Most millennials are first-time buyers of a car, whereas non-millennials already own a vehicle and want a second one. Non-millenials have larger budgets with only 25% of them having a budget under Rs 3 lakhs for a new car, as compared to 43% among millennials. 

According to the OLX study, it is not just millenials who will steal the thunder. While 58% of millennials (between 21 and 37) plan to buy a car in the next 6 months, 50% non-millennials (37 years and over) plan to do the same. 63% of these non-millennials plan to buy a pre-owned car in the next 6 months, and only 37% plan on buying a new car. Among millennials, the split is an even 50-50%.