PulkitShrivastava Aranca CaseStudy V3

India Used Car Market Size (1/2)
Figure 1: India Used Car Market, 2011-2021F (USD Billion) • India Used Car Market amounted to USD
17.4 billion in 2017 witnessing a
promising growth of 13% over the last
37.6 seven years
• The market is estimated to generate USD

37.6 billion in 2021 owing to the rise in
purchasing power, rapid growth of
31.0 economy and increased consumer
demands
• India Used Car Market which was

25.6 previously limited to metro cities and
state capitals have seen a major growth
from the smaller towns and tier 2 cities
21.1
• According to the report published by
Indian BlueBook, only 45% of the pre-
17.4 owned cars are sold in metros
14.3 • North zone accounts for the majority of

12.8 the India Used Car Market followed by
11.5 west, south and east zones
10.3
9.2 • In the recent years, pre-owned car
8.2
industry has managed to break off the
taboo regarding the used car purchase,
making them more acceptable in the
society
• Additionally, greater participation from

OEMs and introduction of online players in
2011 2012 2013 2014 2015 2016 2017 2018E 2019F 2020F 2021F the market have made the purchase of
used cars much easier and transparent
Source: Company Press Releases and Aranca Analysis
Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

India Used Car Market Size (2/2)
2
Figure 1: India Used Car Market, 2011-2021F (Million Units) • India Used Car Market sales volume
reached 3.8 million units in 2017
6.6 • Changing lifestyle, rising income levels

and affordable finance and repayment
options have led to the growth of the
market
5.7
• In 2021, India Used Car Market is
expected to touch 6.6 million units
5.0 witnessing a respectable growth of 15%
• The market is anticipated to rise further

4.4
owing to improved pre-owned vehicle
quality and growing demand from first
3.8 time buyers
3.3 • The ownership period of the used car has
reduced to 4 years for mass-market cars
2.9
and less than 3 years for premium cars
2.5 experiencing a drop of 20%
2.1
• Reduction in ownership period has
1.8 increased the quality of pre-owned cars in
1.6 mass-market as well as premium segment
attracting first-time as well as seasoned
buyers
• India Used Car market has observed

increase in demand from first-time buyers
• According to a report from IBB, first time

2011 2012 2013 2014 2015 2016 2017 2018E 2019F 2020F 2021F buyers constitute 55% of the market
Source: Company Press Releases and Aranca Analysis

India Used Car Market Dynamics
3
India Used Car Market – Key drivers and challenges
Drivers
• Entry of OEMs in the segment
• Better Price Value Quotient
• Favorable Demographics
• Online platforms increasing awareness among
consumers
Challenges
• Launch of less expensive small cars
affecting the cost difference parameter
• Limited choices compared to new car
models
• Perceived risks with the used-car
purchase
Source: News Articles, Aranca Analysis

India Used Car Market Dynamics
1
Near Term Medium Term Long Term

Drivers
(2018 – 2020) (2020 – 2022) (2022 Onwards)
Entry of OEMs in the segment
Better Price Value Quotient
Favorable Demographics
Online platforms increasing

awareness among consumers
Launch of less expensive small

cars affecting the cost
difference parameter
Limited choices compared to

new car models
Perceived risks with the used-

car purchase
High to Low Impact
Source: News Articles, Aranca Analysis

1
Figure 1: Number of used car outlets of top 3 OEMs

(2014 and 2018) • Entry of OEMs in the India Used Car Market has brought
transparency and clarity to this highly unorganized market
1700
• In 2017, organized dealer count in the India Used Car
Market grew by 23% as compared to 2016
1243
• Additional offerings by the pre-owned businesses of the

OEMs such as warranty, free services and easy financing
schemes have made the investment into a used car a hassle
600
free process
450
364
335
• Growing demand has led OEMs to invest additional
resources in the India pre-owned car market and increasing
dealer locations
Maruti Mahindra Hyundai
2014 2018 • All the three major OEMs saw an increase in used car
outlets in 2018
Source: Company press releases
Figure 2: Primary reasons why consumer consider
• India is a price conscious market and therefore first time pre-owned cars
buyers who upgrade from two-wheeler prefers pre-owned
cars to learn driving and experience car ownership for the
first time Affordable
7% 35%
• Affordability and value for money accounts for 35% and
9% Value for Money
29% being the top two primary reasons for purchase of a
used car in India
20% 2nd Car in
• Additionally, a typical new car depreciates by as much as Household
30% in the first year followed by another 5-10% the next
year making pre-owned cars as the better option on the Others
basis of price value quotient
29% Learn Driving
Source: Indian BlueBook

1

(2014 and 2018) • Entry of OEMs in the India Used Car Market has brought
transparency and clarity to this highly unorganized market
• In 2017, organized dealer count in the India Used Car

Market grew by 23% as compared to 2016
• Additional offerings by the pre-owned businesses of the

OEMs such as warranty, free services and easy financing
schemes have made the investment into a used car a hassle
free process
• Growing demand has led OEMs to invest additional

resources in the India pre-owned car market and increasing
dealer locations
• All the three major OEMs saw an increase in used car

outlets in 2018
Figure 2: Primary reasons why consumer consider
• India is a price conscious market and therefore first time pre-owned cars
buyers who upgrade from two-wheeler prefers pre-owned
cars to learn driving and experience car ownership for the
first time
• Affordability and value for money accounts for 35% and

29% being the top two primary reasons for purchase of a
used car in India
• Additionally, a typical new car depreciates by as much as

30% in the first year followed by another 5-10% the next
year making pre-owned cars as the better option on the
basis of price value quotient
Source: Indian BlueBook

India Used Car Market by top cities (2017)
1
Cities Used Car Sales Volume (Units) % of India Used Car Sales
New Delhi 3,50,962 9.3%

Bangalore 1,59,377 4.2%
Mumbai 1,49,420 3.9%
Hyderabad 1,06,147 2.8%
Pune 95,655 2.5%
Chennai 92,815 2.4%
Ahmadabad 75,610 2.0%
Jaipur 57,073 1.5%
Kolkata 56,665 1.5%
Lucknow 46,763 1.2%
• In terms of volume sales, New Delhi topped the India Used Car Sales Market with 9.3% of the market share followed
by Bangalore and Mumbai
Source: Aranca Analysis
India Used Car Market by types of cars (2017)
1
Figure 1: India Used Car Market Sales Volume by

type, 2017 (‘000 Units) • India Used Car Market can be segregated into budget and
luxury cars based on their ex-showroom prices
35
• New luxury cars which often have sales price between INR
25 lakh to INR 10 crore have seen growth in demand from
Used Luxury Car new generation
Sales
• However, exorbitant prices, taxes and import duties charged
Total: 3,791 Used Budget Car on new luxury cars have compelled consumers to rather opt
sales for used luxury cars
• Additionally, rising income levels, changing lifestyle and

affordable repayment options have drove consumers
3,765 towards used luxury cars, making it the fastest growing
segment
Source: Company Press Releases, Aranca Analysis

Figure 2: India Used Car Market Sales by Channel
(2017)
• India Used Luxury Cars Sales Volume grew at a rate of 23%
amounting to 35,000 units in 2017
• Due to high ticket size of used luxury cars, most of the

market is captured by the organized dealers capturing 65% 35%
of the market share
Organized
• The share of the organized segment is forecasted to rise Dealers
further owing to the entry of luxury car OEMs in the India Consumer to
market with their own certified used car programs Consumer
• In the coming years, India Used Luxury Car market is 65%
expected to grow to 1.5 times the new premium car sales

India Used Car Market Breakdown
1
Figure 1: India Used Car Market Sales Volume by

breakdown, 2017 (‘000 Units) • Online Used Car Sales contributed to 21% of the overall
India Used Car Sales in 2017
3,791
3,300
• On the other hand, sales generated through offline channels
2,980
amounted to 2.9 million units capturing a market share of
2,651
79% in 2017
• Online Used Car Sales which comes from various portals

including CarTrade, CarDekho, Droom and Cars24 has
811
649
shown promising development growing at a rate of 24%

from 2016 to 2017
2016 2017 • According to a study conducted by Bain & Company in

partnership with Facebook, the consulting company predicts
Total Used Car Sales Online Used Car Sales that the rise of digital interfaces in automotive industry
would shift the focus away from manufacturers to digital
Offline Used Car Sales technology solution providers
Figure 2: Comparison of website performance of OEMs and
• Website of digital companies such as CarTrade and digital channels (April 2018 – June 2018)
Droom have better performing metrics as compared
to pre-owned business websites of OEMs
Monthly Average Visit Monthly
Website Visits duration Unique
• This is due to the fact that most buyers do online (Mn) (minutes) Visitors (Mn)
research before zeroing in on the pre-owned vehicle
they want to purchase and their research start with
Cartrade.com 2 4 1.2
digital platforms rather than OEM websites
• Most consumers view vehicles listed on the Droom.in 5.4 2.1 2.8
platforms provided by digital companies
• Online Used car Market is expected to grow further Marutisuzuki.truevalue.com 0.5 5.2 0.3
during the forecasted period, as more and more
buyers are anticipated to visit online channels Mahindrafirstchoice.com 0.3 2.6 0.2
Source: Media Articles, Aranca Analysis

Key Player Comparison- Organized Used Car
1 Dealers
Country
Company Number of
Key Rank (Based
Company Service Offerings Valuation Outlets/Dealers Other Aspects
Investors on unit sales
(USD Mn) (August 2018)
– 2017)
Maruti True • 376 checkpoints based
Value (MTV) digital car evaluation
• Verification of seller
Operates as a pre-
details Used Car Outlets:
- - 1 owned car division
• Transfer of Ownership 1,243
of Maruti Suzuki
• One Year Warranty
• Free three services
• Car Finance and insurance
Mahindra First
• Quality check processes
Choice Wheels Part of the
covering 118 check points • Cox
Limited multinational
• 24x7 roadside assistant for Automotive
(MFCWL) 265 (Feb Used Car Outlets: conglomerate
all kinds of repairs • Phi Advisors 2
2018) 1700 Mahindra Group;
• Document verification • Valiant
Sold 2.2 lakh units of
• Transfer of RC Capital
Used Cars in FY 2017
• Car Finance and insurance
Hyundai H • Vehicle certification

Promise (HA) through 147 check points
Business unit of
• Warranty up to 1
Hyundai Motor India
year/20,000Km Used Car Outlets:
- - 3 Ltd; Sold 1.2 lakh
• Two free services 450
units of Used Cars in
• Verification of seller's
FY207
bonified
• Transfer of RTO papers
Source: Aranca Analysis, Company press releases and Media reports
Key Player Comparison- Digital Companies
1
Company Number of
Company Service Offerings Valuation Outlets/Dealers Key Investors Other Aspects
MXC Solutions • Operates as an online platform
India for B2B and B2C operations of
(CarTrade) • Temasek
used cars
Used car dealers: • Warburg Pincus MXC Solutions India
• Quality Certification with 139 100 (Oct 2014)
4,000 (CarTrade) • JP Morgan also owns CarWale
point inspection
• March Capital
• Offers 100 days free warranty
• Car insurance
Girnar Software • Operates as a classified site for

• Google Capital
(CarDekho) used cars
• Tybourne
• Quality Certification with 217-
Used Car Business Capital Girnar Software also
point inspection
400 (Aug 2017) Dealers: 3,000 • Hillhouse owns Gaadi.com and
• Offers TrustMark Warranty
(CarDekho) Capital ZigWheels.com
• Partners with insurers and
• Sequoia Capital
banks to offer car insurance and
• HDFC Bank
loan
Droom Technology • Operates as an online platform
Private Limited for all four business models i.e.
B2B, B2C, C2C, C2B
• Also provides warranty, RSA • BEENEXT Have raised a total of
Number of Auto
and insurance • Lightbox $93M in cumulative
- Dealers on its
• Offers a refundable • Toyota Tsuba funding over 5 rounds
platform: 250,000
commitment fee of 2% • Digital Garage (May 2018)
• Provides ECO-certified
inspection report
• Car loan and insurance
Key Player Comparison- Digital Companies
1
Company Number of
Company Service Offerings Valuation Outlets/Dealers Key Investors Other Aspects
Cars24 • Follows an asset-heavy
customer-to-business (C2B)
• Apolletto Asia
model, where it buys used cars
• Venture
from individuals and dealers
Highway
and sells them to other Have raised a
• Sequoia Capital
dealerships 250 (Jul 2018) 54 outlets cumulative funding of
India
• Offers instant payment and $100M (Jul 2018)
• Kingsway FCI
transfer of documents
Fund
• Free of cost transfer of the
• KCK Global
car’s registration certificate
• Car Loan

1

(2014 and 2018) • United States light vehicle sales which includes passenger
cars and light trucks observed a continuous growth between
2010 and 2016 increasing at a rate of 4%
1,700 • However, in 2017 the market saw a decline of 1.8%

1,243
marking the first fall in annual vehicle sales since the

financial crisis of 2008-10
600
• The fall in the vehicle sales was largely owed to a
450
364
335 continuous drop in demand for sedans and other passenger

cars
Maruti Mahindra Hyundai • Rising interest rates and stabilization in used-car prices
further dampened the new retail light vehicle sales in United
2014 2018 States in 2017

Figure 2: Light Vehicle Sales (Seasonally Adjusted
• The light vehicle sales has started on a brighter side in the Annual Rate), 2017 & 2018 (Million Units)
first half of 2018 with all big automakers posting increases
owing to positive economic conditions
• Seasonally adjusted annual rate (SAAR) for the last five

months (ending June 2018) showed a positive growth
compared to the same period in 2017
• According to J.D. Power, the average number of days taken

by a car to get sold to a retail customer reduced to 68 days
(through July 22, 2018) from 72 days in 2017
• IHS Markit estimated a full-year sales volume of 17 million

units in 2018. Though the figure projects a decline of 1.3%
from the 2017 sales, it still suggests a healthy demand at
the industry level
Source: U.S. Bureau of Economic Analysis

1

1700 • However, in 2017 the market saw a decline of 1.8%

1243

600
450
364

cars
2014 2018 States in 2017




the industry level

1


1243

600
450
364

cars
2014 2018 States in 2017




the industry level

1


1243

600
450
364

cars
2014 2018 States in 2017




the industry level

1


1243

600
450
364

cars
2014 2018 States in 2017




the industry level

India Used Car Market by Sales Breakdown
1
Figure 1: India Used Car Market, 2011-2023F (Million Units) • India Used Car Market is projected to
grow at a promising CAGR of 16.4%
37.6
31.0
25.6
21.1
17.4
14.3
12.8
11.5
10.3
9.2
8.2
2011 2012 2013 2014 2015 2016 2017 2018E 2019F 2020F 2021F
Source: Company Press Releases, Indian Bluebook, Aranca Analysis

India Used Car Market – Key Player
1 Comparison
Source: Company Press Releases, Indian Bluebook, Aranca Analysis

“United States Auto Market makes a
1 promising start to 2018”
Figure 1: New Retail Light Vehicle Sales, 2010-2017

(Million Units) • United States light vehicle sales which includes passenger
• However, in 2017 the market saw a decline of 1.8%

17.47 17.55 marking the first fall in annual vehicle sales since the
17.23
16.52 • The fall in the vehicle sales was largely owed to a
continuous drop in demand for sedans and other passenger
15.60 cars
• Rising interest rates and stabilization in used-car prices

States in 2017
2013 2014 2015 2016 2017
Source: Marklines
Seasonally adjusted annual rate (SAAR) for the last five
17.2
17.2
17.2
17.2
•
16.8
16.8
16.8
According to J.D. Power, the average number of days taken 16.7
16.7
•
16.6

March April May June July
the industry level
2017 2018

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India Used Car Market Size (1/2)

• The market is estimated to generate USD

• India Used Car Market which was

14.3 • North zone accounts for the majority of

• Additionally, greater participation from

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

6.6 • Changing lifestyle, rising income levels

• The market is anticipated to rise further

• India Used Car market has observed

• According to a report from IBB, first time

Source: Company Press Releases and Aranca Analysis

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

India Used Car Market – Key drivers and challenges

Source: News Articles, Aranca Analysis

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

Near Term Medium Term Long Term

Entry of OEMs in the segment

Better Price Value Quotient

Online platforms increasing

Launch of less expensive small

Limited choices compared to

Perceived risks with the used-

High to Low Impact

Source: News Articles, Aranca Analysis

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

Figure 1: Number of used car outlets of top 3 OEMs

• Additional offerings by the pre-owned businesses of the

Source: Indian BlueBook

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

Figure 1: Number of used car outlets of top 3 OEMs

• In 2017, organized dealer count in the India Used Car

• Additional offerings by the pre-owned businesses of the

• Growing demand has led OEMs to invest additional

• All the three major OEMs saw an increase in used car

• Affordability and value for money accounts for 35% and

• Additionally, a typical new car depreciates by as much as

Source: Indian BlueBook

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

New Delhi 3,50,962 9.3%

Figure 1: India Used Car Market Sales Volume by

• Additionally, rising income levels, changing lifestyle and

Source: Company Press Releases, Aranca Analysis

• Due to high ticket size of used luxury cars, most of the

Source: Company Press Releases, Aranca Analysis

Figure 1: India Used Car Market Sales Volume by

• On the other hand, sales generated through offline channels

• Online Used Car Sales which comes from various portals

shown promising development growing at a rate of 24%

2016 2017 • According to a study conducted by Bain & Company in

Source: Media Articles, Aranca Analysis

Copyright 2018. Reproduction is forbidden unless authorized. All rights reserved.

Hyundai H • Vehicle certification

Girnar Software • Operates as a classified site for

Source: Aranca Analysis, Company press releases and Media reports

Figure 1: Number of used car outlets of top 3 OEMs

1,700 • However, in 2017 the market saw a decline of 1.8%

marking the first fall in annual vehicle sales since the

• The fall in the vehicle sales was largely owed to a

335 continuous drop in demand for sedans and other passenger