Buying a new car now more frequent

The flurry of models by car-makers in India during the decade and rising aspirations of consumers has almost halved the life cycle of a new car to about 3-4 years now, said Rajeev Dubey, president of After Markets division of Mahindra and Mahindra Limited. Also Read: Nissan to launch 10 new cars by 2016

This has necessitated creation of ecosystem for the sale of used car that is at par with the one for new car. So far unorganised segment dominates the used car market in India.

"People used to sell their new cars in 5-8 years about 10 years ago. That has fallen to 3-4 years. Owning cars is a status and consumers like to upgrade the models sooner than what they used to do earlier. Moreover car-makers keep on launching new models, even within a segment," Dubey told ET on the sidelines of the opening of 200th store of Mahindra FirstChoice (a Mahindra and Mahindra company that sells used cars) in India at Ahmedabad.

This has led to the growth of used car market in India. According to industry estimates sales of used car match those of new cars and is going to outpace the new market in a few years. The organised segment of the market is pegged at 13%, while the rest being dominated by the unorganised players.

This has created issues like after sales service, warranty and non availability of finance, that is hampering the growth of used car market. FirstChoice claims to have taken an initiative to create an ecosystem conducive for the growth of market.

"Car-makers have their own resale programmes, but these are confined to their models only. We sell cars from Nano to Mercedes or BMW. We also provide warranty, certification and after sales service. A buyer of a second hand car should is not a second class buyer. His aspirations are same as that of a buyer of a new car," said Dubey.

The company claims that customers have the choice to buy a used car in a higher segment compared to a new car in the lower segment. The 200th store that opened in Ahmedabad on Dusshera, sold a one year old BMW car at Rs 13 lakh. Indian consumers have traditionally considered 'resale price' as one of the most important parameter while buying a new car and that creation of suitable ecosystem will encourage sales of used car believe company officials.

However, disparity in legal and taxation matters in inter-state transfer of vehicles is affecting the sales. "There are issues like octroi, transfer charges and other matters. There is no co-ordination amongst the states. A uniform system will benefit the business," said Yatindra Chadha, vice president for operations and network of FirstChoice. At present A segment comprises of 8% sales of the company, while D segment contributes 18%, the rest is shared by B and C segments.