The used market is dominated by informal deals, with the organised sector accounting for only 20 per cent of the business through players such as Maruti (True Value), Hyundai (Advantage), Ford (Assured), Mahindra (Automart India) and Honda (Auto Terrace).
Rajiv Dube, president, passenger car business unit, Tata Motors, said, "We have an adequate portfolio ready for the venture. When the time is right we will go for it...may be this year."
The used car network is expected to be run through Tata Motors' dealership network. Dube, however, refused to give the exact timeframe and investment on the venture saying that it was under consideration and the plans have not been finalised.
Even as fears that auto sales may slow down this year owing to hardening interest rates on car loans, growth in the second-hand car market is expected to continue at a good pace. Over a million used passenger cars were sold last year.
A study by manufacturers indicates that very few Indian buyers pay an expert to evaluate the vehicle and most rely on personal mechanics and friends. The study points out that word-of-mouth publicity, advertisements and used car brokers are key sources that decide brand and price, with Internet and manufacturer-backed sources playing only a limited role.
Ashutosh Goel, auto analyst, Edelweiss, said, "The market for used car will continue to grow at rates, which will be at par with the new car market at 20-25 per cent. The holding period of vehicles is coming down as existing owners are bringing down the period to around six to eight months."
Industry estimates put the annual second-hand car market at 1 million units, almost as big as the new-car market (1.3 million units). Both markets grew 20 per cent in 2006-07 and are expected to grow at 20 to 25 per cent in the coming years.
