German luxury carmaker Mercedes-Benz is looking at around 20% of its total sales this year to come from pre-owned car sales despite sourcing used vehicles remaining a challenge, according to a senior company official.
The company’s arm Mercedes-Benz India sold over 3,000 pre-owned cars last year and is witnessing robust demand for such vehicles with the holding period coming down to around 10 days as compared to 30 to 45 days earlier.
“Still 18 to 20% of our total car sales will come from used cars. So last year, if we did 16,000-odd cars, I will say 3,000 plus cars were used cars, about 20%. Similar ratios will continue, I would say at 20-odd percent,” Mercedes-Benz India Managing Director and CEO Santosh Iyer told PTI.
He was responding to a query on the sales of the company’s pre-owned cars.
The company sells its pre-owned cars through the “Mercedes-Benz Certified” channel which is located at all dealers’ locations and is actively selling and trading in cars.
The Mercedes-Benz Certified business witnessed steady traction growing by 20% in Q1 2023, owing to growing aspirations and increased supplies of pre-owned cars, Iyer added.
He, however, said it’s very challenging to grow the contribution of the pre-owned cars to the total sales beyond 20% because of the availability of the vehicles.
“Pre-owned car sale is a function of the new car market. To a large extent, the biggest challenge is availability of a pre-owned car today when the new car is waiting for three to six months,” he explained.
The customers don’t want to now give out a Mercedes-Benz and drive a mass-market car, and they wait, he said.
Also, Iyer said customers also find buyers within their own circle and transact when someone wants to buy quickly.
“So many of the transactions actually don’t happen via us as they happen directly between customers. So our dealers and our partners find it a big challenge to source a car, but once you source a car, the average time a car is with us is now hardly a week-10 days, it used to be 30 to 45 days of holding period for a used car, because these cars are flying at good pricing.”
On the reasons behind the growth of the company’s pre-owned cars, he said, “There is a trend of first-time luxury car buyers opting for a certified Mercedes-Benz buoyed by a strong brand trust, completed with transparency and robust processes.”
In terms of geography, he said, “Major metros remain our key growth drivers contributing close to 60% of our pre-owned business. However, it is encouraging to see aspiring customers in smaller metros showing high interest in luxury cars, opening new growth opportunity for our certified business.”
The long-wheelbase E-Class is the highest-selling pre-owned car for Mercedes-Benz India.
On the overall sales growth forecast for 2023, Iyer said, “Our outlook is as committed at the start of the year, we still continue to forecast double-digit growth for us for the rest of the year.”
He further said in 2022 the company had record sales and a double-digit growth, on top of it “should make this another record year in our history”.
In the first quarter of 2023, Mercedes-Benz India posted sales of 4,697 units, a 17% growth over the year-ago period. The company posted record sales in 2022 at 15,822 units.
