Second-Hand Speed: Exploring the Thriving Market of Used Two-Wheelers in India

Second-Hand Speed: Exploring the Thriving Market of Used Two-Wheelers in India

Featured Stories by Team Drivio | Mar 28, 2023

Do you want to buy a two-wheeler? Don't ignore the thriving and dynamic used market! From vintage scooters to powerful motorcycles, the pre-owned scene has something for everyone's budget and taste. 

  • The used two-wheeler market has grown significantly in recent years, owing to increased demand for personal mobility, particularly during the ongoing COVID-19 pandemic. Because of their higher fuel efficiency, two-wheelers are one of the primary growth drivers.
  • Despite the pandemic-induced economic slowdown, the used two-wheeler market in India grew by 11.45% in 2020, according to a recent report by the Federation of Automobile Dealers Associations (FADA). 

A Look at the Used Two-Wheeler Market

The Indian used two-wheeler market is estimated to be worth around INR 50,000 crores ($6.7 billion), with a CAGR of 8-10% in recent years. According to industry experts, the market will grow at a faster rate in the coming years, owing to factors such as rising demand for personal mobility, increased affordability, and the expanded reach of organized players.

The market is highly fragmented, with many unorganized players operating on a local scale. However, the organized sector is gaining traction, with several startups and established players offering online platforms for buying and selling used two-wheelers, including CredR, Droom, OLX Autos, and others. 

These platforms provide a convenient and transparent way for customers to buy and sell vehicles, with features such as vehicle inspection, financing, and warranty.

Market Drivers for Used Two-Wheelers

Several factors influence the used two-wheeler market, including:

  • Affordability: With the rising cost of new vehicles and the increased availability of financing options, many customers are turning to used two-wheelers as a more cost-effective option.
  • Personal mobility: The ongoing COVID-19 pandemic has increased demand for personal mobility, with many people preferring two-wheelers as a safer and more convenient mode of transportation.
  • Urbanization: As India's population grows, there is a greater demand for smaller, more maneuverable vehicles capable of navigating congested roads and narrow alleyways.
  • Technology: As the used two-wheeler market becomes more technologically advanced, such as online platforms and vehicle inspection tools, customers will find the buying and selling process more convenient and transparent.

The Used Two-Wheeler Market Difficulties:

Despite its growth potential, India's used two-wheeler market faces several challenges that must be addressed:

  • Lack of trust: Many customers are hesitant to purchase used vehicles because they are concerned about the vehicle's condition and history. Initiatives such as vehicle inspection and certification can help to address this lack of trust.
  • Fragmentation: The market's unorganized nature and lack of standardization can make it difficult for customers to find trustworthy sellers and vehicles.
  • Financing: While financing is available, it is frequently limited and costly for customers with low credit scores. Extending the reach of affordable financing options can help to improve market accessibility.
  • Maintenance: Many customers lack the knowledge and resources necessary to properly maintain their vehicles, resulting in a decrease in vehicle condition and value over time. Education and assistance with vehicle maintenance can help to address this problem.

Used Two Wheeler Market Segment 

In India, the used two-wheeler market caters to a diverse range of consumers with varying needs and preferences. One of the most important aspects of this market is its segmentation, which can be broadly classified into three segments based on factors such as price, age, and vehicle condition.

  1. The first segment is the entry-level segment, which consists of low-cost two-wheelers priced under Rs. 30,000. These vehicles are usually older models with a lot of miles on them and may need some repairs or maintenance. They are popular among first-time buyers, students, and low-income families looking for a cost-effective mode of transportation.
  2. The second segment is the mid-tier, which includes two-wheelers priced between Rs. 30,000 and Rs. 60,000. These vehicles are newer, have lower mileage, and are in better condition than entry-level vehicles. Young professionals, urban commuters, and those who value style and performance frequently prefer them.
  3. The premium segment, which includes high-end two-wheelers priced above Rs. 60,000, is the third segment. These cars are typically less than five years old, have low mileage, and are in excellent condition. They are popular among collectors, enthusiasts, and those who value luxury and comfort over affordability.

Aside from price and condition, factors such as geography, brand, and vehicle type influence the segmentation of the used two-wheeler market in India. Certain regions, for example, may have a higher demand for scooters than motorcycles, and some brands may have a higher resale value than others. Similarly, vintage or classic two-wheelers may serve a niche market of collectors and enthusiasts.

Future Prospects of the Used Two-Wheeler Market

The used two-wheeler market in India is expected to continue its growth trajectory in the coming years, driven by factors such as increasing affordability, expanding the reach of organized players, and rising demand for personal mobility. 

Future projections indicate that the overall market for used two-wheelers in India will grow rapidly, from million units of sales volume in FY2019E to million units of sales volume in FY2023E. 

During the forecast period FY'2019E-FY'2023E, the CAGR is expected to be around %. People who want to own a vehicle, mostly in smaller cities and towns, start by purchasing a used two-wheeler. Women drivers are similar in that they prefer to learn to drive in a used vehicle before purchasing a new vehicle. 

Local dealers, who have been facing stiff competition from online classifieds, will also be seen collaborating with online players to reach a larger audience.