It’s not just tycoons and celebrities who drive luxury cars — the upper middle class is buying second-hand vehicles as if to the manor born
The middle class in India is driven by aspirations, not ideology. Big cars are regarded as symbols of wellbeing, the bigger the better. A car is not merely a mode of transportation but also a status symbol.
As if to prove that luxury is as important as utility, there are more than 100 luxury car options available in India with prices ranging from Rs 25 lakh to Rs 10 crore. Price is no deterrent, as more than 40,000 luxury cars were sold last year. Mercedes-Benz is the leader, BMW, Audi, Jaguar Land Rover, Volvo, Porsche are some of the leading brands in this segment of cars.
These cars may still be out of reach for many middle-class families and young entrepreneurs but there’s a way out. The second-hand luxury car market provides the solution. The market has shown a phenomenal increase in the last few years, and there are many who would prefer a second-hand Audi or BMW instead of a brand new Toyota Camry, Skoda Superb or Volkswagen Passat. In fact, the market for second-hand luxury cars is growing at a faster rate than that for new cars.
As a result, the top luxury car brands like BMW, Audi, have their own used car business. For instance, Audi has Audi Approved Plus which has a tagline: ‘Pre-owned Audi. All-new experience.’ A car that’s certified by the company undergoes as many as 300 quality checks, with the website listing many used cars for sale. Take for instance, a five-year-old Audi A4, diesel variant, white in colour. It will cost less than Rs 25 lakh whereas the ex-showroom price of the new car of the same model would be just about double of that.
The market is dominated by online sales, and the market leader is OLX which has three-quarters market share of used luxury cars. As many as 16 lakh pre-owned car were listed with the website last year. Online portals have ensured that there’s competition in the market as various options can be compared at the push of a button.
Siddhartha Upadhyay, 35, is a young social entrepreneur who purchased a new Audi-S6 five years ago. Now, he wants to buy a second-hand luxury car. The quality of Indian roads has improved, as a result even the used cars are in fairly good condition.
“In the last 10 years, I would have purchased a dozen cars. A new car loses 15% of its value on the very first day. And one is stuck with it for a longer period. I’m someone who likes to change my car every couple of years. A used certified car gives me that flexibility without compromising on the quality of the machine. In this high-tech age, even a new car becomes obsolete very soon,” he explains.
Thanks to people like him, the used car market is a vibrant one. There are more than 100 small dealers in Delhi’s Ashok Vihar. One of the biggest dealers in used luxury cars is Big Boy Toyz, with a showroom in Gurgaon and a studio in Delhi and Mumbai that showcases state-of-the-art luxury and ‘exotic’ cars. For the most part, young entrepreneurs and corporates are their clients. In the last few years, the dealership has registered an annual growth of nearly 50% in sales and revenue.
“The ratio of used to new cars sold in the West is 2:1. That will soon be the case in India and will be beneficial to all,” says Jatin Ahuja, founder and Managing Director of Big Boy Toyz.
“Clients are well-versed and knowledgeable about the cars we have in various price brackets, starting from Rs 40 lakh to 1 crore and upwards,” explains Ahuja and adds, “Owning a luxury car is a style statement. We’ve seen an influx of buyers from Tier II and Tier III cities as well, opting for our unique inventory, much to our delight.”
As a result, efforts are being made to spread out to smaller cities as in years to come their market share is likely to increase. The service and spare parts are now available, which encourages the buyers to go for used cars. Big Boy Toyz has its own service station for exotic cars.
For the first time in India, in December last year, Droom, a leading online automobile transactional marketplace, organised Pre-owned Auto-motive Award in New Delhi, where Mercedes Benz C-Class won the Dealer’s Choice Luxury Car of the year and BMW5 series as Luxury Sedan of the year. They have devised Orange Book Value to benchmark the market value of a vehicle, an algorithmic pricing engine to find the fair market price of any used vehicle.
Sandeep Aggarwal, founder and CEO, Droom, informed the gathering that these awards are one way of “increasing the sense of joy and pride of owning the pre-owned vehicle” and added that the number of used vehicles sold has been higher than new ones for the last five years in India.
Come to think of it, owning a Merc is not a far-fetched dream.