Mumbai
The used car loan market will grow at a CAGR of around 11% and reach $ 16
billion by FY 2027. Low interest rates, increased ownership of used cars, etc. would drive
this growth, according to a report of TechSci Research.
The market has already witnessed an
increase in demand for used car loans in the country and the major drivers
behind the growth in future would be lower interest rates, rising ownership of
used cars, increasing disposable income, etc.
Choosing a used car loan is a wise
decision as it provides buyers with good value for money. With rising
disposable income and urbanization, the customers no longer choose to keep a
car for long term and prefer upgradation with the latest models.
Companies like CarDekho, CARS24, Spinny,
OLX Auto (Cars), Droom Credit, etc. have launched digital platforms for used
car buyers and sellers, providing servicing and warranty facilities, instant
and paperless loan experience. A potential buyer can ask the dealer for loan
offers on any pre-inspected car and the dealer can immediately check the
buyer's eligibility with multiple banking partners online. Buyers can also
begin the loan application process by uploading KYC and other required
documents to these platforms.
Due to the COVID-19 outbreak in the
second half of March, FY2020, and subsequent restrictions of continuous
lockdowns and disruptions in India's travel and transportation networks, there
has been an increase in the demand for personal vehicles specially used cars.
The used car market experienced
supply constraints because people did not sell their vehicles as they did prior
to the pandemic, affecting exchanges and demand for used car loans. The pandemic also had
an impact on the country's per capita income, so drivers and small-scale fleet
management companies were looking for more cost-effective investments, such as
purchasing used cars as a means of small business. It proved to be very cost
effective for many small logistics and transportation business owners, and
those who experienced losses in other businesses. Due to financial constraints,
these small-scale fleet management companies preferred used cars through used
car loans.
The India used car loan market is segregated by
vehicle type, by financier, by percentage of amount sanctioned, by tenure, by
region and by company. Based on the vehicle type, the used car loan market is
segmented into Hatchbacks, SUVs and Sedans. Among these, Hatchbacks has
dominated the used car loan market, holding a share of above 49 % of the market in FY2021, and will
continue to do so in the forecast period as well. This is due to the benefits
such as riding comfort, safety, budget, lower noise and vibration when compared
to other competitors in the same segment.
On the basis of region, the market is divided into
North, South, East and West. The North region in the country is projected to
grow at the fastest pace than any other regions. The Northern region, including
Punjab, Chandigarh, Haryana, Himachal Pradesh, J&K, Delhi, Uttar Pradesh,
and Rajasthan, contributed approximately 33-35 % of total used car sales in
India in FY2020, implying more focus on the North region to achieve maximum
growth.
In terms of company,
major players operating in India used car loan market include HDFC Bank Ltd,
State Bank of India, ICICI Bank Ltd, Shriram
Transport Finance Co. Ltd, Mahindra & Mahindra Financial Services
Limited. The leading players are focusing on expanding their product portfolios
to maintain sustainable growth in the market and through acquisition and
mergers.
Karan Chechi, Research Director with TechSci Research, said that, digitalization is the buzzword in India's used car market, and the industry has shifted its focus to providing potential buyers with a virtual experience. He added that this is a significant market development that will contribute to the growth of the country's used car loan market during the forecast period. Big Boy Toyz, which sells and buys premium and exotic luxury used cars, has launched a new smartphone app that allows customers to browse a selection of used automobiles, book appointments, make payments, and apply for loan.
India Used Car Loan Market report has evaluated the future growth potential of India’s used car loan market and provides statistics and information on market size, structure and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take correct investment decisions. It also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in the used car loan market.
TechSci Research is a leading global market research
firm publishing premium market research reports.
Source: TechSci Research
Image source: Press Release
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