Kia India has confirmed that it will set up a used car business in the country next year. Speaking during the OLX Autos’ used cars panel discussion, Hardeep Singh Brar, vice president and head of Marketing and Sales, Kia India, said, “We are also planning to get into the used car market. Come 2022, when our cars will turn about three years old, it’ll be the right time to start [with our used car business], especially in the bigger towns.”
Why is Kia looking to enter the used car market?
Sales of pre-owned cars have been on the rise in the country, thanks to the need for personal mobility due to the COVID pandemic and the ongoing supply shortages for manufacturing new cars. Kia has seen this potential in the used car market and now wants a piece of the pie.
“If you look at the scenario today, what I understand is that the used car market is about 1.4 times the new car market and, come 2025, this is projected to be almost two times the new car market. So there is tremendous potential that we can see in this area,” Brar added.
Kia’s first model in India, the Seltos, is set to turn three years old in 2022, so the carmaker wouldn’t want to lose the customers who are looking to replace the SUV with rival brands. Hence, setting up its own used car business will help Kia with conquest sales. Brar didn’t divulge more details apart from the fact that the brand will look to set up the business in larger cities to begin with.
However, despite its potential, there are currently certain challenges in the used car market. “Currently the supply of the used car market is a big concern. So, when there is a concern on the supply of new cars, people hold on to the cars which they want to exchange and hence, I think, it has impacted the supply side of the used car,” Brar said.
This, in turn, has also led to a hike in prices in used cars, since the demand is more than the supply. “It has actually gone up [prices for used cars], I would say, anywhere between five to 10 percent versus what it was earlier,” he added.
High resale value of the Kia Seltos
The signs to enter the used car market are encouraging for Kia, and, in a study conducted by Autocar India and OLX Autos earlier this year, the Seltos was adjudged to have the best resale value in its segment. Thanks to huge waiting periods and price hikes, the Seltos is able to command a strong resale value that is unmatched by any of its competitors in the midsize SUV segment.
When asked about the Seltos’ high residual value, Brar said, “I would say there are three factors [for high residual value]. One is as the prices of the new cars go up, it also has a direct impact on the prices of the used cars. Second, the availability of a new car in the market. When you have a lengthy waiting period, it definitely impacts the overall pricing of the used car, which is probably why we have the best residual value in the marketplace. And third is the product itself. I think people are loving it [the Seltos] and they are willing to pay the price.”