Pre owned growth story defies slowdown

While all doesn’t seem to be right with the auto industry, Honda Siel Cars India has tripled the number of cars exchanged through its flagship used car exchange programme, Auto Terrace. The exchange programme allows customers to trade in their existing car and upgrade to a Honda. Dealers are then allowed to sell used cars of all brands at their disposal. One of the key features of the exchange programme is that customers are also allowed an option of a pre-owned Hondas.

Very recently, Honda Siel has decided to incorporate a thorough check on all the cars, with Hondas to be specifically certified with an option of limited warranty. Primarily targeting customers switching from compact hatchbacks to premium sedans, Auto Terrace was initiated in early 2007. In less than two years, Honda Siel has extended the exchange programme to Honda dealerships across the country and managed to triple the number of exchanges carried out in the initial phase.

‘The total number of exchanges has gone up considerably; especially since finding pre-owned Hondas in the unorganised used car market is not so easy. We are closing about 600 exchanges a month,’ informed, Senior VP, Marketing, Honda Siel, Jnaneswar Sen. When asked whether the service is available across all the dealers in the country, Sen added, ‘Theoretically yes, but there are always going to be some dealers who continue to do far better that others. Some of them are still trying to get a grip on the format but we have a focussed team helping them out with it.’

Dealer sources confirm that the City and Accord are the hottest selling cars even in the used car venture, followed by its flagship and its only SUV in India, the C-RV. Honda Siel will spend close to Rs 2.5 crore on advertising promotions for Auto Terrace in association with local dealerships, in a year that forced most players to trim their media buying.

Reasonable Organisation

The used-car and exchange market — still fairly dominated by unorganised players — has witnessed reasonable organisation over the last few years, especially after market leader Maruti Suzuki India stepped into the business around 2001. According to market estimates, Maruti sold around 18 percent of its new cars in the April-October 2008 period through True Value, which is a one-stop shop for buying, selling or exchanging cars.

Of the 200,000 units sold by the organised segment, Maruti sells 90,000 second-hand cars through its 210-dealer strong True Value network. Hyundai Advantage, Ford Assured, First Choice — a JV between Mahindra & Mahindra, HDFC and Sah & Sanghi — and a clutch of other auto websites are the other players in the organised segment with a minor share of the market. At least two more OEMs, General Motors and Volkswagen are hoping to set shop and claim their share of the near-million-units pie. Vice President – Marketing, Sales and After Sales, General Motors India, Ankush Arora had earlier announced the manufacturer’s intention to enter the used car arena by September 2008, which is now evidently delayed.

Earlier this year, transportation analysts across the board predicted a slump in the used car market upon the launch of Tata Motors’ Nano, which promises to usher in an era of affordable mobility. However, with the mother plant of the toughest contender moved to Gujarat, a full-fledged launch of Nano is inevitably delayed. That coupled with the current meltdown is gradually earning used car markets a significant role in the value chain. Territory Head and CEO, BNP Paribas India, Frederic Amoudru, said, ‘The used car domain in India is likely to witness remarkable organisation and at a