India saw three online used car platforms -- Droom, CarDekho and Spinny -- becoming unicorns (market cap of over $1 billion) in 2021 and riding the digital wave, the used car sales are expected to grow to 8.3 million units (at a healthy CAGR of 11 per cent) by 2026, a new report showed on Monday.
Data monetisation, in-vehicle connectivity, subscriptions, rental, charging, and long-term maintenance packages are expected to command a large share in the profit pool, according to data provided by Bengaluru-based market research firm RedSeer.
"Reduced period of car ownership among the millennial demographic has also been observed, and is a key contributor to the growth in the used car segment," the report mentioned.
Although a booming segment, the used car market comes with its own set of considerations.
"The used car market comprises 30,000 dealers as of now, making it an extremely fragmented space. Of the existing dealers, close to 45 per cent are commission agents or brokers. Most of them have no physical space of business, and operations are bound to be unorganised," the report mentioned.
Unorganised dealers have low productivity as they face price led competition from unorganised brokers or C2C transactions.
Despite the fact that the used car market has its challenges, digital seems to be doing its part to solve them, as key players are adopting digital best practices and incorporating them effectively in their dealership models.
"It is estimated that most new car dealerships are now connected online via the OEM online network, and benefit from targeted leads (via OEMs and auto portals). Out of the 30,000 used car dealerships, at least 4,000 are spending consistently on online auto portals," the findings showed.
With the help of transparent, organised and efficient and tech-driven dealership models, the used car segment can overcome the existing pitfalls.
"Competitive intelligence, high-quality data, solid user experience, are the need of the hour," said the report.