With the development of the organized and semi-organized sector the used car market has developed in the country over the years. In Fiscal year (FY) 2018, the pre-owned car or used cars in the market reached the 4 million units mark, meaning that the used car market is 1.3 times that of the new car market. The revision of the GST rate on used cars from 28% to 12-18% is one of the main growth drivers in the sector. When Indian auto-industry joins the Bharat Stage (BS-VI) period from April 2020, the value proposition of the used card growing develops stronger, when new cars are likely to become costly due to increased manufacturing costs.
In addition, according to the MD and CEO of Mahindra First Choice Wheels (MFCW), companies slowly focusing on rising diesel car production, for example, Maruti Suzuki’s decision to leave the diesel car segment by April 2020 is also expected to increase demand for compact diesel cars on the used car market, unless there is a revolt towards diesel cars. The development of the used car market may be hampered by factors such as uniform dealer experience, fair price knowledge and high financing costs for used vehicles. OLX, Mahindra First Option Wheels, Cars24, Maruti True Value, Hyundai H Promise and others are some of the big players dominating the market.
Organized channels for a used car market
The coordinated segment is projected to experience a Compound annual growth rate (CAGR) of 22.79 percent on the Indian used car market during the forecast period. Over the last three years, the unified sales channel has seen significant growth. This development is powered by increased sales in metro cities of used cars and an increase in online sales channels including CarDekho, Cars24, Droom, etc.OEMs have already penetrated the used car market by a lot, and those who have not reached the used car market in the early stages have also entered the market in the last five years. In 2015, Renault began the pre-owned car business and in 2017, Nissan entered the sector. Important Indian OEMs like Maruti Suzuki, Mahindra, Hyundai, and Toyota, as well as luxury car manufacturers like BMW, Audi, and JLR, have their used car network. Since 2017, a lot of these players have seen revenue growth.
For example, during 2018-19 reporting revenue from INR 148 crore, Mahindra First Option Wheels posted a healthy sales growth of 40 percent. At the same time, the company sold over 250,000 units of used cars and plans to raise this number by 40 percent by 2020.
Mid Florida Car Wash (MFCW) reportedly has 1,100 branch offices throughout India. By 2020, the organization plans to raise the channels to 1,200 out of which 11 outlets will only be devoted to the selling of luxury cars.
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The used car market is experiencing a boom in the region, with the ever-increasing demand for luxury cars. Because of financial barriers, buying a luxury car used to be a fantasy for many buyers until a few years ago, but this is increasing slowly because customers can easily buy used luxury vehicles. These cars also made heavy deflation in luxury car rates, a preferred choice in the used car market.
The rise in Demand for Used Luxury Cars
Luxury cars priced above the international normalized ratio(INR) 15 lakh became consumers’ preferred choice. Over 55,000 luxury cars priced over INR 15 lakh were classified on OLX per month. According to OLX, in 2017, supply for premium cars jumped by more than four times. Titled OLX Auto Remember according to the survey, top-end sedans and luxury cars added up to 38 percent of the platform’s total four-wheeler listings. The following are some major factors driving the development of used luxury cars high rate of depreciation value of luxury cars, rapidly growing population market, customer disposable income along with rapid urbanization, and internet penetration in non-metros.
As per car dealers, demand for used luxury cars has risen at about 35 percent to 40 percent year-on-year, as luxury car owners usually sell off their automobiles after a year or two, as they want improved and better ones. With the rise in the disposable income of consumers, they have no reluctance in spending on luxurious products and services. For these consumers, luxury is an indulgence; as a result, they choose to make a point by associating themselves with top brands.
Competition of used car market
Thanks to their business models and increased number of pre-owned car retail outlets, the demand for used cars in India is competitive, with major players controlling the largest market share. OLX, Mahindra First Option Wheels, CARS24, Maruti True Value, and Hyundai H Promise are the big players. Read More
Other firms, such as Quikr, Toyota U-Trust, Honda Auto Terrace, etc., are increasing their local channels and operations. Nearly 80 percent of the total market comprises the unorganized sector.
Used Cars Vs New Cars
Finding your own vehicle is yet a fantasy that many people in India are trying to fulfill. In the last few years, there has been a spike in the number of people buying a first-hand vehicle. All this was possible due to the quick process of buying a vehicle and also an increase in mass profits. In this cycle, another thing that works as a source is the auto loan.
When it comes to buying a car, you have a variety of options at your fingertips. You don’t just have to choose your car’s make and model, you also have to determine if you want to buy new or used cars. This is an important decision and over the next few years, it can make a big difference in your finances.
Advantages of buying a new car
- The upside of buying a new car is that you buy a car which usually comes with a warranty. In the first few years, most new cars will have very few fixes, so you can rely only on car maintenance. The dealer may also provide a lower interest rate, which can lower the amount of interest you pay over the tenure of the loan. Those are the most important benefits.
- Another benefit is that the new cars will be fitted with the latest technology, so you will expect automobiles with better mileage and lower emissions. You will purchase a hybrid car and reduce the amount you spend each month on transportation. Furthermore, the new cars seem to link up more easily to your phone and other apps.
Disadvantages of buying a new car
- The biggest disadvantage of buying a new car is that as soon as you drive it off the site, you lose money on it. In the first two or three years, a new car begins experiencing the greatest depreciation. This suggests you’re basically throwing out a hundred thousand bucks that you’ll never get back. Buying a new car doesn’t make much sense practically unless you have resources you don’t mind losing.
- Another downside is buying a car which is a brand new model. There may be a year when they turn engines or adjust the configuration so they seem to have more trouble with that model and year. You will prevent the issue when you buy old ones.
Advantages of buying a used car
- The biggest advantage of buying a used car is that you’re encouraging someone else to take the biggest risk in the car. In the next few years, you might be able to sell your vehicle for almost the same amount you paid for it. Through your local bank or credit union, you can still find good financing options, and because you don’t risk the depreciation funds, you can come out ahead of a zero-interest loan that you would take out on a new car.
- It’s simpler to save and pay cash when you’re buying a used car. You can also review the Consumer Reports and choose a layout that worked well.
- Another benefit is that the insurance rates on an abandoned automobile may be smaller than on a fresh one, depending on the model. Because of your generation, if you are in your early twenties and pay high insurance rates, this can be a big saving.
Disadvantages of buying a used car
- The biggest drawback of buying a used car is that it might not be as safe or you might need to do more work on it. You will, however, have the option to purchase a Registered Pre-Owned Vehicle through several different car firms. Because of technological advancement, vehicles have become more durable, and until they are well over 100,000 miles and almost ten years old, many models do not need maintenance. Besides, you will market it at a very close price to what you bought it for. Each month, you might want to set aside a little bit of money to cover any car repairs that come up.
- The drawback to purchasing used is that in order to get the one with a better history and mileage you may have to decide on the color of the vehicle. You need to be more versatile and more careful when looking for a used vehicle when you search for a ride. You can also extend the quest on accessible cars and look for the best price.
Buying a used car can save a lot
- It is a major decision to buy a vehicle as it is one of the most costly purchases to make. Before buying a car, people think that it is a big investment plus the price has to go up to the mark.
- Since time went by, car renting people’s mentality had shifted. Pre-owned cars today get more of a demand than a new car. Seeing and buying used vehicles in the same shape as a new car is easier. Within the budget, the registered pre-owned car was getting a big demand.
- It’s real that buying a new one feels great but there may not always be financial support to buy a new one. In this situation, a pre-owned car with good maintenance will serve you more. In the old days, owning an old car was a headache because people needed to deal with local dealers or also sometimes the driver. It would take several weeks and months for the papers. This is why people used to stop it earlier. But time has changed and you can find it in a checked dealer now, and also render the operation online.
Until making a decision on purchasing your car you will consider the following factors.
1. Depreciation is very less than a new car:
For an old car, the loss is far less because the amount that the manufacturer used to trim was already completed when it was first bought. Sometimes they also deliver it very early because people can’t pay the EMIs. Therefore, going for a used car is safer as it will reduce the overall cost.
2. Cost-effective, luxurious as a new car and safe:
Most of the vehicles that have been manufactured over the last 5 years are fitted with the new protection technology. There’s everything from airbags to Wifi and the reverse-camera. Yeah, never it feels like you have an old-model car. You might also consider a used car with extra parts such as subwoofers, reverse monitor, leather seats, amplifier, and touchscreen infotainment.
3. Insurance cost within the range:
Over time, the total cost of car insurance shrinks. The value of the deterioration is measured with it. Sometimes, it’s brought to different calculations when the user is modified.
4. It is the best option for learners:
A few bruises and all are really normal when you first know, it sounds painful to have those in brand new cars. Now, you can be comfortable and safe if you’ve just got a used vehicle.
10 Best Used Cars to Buy Under 5 Lakhs in India
Due to rising inflation, there is more competition for used vehicles than ever before. And the growth of the usual upper-middle-class car’s standard of living has become a must. Therefore, this compilation should help you find the best-used cars under 5Lakhs.
Mileage is the most important thing an Indian will search for in a vehicle but for normal office goers, it seems like the sedan is the best choice for homemakers to sit comfortably for a family outing or dinner. Hence, the fuel efficiency is really essential for the consumers who are going to be hell-bent on a car’s mileage. A car selection may be an opinion of his own, but the list generated here is based on what most people want. My personal opinion is I’d be looking for the normal outing for a small but compact sedan. Here’s a list of the best cars under 5Lakhs.
1. Maruti Suzuki Swift Dzire
The Maruthi Suzuki is the best company renowned for its many happy clients. And with its sleek design, the Swift Dzire is the best choice to opt for. Hence, this car’s ratings are strongest among the top used vehicles below 5Lakhs. It is great for the regular day-to-day office and for a fun weekend ride. One of the best spaces available for comfortable seating when moving comfortably with power steering is above all on the list.
The automobile is available with both diesel engines and petrol. The petrol engine has a peak capacity of 6000 rpm (84.3 PS). Peak torque at 4000 rpm (115 Nm). On the other hand, the diesel engine has a peak output of 75 PS at 4000 RPM. And peak torque of 190 Nm at 2000 RPM. The front headlamps with the sloping hood are nice. The car cost from 2.21-3.1 lakhs.
2. Toyota Corolla Altis petrol
Toyota is a veteran of automobile manufacturing, the Japanese maker is most famous in India. This car is made particularly for India and the latest Toyota Corolla Altis is made specifically for the Indian market. And is more convenient to the Indian roads with many features suits best to Indian roads and business. It is decent looking and the fuel efficiency is good which makes the maintenance easy.
The fuel efficiency is estimated to be at 15.22 kmpl, and the car’s architecture is amazing. And more importantly, the design is the strength of this car. Ultimately, the car’s petrol engine has a 140 PS peak power at 6400 RPM and a 173 Nm peak torque at 4000 RPM. The automobile is therefore fitted with six hand gears. And is one of the cheapest wagons to find in India under 5lakhs.
3. Honda City petrol
Honda city is the best-selling sedan when this is sophisticated in terms of style, with its awe-inspiring nature to its super curves. And it is a sedan one has to look for to raise their confidence and make a statement. Elegance will be on a whole new level and with the model, the trendy car will make an audacious remark. The 2010-2013 Honda city can comfortably be bought under 5Lakhs and it is also the fifth hybrid version. All styles were better than the other ones. The car made in 2010-2013 now arrives at an average price of 4.8 lakhs. And that maybe the car’s best buy. The different power sources with a 5-speed manual transmission petrol engine. And the vehicle uses a CVT gearbox. At 6000 rpm the engine has a peak power of 118 PS and a peak torque of 146 Nm at 4600 RPM. In just 11 seconds this car will hit the range of 0-100 kmph and has a whopping speed of 185kmph. Hence the fuel efficiency is roughly around 16.7 kmpl.
4. Hyundai I20 diesel
The Hyundai i20 is one of India’s Best Cars you could buy Under 5Lakhs. It ranked for three consecutive years as The Indian Car of the Year. This car comes with the most trendy exterior that has nothing to conceal and much more, it might not be like the new elite i20 but it has some of the best features unique to Indian clients. The petrol engine then comes in at 4000 RPM with a peak strength of 90 PS. A total torque of 219 Nm from 1500 – 2500 rpm with six manual gearboxes.
5. Chevrolet Cruze
One of the most popular cars in the second-hand car market is The Chevy Cruze. In India, it’s the trendy sedan among virtually available sedans. The sedan for a great driving experience is the best car to purchase Under 5Lakhs in India. The car comes with a top-powered 150 PS petrol engine at 4000 rpm and a huge peak torque of 327 Nm at 2200 RPM. The top speed is 220 Kmph and fuel consumption is 17.3 kmpl. The automobile has a comfortable seating configuration with a decent seating arrangement.
6. Rapid diesel
Skoda was first launched with Octavia in India throughout early 2002. Getting a name experience in the subcontinent, and planning to hold it. The latest Skoda Rapid which has a style that suits its beauty, this is the best car for you if you’re hunting for the top cars below 5lakhs then with its good looks. And it has an attractive feel, with a peak strength of 105 PS at 4400 rpm and a peak torque of 250 Nm at 1500-2500 rpm most significant. It will offer a 20.54 Kmpl fuel economy. With one of the best available automobiles in India, this car can be easily purchased under 5lakhs.
7. Mahindra Scorpio diesel
Mahindra Scorpio is very popular in the SUV segment in India. In addition, one might say that Scorpio is one of India’s best SUV cars available. The cars away from cities into the adventure road, the car’s design is very elegant and this car is one of India’s best-looking SUVs, so it’s the best car available in the SUV category. As a consequence, the vehicle has a peak output of 122 PS at 4000 rpm and a peak torque of 290 Nm at 1800 – 2800 rpm is required for the petrol engine as well as a diesel engine for the automobile.
8. Tata Safari
Finally, Tata Safari is one of the oldest and best available SUVs in India and one can assume that it is the face of SUV in India and has been the best available SUV in India today, even though the Mahindra Scorpio is on its way to claiming the best SUV in India.
The SUV is one of the best-designed SUVs available and has a wide frontier space and comfortable seating. Therefore the engine’s power source is at a peak output of 140 PS at 4000 RPM. Though at 1700 rpm, a powerful torque of 320 nm, the car has a top speed of 160 kmph and a fuel economy of 16.93 kmpl.
9. Maruti Suzuki swift
The largest Indian car manufacturing company is saying it all with the Maruti Suzuki swift when it comes to mileage India. Since India’s most marketed car with a very good customer fulfilling across India. And their output is the best thing about this. The car sports a unique design. It arrives with a very strong headlight grouped, its trendy front grill. Hence the car’s design was such that it was a worthy i20 competitor in India. The car comes with an engine of the 1.2-liter K-series.
10. Hyundai Verna diesel
With its nature it has established a unique relationship with India, the Hyundai is one of India’s most popular automobile brands. The period of decades and the continuity of the customer relationship and automobiles like Verna just help to strengthen it. And fuel the company’s growth to another level. The vehicle comes with two petrol engines and two diesel engines. But here we are thinking about a diesel engine with a peak output of 128 PS at 4000 rpm and peak torque of 259 Nm at 1900 RPM to 1750 rpm. And there is another form of lower power diesel engine available.
