Take Mercedes Benz India which typically sells over 2,000 pre-owned cars a year led by markets like Mumbai and Delhi. With a trade-in penetration of 10-12% this segment has become very important for the brand during the pandemic years.
Martin Schwenk, MD & CEO, Mercedes Benz India, said: “We are very bullish about our pre-owned car business and as part of scaling up we recently launched an innovative ‘Marketplace’, a direct-to-customer model with which we expect our pre-owned business to grow by 50% annually and increase online penetration to 30% of our total pre-owned business in 2022.” Currently online comprises 20% of pre-owned sales for Mercedes Benz India.
Others like BMW, which sells between 1,400 and 1,700 units of used vehicles a year, are betting on service packages under its BMW Premium Selection used car vertical. All cars under this platform come with 24 month/40,000 km warranty Add ons like Joy rewards scheme offering 14-30% off on service cost and a 2-year roadside assistance are now de rigueur.
“Buying a pre-owned BMW vehicle allows the customers to enter the world of BMW and experience the product, customer service, sales and after sales which is an important decision making factor for customers looking at a new car purchase in the future,” said a company spokesman. BMW has sold 663 units in the January-July period this year.
Used car marketers say that a large part of the uptick in used luxury cars is coming from replacement buyers. Ashutosh Pandey, CEO, Mahindra First Choice Wheels, said: “There is certainly an uptick in demand and most of the sales are happening from new car dealerships of the luxury brand since a significant section of the customers are replacement buyers.”
Not surprisingly car companies are expanding their used business network. Take premium brand MG Motor which is looking to extend its MG Assure used business from 30% of its dealerships right now to 100% by next year, said MD Rajeev Chaba. “Already 10% of our business comes through the exchange programme, and we will increase this going ahead,” he said.
Ditto for Audi India which is looking to double its pre-owned network. Balbir Singh Dhillon, head of Audi India, said: “We will take our Audi Approved Plus showrooms from 7 to 14 by this year-end which along with the 40 plus workshops countrywide will back up pre owned sales.”
The used car business, he added, is particularly important now because “it gets first time buyers into the Audi fold and keeps the dealer network profitable.”