Market Trends of Asia-Pacific Used Car Financing Industry
This section covers the major market trends shaping the APAC Used Car Financing Market according to our research experts:
Hatchback Segment to Remain Under the Spotlight
Owing to the affordability of hatchbacks, the sales of this segment in the used car market were least disrupted during the pandemic. Hence a little over 50% of the car buyers in the country may opt for a user over a new vehicle. Hatchbacks are popular for a variety of reasons, including lower taxation than sedans while providing the same performance and comfort. Since so few new models qualify for these tax breaks, the price of used hatchbacks remains unaffected.
Hatchbacks have been the bestselling cars in Asia-Pacific since they were introduced in the early 1980s. The segment has shown a similar sales trend in the pre-owned car segment. Major international automakers, including Chevrolet, Volkswagen, Nissan, Ford, Maruti, and Renault, have already penetrated the compact car models to tap the segment's long-term potential in the region. This has also elevated pre-owned vehicle demand for the same.
Moreover, due to the increased digitization and the ability of companies to provide immersive purchase experiences remotely, the used car market is expected to witness significant growth. Furthermore, the rise in the value-added service offering and the variety of finance providers offering credit for used cars will also contribute to the growth of the hatchback segment in the Asia-Pacific used car market.
India to Play the Pivot Role
India is leading the used car financing business across the Asia-Pacific region owing to increasing used car sales in the country. This growth is mainly attributed to the cost affordability offered by these used cars over the new cars. Further, easy finance options available readily have deeply taken a steady recovery in demand for used car financing in the market.
Growing digitization is promoting the used car financing market. Digitization helps to store, retain, and retrieve data. Almost all information is in digital format. This reduces the capital resources required and reduces the problem of storing documents. An increase in digitization in auto finance will extend end to end, including e-signatures and digital loan documents, and have an opportunity to gain an advantage over the market. For instance,
- In November 2022, Spinny, which is the Gurugram-based used car retailing platform, announced the opening of its largest experiential hub in India. The newest experiential hub, which will be soon opened in Bengaluru, would offer India's largest fleet of used cars, accommodating clients offline and online, both with an inventory of more than 500 cars.
- In February 2022, Kuwy launched an end-to-end digital lending platform for online car sellers. The platform allows car manufacturers, dealers, aggregator platforms, and lenders to offer digital retailing to their customers.
Significant growth of the market attributes to factors including the pandemic, changing demographics and ambitions, the addition of first-time buyers, and the availability of various financing options by companies across the market. Furthermore, more than 65 % of the pre-owned cars supplied were concentrated in metropolitan cities such as Delhi-NCR, Mumbai, Bengaluru, Hyderabad, and Chennai.
The major presence of OEMs, including Maruti Suzuki and Tata Motors, is attracting consumers for used cars and offering better financing options, thereby increasing the demand for used cars is increasing. Even luxury car makers, including Audi, also entered the used car market, which increased the sale of used premium cars.
