Skoda entry to strengthen organized used car market in India, says GlobalData

Following the news that Skoda Auto India has introduced ‘Certified Pre-Owned’ program;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading research and consulting company, offers his view:

“Skoda has officially announced the launch of its certified pre-owned vehicle sales business across nine cities in India after indicating its plan to enter the business last month. The entry of Skoda in the used car business is an extremely positive development for the company, as the organized used car Indian market, which is niche presently and has presence of only some key players, holds significant market potential.

“The move is a part of Skoda’s ‘India 2.0’ strategy, which aims to invest US$1.17bn between 2019 and 2021 along with its parent company Volkswagen Group to ensure sustainable growth in the Indian market. In phase II, the company plans to roll out the program at its nation-wide dealerships by 2021 and aims to sell over 10,000 used cars – which would be 20% of its sales by 2022.

“The organized used car market in India has presence of some key Original Equipment Manufacturers (OEMs) including Maruti Suzuki (True Value), Mahindra (Mahindra First Choice), Hyundai (H Promise), Ford Motors (Ford Assured) and Volkswagen (Das WeltAuto). Skoda pre-owned vehicle program will not be just limited to Skoda but all other brands, provided they qualify the requisite inspection and KM driven criteria. These norms are similar to business model adopted by other OEMs where customer can trade in their multi-brand used car for a new car from that brand and then the used car can be resold through the company’s pre-owned channel. Skoda also aims to offer ‘digitalized used car buying experience’ to differentiate itself from competitors. This includes live consultation with technicians, sales consultant, and car evaluators and virtual product demonstration.

“Used cars have high uptake in India. The annual volume sales of used cars are approximately 1.5–2 times higher than the new sales. The entry of Skoda in used car business makes complete sense in the present scenario as there is higher traction towards affordable personal mobility due to COVID-19 pandemic and dwindled public transport across the country. Furthermore, organized pre-owned channels holds significant untapped potential. Increasing presence of established and reputed OEMs/dealers in the used car business can wash away the odds of buying a used car through the unorganized channel and increase consumer’s confidence in certified pre-owned cars.”

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