Study on Used Cars

A REPORT ON

“A STUDY ON PERCEPTION OF PEOPLE BUYING
USED CARS”

SUBMITTED BY
P.N.PRATYUSHA
ROLL: 10132

1

A REPORT ON

“A STUDY ON PERCEPTION OF PEOPLE BUYING
USED CARS”

SUBMITTED BY
P.N.PRATYUSHA
ROLL: 10132
BATCH XVIII, 2010-2012
Report submitted in partial fulfillment for the award of
Post Graduate Diploma in Management

VIGNANA JYOTHI INSTITUTE OF MANAGEMENT
2

(APPROVED BY AICTE, MINISTRY OF HRD, GOVT. OF INDIA)
BACHUPALLY, HYDERABAD.

3

ACKNOWLEDGEMENT
I hereby convey my deep acknowledgement to all those who made it possible for me to complete
this project, by extending their support and continuous co-operation.
I would like to acknowledge the consistent encouragement extended by Dr. Kamal Ghosh Ray,
Director and Dr. Ch. S. Durga Prasad, Dean-Academic Planning of Vignana Jyothi Institute of
Management.
Finally, I would like to thank all the people who helped in my survey and my VJIM batch mates
without whom this dissertation work would not have been successfully completed.

4

Contents
Introduction:...............................................................................................................5
History of automobiles............................................................................................5
Changing faces of cars...........................................................................................7
Used cars..............................................................................................................10
Used cars industry.................................................................................................10
Growth in Used Cars Industry.............................................................................11
Growing trend of used car markets in india.......................................................12
Maruti suzuki india limited....................................................................................14
Maruti true value...................................................................................................15
Mahindra & Mahindra Motors................................................................................16
Mahindra first choice wheels.................................................................................18
Ford motors:..........................................................................................................19
Ford assured:........................................................................................................20
Auto companies take pre-owned route to drive sales:..........................................21
Research objective...................................................................................................23
Research methodology.............................................................................................23
Research problem:................................................................................................23
Type of Research:..................................................................................................23
Data collection:.....................................................................................................23
Primary data:..........................................................................................................23
Secondary data:.......................................................................................................23
Sampling technique:.................................................................................................23
Sample size:...........................................................................................................23
Data representation technique and tools.........................................................................23
Analysis....................................................................................................................24
Observations and interpretations.............................................................................30
Conclusions:.............................................................................................................31
Limitations................................................................................................................32
5

Suggestions..............................................................................................................32
Questionnaire...........................................................................................................33
Questionnaire

Introduction:
History of automobiles:
Horses had dreams of them since time immemorial, but it was only in the 18th century
that the first horseless carriage actually hit the roads. That's not to say that the idea never struck
anyone. Seeds of the idea, in fact, originated long before the first contraption was rolled.
The History of the automobile actually began about 4,000 years ago when the first
wheel was used for transportation in India. Several Italians recorded designs for winddriven cars. The first was Guido da Vigevano in 1335. It was a windmill-type drive to gears and
thus to wheels. Vaturio designed a similar car that was also never built. Later Leonardo da Vinci
designed clockwork-driven tricycle with tiller steering and a differential mechanism between the
rear wheels.
In the early 15th century, the Portuguese arrived in China and the interaction of the two
cultures led to a variety of new technologies, including the creation of a wheel that turned under
its own power. By the 1600s, small steam-powered engine models were developed, but it was
another century before a full-sized engine-powered automobile was created.
A Catholic priest named Father Ferdinan Verbiest is credited to have built a steampowered car for the Chinese Emperor Chien Lung in about 1678. There is no information about
the automobile , only the event. Since James Watt didn't invent the steam engine until 1705, we
can guess that this was possibly a model automobile powered by a mechanism like Hero's steam
engine-a spinning wheel with jets on the periphery.
Although by the mid-15th century the idea of a self-propelled automobile had been put
into practice with the development of experimental car is powered by means of springs,
clockworks, and the wind, Nicolas-Joseph Cugnot of France is considered to have built the first
true automobile in 1769. Designed by Cugnot and constructed by M. Brezin, it is also the first
automobile to move under its own power for which there is a record. Cugnot's three-wheeled
steam-powered automobile carried four persons and was meant to move artillery pieces. It had a
top speed of a little more than 3.2 km/h (2 mph) and had to stop every 20 minutes to build up a
fresh head of steam.
Evans was the first American who obtained a patent for "a self-propelled carriage." He,
in fact, attempted to create a two-in-one combination of a steam wagon and a flat-bottomed boat,
which didn't receive any attention in those days. During the 1830's, the steam car had made great
advances. But stiff competition from railway companies and crude legislations in Britain forced
the poor steam automobile gradually out of use on roads. The early steam-powered automobile s
were so heavy that they were only practical on a perfectly flat surface as strong as iron. A road
thus made out of iron rails became the norm for the next hundred and twenty-five years. The
6

automobile s got bigger and heavier and more powerful and as such they were eventually capable
of pulling a train of many car s filled with freight and passengers.
Carl Benz and Gotttlieb Daimler, both Germans, share the credit of changing the
transport habits of the world, for their efforts laid the foundation of the great motor industry as
we know it today. First, Carl Benz invented the petrol engine in 1885 and a year later Daimler
made a car driven by motor of his own design and the rest is History.
Daimler's engine proved to be a great success mainly because of its less weight that could
deliver 1000 rpm and needed only very small and light vehicles to carry them.
France too had joined the motoring scenario by 1890 when two Frenchmen Panhard and
Levassor began producing automobile s powered by Daimler engine, and Daimler himself,
possessed by the automobile spirit, went on adding new features to his engine. He built the first
V-Twin engine with a glowing platinum tube to explode the cylinder gas-the very earliest form
of sparking plug. The engines were positioned under the seat in most of the Daimler as well as
Benz car s. However, the French duo of Panhard and Levassor made a revolutionary contribution
when they mounted the engine in the front of the car under a 'bonnet'.
Charles Duryea built a car carriage in America with petrol engine in 1892, followed by
Elwood Haynes in 1894, thus paving the way for motor car s in that country.
For many years after the introduction of automobile s, three kinds of power sources were
in common use: steam engines, gasoline or petrol engines, and electrical motors. In 1900, over
2,300 automobile s were registered in New York, Boston, Massachusetts, and Chicago. Of these,
1,170 were steam car s, 800 were electric car s, and only 400 were gasoline car s.

In ten years from the invention of the petrol engine, the motor car had evolved itself into
amazing designs and shapes. By 1898, there were 50 automobile -manufacturing companies in
the United States, a number that rose to 241 by 1908. In that year, Henry Ford revolutionized the
manufacture of automobile s with his assembly-line style of production and brought out the
Model T, a car that was inexpensive, versatile, and easy to maintain. The introduction of the
Model T transformed the automobile from a plaything of the rich to an item that even people of
modest income could afford; by the late 1920s the car was commonplace in modern industrial
nations.
Herbert Austin and William Morris, two different car makers, introduced mass
production methods of assembly in the UK, thus paving the way for a revolution in the
automobile industry. Austin Seven was the world's first practical four-seater 'baby car ' which
7

brought the pleasures of motoring to many thousands of people who could not buy a larger, more
expensive car . Even the 'bull-nose' Morris with front mounted engine became the well-loved
model and one of the most popular car s in the 1920s.
Automobile manufacturers in the 1930s and 1940s refined and improved on the
principles of Ford and other pioneers. car s were generally large, and many were still extremely
expensive and luxurious; many of the most collectible car s date from this time. The increased
affluence of the United States after World War II led to the development of large, petrolconsuming car s, while most companies in Europe made smaller, more fuel-efficient car s.
Changing faces of cars:
A Carriage That Moves On Its Own
The dream a carriage that moved on its own was realized only in the 18th century when
the first car rolled on the streets. Steam, petroleum gas, electricity or petrol (sold at the chemist's
in the beginning) started being used for driving these funny car s that looked more or less like
horseless carriages.
The Benz Vehicle (1886, Germany)
It is accorded the distinction of being the first gasoline-powered vehicle. This threewheeler was the first car equipped with a differential gear and had a horizontal, four-cycle
single-cylinder engine. The engine was mounted horizontally behind the seat, over the rear axle,
in a frame-developed form prevailing tricycles. Its 0.9 horsepower was transmitted to the rear
wheels via belt and chain, enabling a top speed of about 15 km/h. A lever connected to a rackand-pinion controlled the lone front wheel, which steered the car.
Baker Electric (1899)
For a long period after gasoline-powered cars gained popularity, battery-powered cars
continued to be made in the United States. The Baker was produced from 1899 to 1915. The
unusual suspension of this car consisted of attaching the wheel shafts directly to the frame, on
top of which was mounted a body on springs. The body carried the motor, which drove the rear
wheels by a chain. A lever next to the driving seat controlled its speed. The Baker Electric was
reputedly easy to drive, and could cruise a distance of 80 km when fully charged, reaching a top
speed of 40 km/h.
Stanley Streamer
The steam car, Stanley Steamer continued production until 1927. It was quiet, had little
vibration, produced sufficient torque, and was easy to handle. Under the bonnet of this car was a
boiler, which provided the pressure to drive a two-cylinder engine located beneath the floor.
Because of its abundant torque, the Stanley Steamer did not have a transmission-just one gear
engaged the center of its crankshaft, and directly turned the rear wheels. Manipulating the
Steamer's valves, which controlled the flow of fuel, water, and steam, must have required quite a
8

bit of practice and knowledge. Although it could achieve a higher top speed than its gasolinedriven rivals, it was hard to start, especially in the cold weather.
Panhard et Levassor (1891 France)
Two French toolmakers Rene Panhard and Emile Levassor were the first to propose and
commercialize a car having a layout and structure similar to today's cars. The Panhard et
Levassor was the origin of the classic front engine, rear-wheel drive layout, the paradigm that
transformed the horseless carriage into the car as we know it today. It positioned its transmission
in line with the engine and clutch, and had a steering wheel instead of a tiller, and an in-line fourcylinder engine. The front engine gave the car a better balance and made it easier to steer.
Mercedes (1901)
The new Daimler model combined into one machine for the first time all the vital
features of the modern car : a powerful four-cylinder engine, a pressed steel chassis, a
honeycomb radiator, and a recognizably modern gear stick moving in a gate. The model was
named Mercedes, after the daughter of an Austrian, Emily Jellinek, the Daimler representative in
France.
Tin Lizzie or T Model (1907)
Henry Ford's model T, popularly called the Tin Lizzy, was the first everyman's car .It not
only brought motoring to the masses but also was the first mass-produced car . As
result, automobile ownership surged and car s became affordable for the ordinary wage earner as
well. The Model T introduced various features to facilitate driving, and the transmission was
integrated with the engine. Its planetary gears-two forward and one back-could be shifted
without the use of a clutch.
In 1906, gasoline-powered car s were produced that had a style of their own. In these new
models, a hood covered the front-mounted engine. Two kerosene or acetylene lamps mounted to
the front served as headlights. Car s had fenders that covered the wheels and step-up platforms
called running boards, which helped passengers get in and out of the car . The passenger
compartment was behind the engine. Although drivers of horse-drawn vehicles usually sat on the
right, automotive steering wheels were on the left in the United States.
Improvements in engine-powered car s during the 1920s contributed to their popularity:
synchronized-mesh transmissions for easier gear shifting; four-wheel hydraulic brake systems;
improved carburetors; shatterproof glass; balloon tires; heaters; and mechanically operated
windshield wipers.
The Morris and the Austin Seven (1922)
The bull-nosed Morris launched the family car in Britain. In the 1920s, this popular line
could be bought for as little as $775, at $115 down and about $9 per week.
Also in 1922, the Austin Seven became the family runabouts. It had all the big car
characteristics contained in a small design. The top speed was 45-50 mph, and averaged 40 miles
9

on a gallon of gasoline. It was a front-engine, rear-drive model using 750cc four-cylinder side
valve, 10.5-horsepower engine, and floor shift three-speed transmission. The handbrake stopped
the front wheels while a more conventional foot pedal stopped the back ones.
The Volkswagen (1938)
The Volkswagen (German for the "people's car ") went on to rack up worldwide sales of
more than 40 million. A horizontally opposed four-cylinder engine was designed for the power
plant, with a total displacement of 996cc. When mounted in the rear and driving the rear wheels,
this engine, with its low height, permitted the Volkswagen to have a streamlined, fastback shape.
It was air cooled too and came to be loved all over the world as the beetle.
Aerodynamic Models
From 1930 to 1937, car engines and bodies became large and luxurious. Many 12- and
16-cylinder car s were built. Independent front suspension, which made the big car s more
comfortable, appeared in 1933. Also introduced during the 1930s were stronger, more reliable
braking systems, and higher compression engines, which developed more horsepower. Mercedes
introduced the world's first diesel car in 1936. Cars on both sides of the Atlantic were styled with
gracious proportions, long hoods, and pontoon-shaped fenders. Creative artistry merged with
industrial design to produce appealing, aerodynamic car s.
Some of the first car s to fully incorporate the fender into the bodywork came along just
after World War II, but the majority of designs still had separate fenders with pontoon shapes
holding headlight assemblies. During the 1940s, sealed-beam headlights, tubeless tires, and the
automatic transmission were introduced.
Small Cars Versus Big Cars
Two schools of styling emerged in the 1950s, one on each side of the Atlantic. The
Europeans continued to produce small, light car s weighing less than 1300 kg (2800 lb).
European sports car s of that era featured hand-fashioned aluminum bodies over a steel chassis
and framework.
In America, automobile designers borrowed features for their car s that were normally
found on aircraft and ships, including tailfins and portholes. Cars were produced that had more
space, more power, and smoother riding capability. Introduction of power steering and power
brakes made bigger car s easier to handle. The Buick Motor Car Company, Olds Motor Vehicle
Company (Oldsmobile), Cadillac Automobile Company, and Ford all built enormous car s, some
weighing as much as 2495 kg (5500 lb).
Austin Mini (1959)
The Austin Mini was introduced in Britain. It became hugely popular. It was small
enough to squeeze through city traffic, easy to park, cheap to run, yet big enough for four adults.
Its success paved the way for a succession of small car s.
10

The Japanese Cars
In the 1950s and more years since the Japanese began producing cars domestically,
Japanese automotive technology has made remarkable progress and come to be one of the
international leaders. In 1980, Japan became the top automobile-producing country in the world.

Sports Cars
The various car races encouraged the automakers to view car racing as a sport resulting in
the rapid development of automotive technology. As technological knowledge began to
accumulate from car racing, various sports models appeared, allowing motorists to experience
real driving pleasure.
Computerized Cars
Today, stepping into the twenty-first century, utilizing new materials, high-tech
electronics, new power sources, and artificial intelligence, the type of car that automakers are
capable of producing cannot even be imagined.
Austin Rover Maestro (1983)
The Austin Rover in Britain introduced the Maestro, with a talking dashboard designed to
alert the driver to engine problems, the latest in the line of electronic systems added to car s since
the 1960s.
Ford Probe IV:
The Ford Probe IV prototype, perhaps the world's most aerodynamic four seater, is
testing many revolutionary features that may well become the standard in tomorrow's car s.
Among them is the use of computer-controlled pneumatic suspension.

Used cars:
A used car, a pre-owned vehicle, or a second hand car, is a vehicle that has previously
had one or more retail owners. Used cars are sold through a variety of outlets, including
franchise and independent car dealers, rental car companies, leasing offices, auctions, and private
party sales. Some car retailers offer "no-haggle prices," "certified" used cars, and extended
service plans or warranties.
In 1898, the Empire State Motor Wagon Company in Catskill, New York is one of the
very first American used car lots.
11

Used cars industry:
Used cars sector in India has emerged as one of the major industries due to its easy
accessibility and lower rate of interest. According to the industry analysts, the sales of used cars
are likely to boost up in the next few years. Infact in the last fiscal year, more used cars were
transacted 10% more than the new ones, according to the assessment by Maruti Suzuki India
Ltd. and Honda Siel Car India Ltd.

Growth in Used Cars Industry
As per the estimates of the car financers, the used cars industry is expanding at 25%
-30% against the 13% growth of the new car sector. In FY 2008, Indians purchased 1.5 million
used cars compared to the 1.6 million new cars. According to the latest statistics, Maruti and
Honda traded 66,000 and 2,769 used cars respectively. This indicated a 45% increase in their
sales against the 2007 sales. In the past few years around 55 latest used cars models have been
launched in India. This trend is likely to sustain and expand in India till the car manufacturers
bring in Rs 36,000 Crore into Asia's third biggest car market. This speedy expansion in used car
sector over the last thirty years has taken place due to lower interest rates compared to the new
vehicles.
According to a latest analysis the yearly used car demand in the Indian market is around
1.4 million cars. To benefit from the flourishing trend leading organized manufacturers like
Automart india Ltd and Maruti's TrueValue have made a foray into the used car business. Unlike
other unorganized companies, they provide guarantee of accurate ownership and accident
certification to their customers and vendors along with superior quality and benefits like
warranty period and free repair services.
Advantages of buying a used car
Purchasing a second hand car has lot of benefits. Some of them are listed below:
•
•
•
•

The value of a used car is considerably lower than a new car,
The depreciation cost is lesser as compared to the new car,
Used car loans are simpler, easily available and cost lower than the new car loans
Used car can be modified according to the owner's preference.
Used car retail market in India:
For retailers, the licensed used car outlets provide the finest market cost besides
meticulous evaluation by professionals and an alternative to select from any other car short-listed
12

in the car-maker's portfolio. These certified retail outlets also provide extended warranty period
to its customers on the basis of the brand outlet, used car insurance, assistance tariffs, utilization
of OEM parts during the repair services, delivering world-class quality and detailed inspection
by expert technicians. In addition, the purchasers get to drive back a car at attractive price after
getting concession from the manufacturer.
Industry experts believe that 51% of the used car sales will be included under the
structured car market by FY 2014. Keeping this in consideration, Mahindra is laying market
strategies to enhance its retail numbers to 300 outlets in the next 3-5 years.
Maruti TrueValue has already set-up 275 retail outlets in the country and is all set to raise
the numbers to a few hundred more in the coming years. Other car-makers are also willing to
follow the trend and are planning to extend the used car retail outlets into II tier metropolis in a
short span of time.
Car makers have realized the potential of used car market and making it mandatory for their
wholesalers to operate used car outlets also. Besides exhibiting multiple brands, the branded used
car retailers are also offering one-stop shop for all inquiries.
Growing trend of used car markets in india:
The market for used cars in India is growing exponentially day by day. With this, the
markets for new cars rejoice the success. There are various factors which have forced the growth
for used cars and have shifted the sector from unorganized to an organized one. Previously, the
used automobile sector was characterized by the lack of choice and transparency because of
dominance of small dealers, car mechanics, and owners for private cars. The unorganized sector
for used cars gave very limited choice of used cars for buyers. But the things have changed
completely in the recent times with the sudden shift from an unorganized to an organized sector.

13

Various factors have attributed to the country with the growth of used car market. Below are the
reasons:1. Nowadays, it is simple to get a loan for car with the floating interest rate of 8% and 12%.
2. The newer generation has adapted a trend for changing the existing car within the two/ three
years.
3. Younger generation prefers new look of car, and thus prefers selling of the existing one and
get a great exchange offer by buying a newly launched car.
4. The owners get a high merchandising value for their cars perhaps; the owners are not reluctant
in selling their car. This depends on the merit of car and the way cars have been maintained.
5. Used car buyers get lots options in the used cars with different models, colors, types along
with various preferences.
The car markets have also changed a lot when compared with olden days. There has been
a huge sale for used cars each day according various studies made on used cars. There have been
various car schemes and programs launched for new car buyers. New car purchasers can
exchange with their existing car with substantial discounts. Buyers have a choice for selection
with the vast fleet of cars. The used automobiles are checked thoroughly and are renovated by
skilled engineers for better resale value. This leads to a higher level of satisfaction among old car
buyers. The market for used cars has been structured and organized recently and the same is
expected to zoom widely within a decade. There has been a tremendous growth with various car
manufacturing companies entering into the business of used cars.
For Indian market the best commuting solution is buying a used car as it fits into the
budget for Indian masses. In addition to this, it also offers lower interests rate with easy
financing deals. According to researchers, there is no official statistics maintained on used car
sectors in India, but auto and car dealers assume that the used auto markets have a bright future
and hence will be very advantageous for Indians and for their convenience. Few car companies
14

have estimated that, used car sectors have registered a significant growth when compared with
new cars. In the current financial year, used car markets have touched great heights. According
to media, big car brand companies will enter into the resale sector very soon. These companies
will focus on middle class Indian masses at all times.
The leading car manufacturers have also shown interest in the used car segments like the
Maruti, Mahindra followed by the Honda, Hyundai and the ford. The true value program of
Maruti, Mahindra first choice, Hyundai advantage, Honda auto terrace and the ford assured have
given lots of contribution to the used cars in India Market. Even other big manufacturers like the
Tata, general motors as well as Mercedes Benz have shown interest and entered in the market of
used cars.
Major used car dealers in India.
Some of the renowned and licensed used car dealers in India are •
•
•
•
•
•

Maruti TrueValue,
Honda Auto Terrace,
Ford Assured,
Toyota U Trust,
Hyundai Advantage,
Mahindra and Mahindra's First Choice

Maruti suzuki india limited:

15

Maruti Suzuki India Limited(MSIL, formerly known as Maruti Udyog Limited) is a
subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car
market for over two and a half decades. The company has two manufacturing facilities located
at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined
capability to produce over a 1.2million(1,200,000) passenger car units annually.
The company plans to expand its manufacturing capacity to 1.75million by 2013. For this
company will be investing around Rs.60billion(6,000 crores) over the period till 2013.

The company offers a wide range of cars across different segments. It offers 14 brands
and over 150 variants- Maruti 800, people movers, omni and Eeco, international brands Alto,
Alto-k10, A-Star, Wagon-R, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara etc. In
an environment friendly initiative, in August 2010 Maruti Suzuki launched factory fitted CNG
option on 5models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and
SX4.
In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell
One Million cars in a year. Maruti Suzuki has employee strength of 7,600(as at end of
March,2010).
In 2009-10, the company sold a record of 10,18,365 vehicles including 1,47,575 units of
exports. With this, at the end of March 2010, Maruti Suzuki had a market share of 53.3 percent
of the Indian Passenger car market(including C segment).
Maruti Suzuki’s revenue has grown consistently over the years.
(Rs. in Million)

16

Year

Net Sales

Year

Net Sales

2004-05
2006-07
2008-09

1,09,108
1,45,922
2,03,583

2005-06
2007-08
2009-10

1,20,034
1,78,603
3,01,198

Considering the growth of sales in used cars, Maruti Suzuki India Limited besides its
manufacturing and selling of new cars, started Maruti True Value as a venture of selling used
cars in an organized way.

Maruti true value:

Maruti True Value is India No.1 organized pre-owned car brand .True Value is venture of
India’s largest automobiles manufacturer “Maruti Suzuki India Ltd”.
Unique advantages
* India's largest certified used car dealer network
* 340 outlets in 197 cities and growing
* All car related services under one roof
* professionally trained manpower
* Complete peace of mind
Maruti True Value business expands the family of Maruti customers, providing
reassurance to existing Maruti customers about resale of their cars and further emphasizes
Maruti’ s Commitment towards enhancing customer satisfaction by continuous association
during the vehicle ownership life cycle.
No one knows your Maruti car better than Maruti - based on this premise, Maruti
chanalises its expertise to ensure that transactions in pre owned cars are transparent and fair.
Through that, the company endeavors to extend the relationship and emotional connect that it
enjoys with the customer.

True Value has transparent and fair evaluation process, which is currently missing in the
largely unorganized market for pre-owned cars. Maruti True Value processes and systems ensure
that the seller gets the right price and is paid promptly.
17

Under True Value, the seller has the option to be paid in cash, or get a True Value car in
exchange or a brand new Maruti Suzuki car in exchange. True Value category cars bought by
Maruti True Value dealers are taken to state-of-the-art workshops.
True Value Category cars are refurbished in state of art workshops using Maruti Genuine
Parts and by skilled technicians. These cars are then sold through maruti True Value outlets.
As a mark of confidence, and to provide reassurance to customers, every vehicle bought
under Maruti True Value is inspected and certified by Maruti Engineers and the Car carries a
one-year warranty and three free services. Convenient finance options are also offered to buyers
of Maruti True Value cars.

Mahindra & Mahindra Motors :

The Mahindra Group’s Automotive Sector is in the business of manufacturing and
marketing utility vehicles and light commercial vehicles, including three-wheelers. It is the
market leader in utility vehicles in India since inception, and currently accounts for about half of
India’s market for utility vehicles.
Although created in 1995 following an organizational restructuring, the automotive sector
can trace its antecedents back to 1954. The iconic that led American G.Is to victory in World
War II is the very same vehicle that drove the Mahindra Group to success in the automotive
sector. Mahindra & Mahindra Limited, the flagship company of the Group, was set up as a
franchise for assembling general purpose utility vehicles from Willys, USA.

18

Over the years, the group has developed a large product portfolio catering to a diverse
customer base spanning rural and semi-urban customers, defense requirements and luxurious
urban utility vehicles. In 2002 it launched the indigenously engineered world-class sports
vehicle- Scorpio, which bridges the gap between style and adventure, luxury and ruggedness,
and performance and economy.

The Group exports its products to several countries in Europe, Africa, South America,
South Asia and the Middle East. The Automotive Sector continues to be a leader in the utility
vehicle segment with a diverse portfolio that includes mass transport as well as new generation
vehicles like Scorpio, Bolero and the recently launched Xylo.
Mahindra & Mahindra’s foray into the three wheeler segment with Alpha and Champion
has also made it a leader in its category. The International Operations of the Automotive Sector
focuses on the international business.

Mahindra Renault (MRPL) announced the launch of Logan, India’s first wide body car,
sporting a host of class-defying features at an aggressive price. The Logan redefines its segment
in terms of spaciousness as well as performance, technology with the latest generation dci
common rail engine. It has been designed for the Indian market incorporating a contemporary
styling and design.

19

Mahindra Navistar Automotives Ltd. (MNAL), a joint venture between Mahindra &
Mahindra Limited and International Truck and Engine Corporation, will manufacture trucks and
buses for India and export markets. It will also provide component sourcing and engineering
services to International Truck and Engine Corporation.
Mahindra Navistar (MNEPL) a second joint venture agreement with Mahindra &
Mahindra, Ltd. focuses on producing diesel engines for Medium and heavy Commercial vehicles
in India. Beginning in 2009, MNEPL’s advanced diesel engines will power the full line of trucks
and buses produced by MNAL.

Mahindra first choice wheels:

Mahindra First Choice is the country’s preferred pre-owned car mart and is India’s only
organized multi-brand player, with 114 outlets in 74 towns across India. The company plans to
expand this number to 300 outlets in the next three years. This implies that customers will soon
be able to choose from a range of certified pre-owned cars throughout India, including the
metros and tier-2 towns and cities. Tremendous attention to detail is required to ensure that each
pre-owned car meets a high level of quality. Before purchasing the car, a trained engineer
thoroughly inspects the vehicle and also sees to it that all papers are in order. After purchase,
every car is refurbished and undergoes an extensive 118 point quality check by a trained
engineer, as part of the company’s robust certification process.
Mahindra First Choice also has retail finance relationships with major banks and NBFCs
in the country. As an industry first, Mahindra First Choice has recently partnered with Syndicate
Bank to offer consumers finance rates comparable to those for new cars. In order to facilitate
business growth, existing and potential franchisees will also be able to avail of inventory funding
options from Syndicate Bank and IDBI Bank.
Mahindra First Choice, an arm of Mahindra and Mahindra Group (M&M) which sells
second hand car, had recently said it would set up sales and service outlets in rural areas across
the country to sell one lakh vehicles by 2015. This year, it expects the sales volume from its
20

multi-brand pre-owned car company - Mahindra First Choice Wheels (MFCW) to go up to
18,000 units from 10,255 last year. MFCW operates a country-wide network, spanning 114
centres, including 6 company-owned outlets, in the superstore and smaller formats. MFCW aims
to leverage its brand power in the franchising mode of business and make it more organised by
professional management. ET has reported that MFCW derives 15 per cent of its sales from the
'D' or luxury car (Rs. 5.5 to Rs. 6 lakh) segment, with the B and C categories (Rs. 3.5 lakh or so)
contributing around 30 per cent of the sales volume.

Ford motors:

The Ford Motor Company is an American multinational corporation based in Dearborn,
Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on
June 16, 1903. In addition to the Ford, Lincoln, and Mercury brands, Ford also owns a small
stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and
Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely
Automobile.
Ford introduced methods for large-scale manufacturing of cars and large-scale
management of an industrial workforce using elaborately engineered manufacturing sequences
typified by moving assembly lines. Henry Ford's methods came to be known around the world
as Fordism by 1914.
Ford is currently the second largest automaker in the U.S. and the fourth-largest in the
world based on number of vehicles sold annually, directly behind Volkswagen Group. In 2007,
Ford fell from second to third in US annual vehicle sales for the first time in 56 years, behind
only General Motors and Toyota. However, Ford occasionally outsells Toyota in shorter periods

21

(most recently, during the summer months of 2009). By the end of 2009, Ford was the third
largest automaker in Europe (behind Volkswagen and PSA Peugeot Citroën). Ford is the
seventh-ranked overall American-based company in the 2008 Fortune 500 list, based on global
revenues in 2008 of $146.3 billion. In 2008, Ford produced 5.532 million automobiles and
employed about 213,000 employees at around 90 plants and facilities worldwide. During
the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. Despite
the adverse conditions, Ford ended 2009 with a net profit of $2.7 billion. Starting in 2007, Ford
received more initial quality survey awards from J. D. Power and Associates than any other
automaker. Five of Ford's vehicles ranked at the top of their categories and fourteen vehicles
ranked in the top three.

Ford assured:

Ford India, a fully owned subsidiary of US based Ford Motors is planning to bring its
used car business named as 'Ford Assured' in India again. The Ford Assured was introduced in
India by the company few years back but due to recession and lowering sales the company
discontinued its used car business at that time. But now as the used car business is growing once
22

again and many major car makers are planning to enter in this segment, Ford India is also
interested in capitalizing the opportunity.
Company is planning to launch this business through its dealership spread across India,
where these dealers will buy used cars and then sell them again in the market. According to
the Ford India's spokesman, the plans of entering in the used car business are in process but
company hasn't finalized the time and format of the business.

Ford India recently enhanced its dealership base in India by opening 28 new sales and
service facilities in 24 cities of India including 13 tier-3 cities. Company is planning to increase
number of its dealerships to 185 by the end of 2010. Company is also expecting that by the end
of this year 30 percent of its sales will come from tier-3 cities.

Besides used car business the company is aggressively planning to increase its market
share in new car segment. Company has recently launched its long awaited small car model Ford
Figo India with plans of making it company's flagship small car model in coming years. Ford
India is also planning to launch 5 to 6 models from its global product portfolio in India.

Auto companies take pre-owned route to drive sales:
Auto majors from Toyota Kirloskar, Honda Siel, Hyundai Motors to General Motors
India are expanding their pre-owned car business to spruce up their new car sales under the
exchange programme.
While Toyota Kirloskar plans to sell 25-30% of its compact car Etios, which will be
launched next year, through its used car outlets, Toyota You Trust, GM and Hyundai, are
aggressively pushing their existing models through their pre-owned car outlets.
Talking to ET, Mr Sandeep Singh, deputy managing director (marketing) at Toyota
Kirloskar Motor said: “We now have five outlets of Toyota You Trust. Within the next three
years, we plan to have 50 outlets. Our aim is to sell 25% of our new cars through Toyota You
Trust. We are already selling Innova and Altis through the used car exchange programme. We
are expanding our used car outlet footprint, keeping in mind the launch of our compact car,
Etios, next year. Toyota You Trust will be one of the major avenues for selling Etios.”
With advances in technology and a record number of new car models entering the Indian
market every year, customers today typically go for an upgrade or exchange within three years of
23

their purchase, compared to the timeworn ideology of sticking to the same car for 10-15 years,
auto industry analysts said.
The used car segment is witnessing growth owing to factors like increasing number of
OEMs entering pre-owned automobile industry, favourable demographics, the changing lifestyle
of Indians and user choice.
Mr Sunil Gambhir, head of AutoTerrace, the used-car arm of Honda Siel, said there are
117 Honda AutoTerrace outlets across the country. “In AutoTerrace, we have exchanged more
than 4,300 preowned cars for new cars and liquidated them through various channels. In about
70% of the cases, the customer needs exchange at the time of buying a new car. So, AutoTerrace
helps the new car department at Honda to present a complete package deal to the customer by
buying the used car of the customer,” said Mr Gambhir.
Mr Gambhir feels that though the second hand car market in the country is equivalent to
the new car market at about 13 lakh plus, in future, it may surpass the new car market.
“Our used car programme, Chevy OK, is doing very well. In the first six months of this
year, we have already sold/exchanged close to 1,200 cars. We intend to sell at least 2,500 cars
through this channel in 2010. It brings in incremental sales volume as the customer is given a
one-stop shop experience to trade in a car, old or new. Although we had sold all models through
this programme, the maximum numbers have come from the sales of Spark and Beat,” said Mr P
Balendran, VP, GM India.
Arvind Saxena, director, sales and marketing at Hyundai Motors India, added: “As for
the volume, we do around 15% of the total sales through those dealers who also have the
Hyundai Advantage dealership. Used-car sales, we expect, will grow at the same rate as the new
car sales. Santro is the most popular model sold through the exchange programme.”

24

Research objective
To study the effect of pre owned cars on new cars.
To know about the factors that are affecting the buying decision of used cars.

Research methodology
Research problem:
To study the factors affecting the growth of sales of pre owned cars on new cars .
Type of Research:
Descriptive type of research has been used. This research is based on fact finding enquiries.
Data collection:
Primary data:
Primary data of research are collected from direct resources (customers of different brands of
cars) through questionnaire.
Secondary data:
Secondary data which are used for the research to know the history scope of different companies
are collected from already available sources like net and other sources.
Sampling technique:
Random sampling is used for the research. I have given equal weightings to all my respondents
and chose them randomly without any bias like gender, age, income level and culture.
Sample size:
50 respondents have been selected as sample size for research.
Data representation technique and tools
Column charts and pie charts have been used for representation.

25

Analysis
A questionnaire has been designed to know the perception of various factors influencing the
growth of sales of used cars when compared to new cars. There were total 50 respondents which
include students(10), business people(22) and service people(18).
The mean and standard deviation of various fields like occupation, age group and monthly
income is calculated to know the effect of pre owned cars on new cars in each of these.
Table 1: Mean and Standard deviation of new cars and used cars in the case of occupation
Occupation

New cars

Used cars

Students

9

1

Business

14

8

Service

9

9

Total

32

18

Mean

10.66

6

Standard deviation

0.720

0.585

Table 2: Mean and Standard deviation of new and used cars in case of Age group
Age group

New cars

Used cars

20-30years

8

3

30-40years

13

7

40-50years

8

6

26

Above 50

4

1

Total

33

17

Mean

8.25

4.25

Standard deviation

0.43

1.35

Table 3: Mean and Standard deviation of new and used cars in case of Monthly income
Monthly income

New cars

Used cars

20,000-35,000

2

3

35,000-50,000

6

13

50,000-75,000

10

1

Above 75,000

8

0

No income

7

0

Total

33

17

Mean

1.32

3.4

Standard deviation

30.46

23.90

Table 4: Mean and Standard deviation of new and used cars in reference with various factors
affecting the buying decision
Factors
affecting
buying
decision

New cars

Used cars

Total

Mean

Total

Mean

Price

135

4.09

82

4.82

27

Brand

141

4.27

64

3.76

Mileage

121

3.67

71

4.18

Style

141

4.27

54

3.18

Durability

119

3.60

66

3.88

Comfort and
convenience

141

4.27

71

4.17

After sales
service

106

3.21

60

3.53

80

4.71

Warranty and
working
condition(used
cars)

Graph 1: Graph showing the influence of various factors on buying decision of new and used
cars

Graph 2: Graph showing number of people having different brands of cars
Graph 3: Graph showing the effects of various sources of awareness on different brands of cars

Graph 4: Graph showing number of people with different income levels

Diagram 1: Diagram showing the distribution

of various occupations

28

Diagram 2: Diagram showing the distribution of various age groups

Diagram 3: Diagram showing the distribution of people using new and used cars

29

Diagram 4: Diagram showing the distribution of various mode of payments

Diagram 5: Diagram showing the distribution of preferences to purchase cars from

30

Observations and interpretations:
 According to the findings it is observed that the percentage of people possessing or
willing to possess a used car is 34%.
 It is observed that people in the occupation of service, 50% are showing interest in
buying of used cars whereas the business people 34% and students showing only 10%.
 It is also observed that people in the Age group of 30-40 are more interested in buying a
used car comprising 38%, and 40-50 comprising of 35% whereas the age groups of 20-30
and above 50 are not much interested.
 People with monthly income level of 35,000-50,000 are interested in used cars
comprising of 68%, followed by the people with income level of 20,000-35,000
comprising of 60% and 50,000-75,000 comprising of 9%. Whereas it is observed that
people with income levels above 75,000 are not much interested in buying a used car.
 It is observed that 46% of people prefer cash as mode of payment and 32% prefer bank
finance and 44% prefer buying cars from companies whereas 28% prefer to buy from
dealers.
 It is interpreted from the findings that the deviation in the usage of new and used cars is
low in case of occupation which means that the occupation does not affect much on
buying decision of new and used cars.
 The deviation in case of age group is comparatively more with occupation, which means
that it has some effect on buying decision of new and used cars.
 The large deviation in case of income levels shows that the buying decision of purchasing
a used car or new car mostly depends on the income level of the person.
 Considering the factors that affect buying decision brand, style and comfort play a major
role in case of new cars and price, warranty and working condition play a major role
followed by mileage.
 This study reveals that pre owned cars do have an impact on the sales of new cars of
about 36% and it is expected to increase over the years.
 And this could be proved with the ventures that most of the renowned companies are
placing for the sales of used cars. They are also using them to promote the sales of
existing new cars.

31

Conclusions:
The trend of buying a used car has paced up resulting in the effect of sales growth of new
cars. It has been increased from 29% to 34% from the year 2009-2010 and it is expected to
increase. The market for used cars in India is growing exponentially day by day. With this, the
markets for new cars rejoice the success. There are various factors which have forced the growth
for used cars and have shifted the sector from unorganized to an organized one. Previously, the
used automobile sector was characterized by the lack of choice and transparency because of
dominance of small dealers, car mechanics, and owners for private cars. The unorganized sector
for used cars gave very limited choice of used cars for buyers. But the things have changed
completely in the recent times with the sudden shift from an unorganized to an organized sector.
For Indian market the best commuting solution is buying a used car as it fits into the
budget for Indian masses. In addition to this, it also offers lower interests rate with easy
financing deals. According to researchers, there is no official statistics maintained on used car
sectors in India, but auto and car dealers assume that the used auto markets have a bright future
and hence will be very advantageous for Indians and for their convenience. Few car companies
have estimated that, used car sectors have registered a significant growth when compared with
new cars.
There have been various car schemes and programs launched for new car buyers. New
car purchasers can exchange with their existing car with substantial discounts. Buyers have a
choice for selection with the vast fleet of cars. The used automobiles are checked thoroughly and
are renovated by skilled engineers for better resale value. This leads to a higher level of
satisfaction among old car buyers. The market for used cars has been structured and organized
recently and the same is expected to zoom widely within a decade.
Finding these opportunities many world-wide companies have already entered into used
car market. Of them Maruti True Value is one of the leading ventures which emerged into a
organized pre owned car brand followed by Hyundai Advantage and Mahindra First Choice
Wheels.
This study reports the details and the growth of sales of three key players in used cars
market- Maruti True Value, Mahindra First Choice Wheels and Ford Assured. This study
revealed that income level of a person is the major factor in deciding to buy a used car. Whereas
occupation, age and various factors do have some impact. Finally to conclude the sales of pre
32

owned cars has increased comparatively, be it the reason to get the driving experience, to own a
big brand car to boast up their levels in society or to own a car in affordable income level.

Limitations
✔ The research has some limitations as it is based on individual efforts and is confined to a
small area only.
✔ Some consumers are not interested in filling the questionnaire.
✔ The survey was restricted only to 50 respondents and as such may not be true
representative of entire people.
✔ People may give biased answers that are false.

Suggestions
➢ More promotion schemes should be used to penetrate the market and acquire more
customers.
➢ Skilled employees should be higher because most of the consumers are middle aged.
➢ Promotion scheme should be in such a way that customers can easily understand.
➢ Features and price should be provided in such a way which satisfies the needs of the
customers.
➢ There should be proper synchronization between order placed and delivery. The
distribution channel should be enhanced and the models should be readily available in the
market.
➢ As the buying decision of the buyer has been influenced by himself, companies should
target them.
➢ Incentives and financial benefits provided for the dealers should be maximized to
maintain their level of satisfaction and motivation.

33

Questionnaire
I am a management student at Vignana Jyothi Institute of Management,Hyderabad. I have been assigned
a report in the context of which i am conducting a survey on "Effect of pre owned cars on new cars" with
special reference to Maruti Suzuki India Limited. I would like to request you kindly to spare a few minutes
for answering some questions.
Top of Form

Name:

Occupation

•

Service

•

Business

•

Students

•

Other:
Age group

•

20-30years

34

•

30-40years

•

40-50years

•

above 50
Monthly Income

•

20,000-35,000

•

35,000-50,000

•

50,000-75,000

•

above 75,000

•

no income

how did you get aware of different brands of cars?

•

T.V. commercials

•

Newspapers

•

Magazines

•

Trade fairs

•

Friends

•

Family Members

•

Other:

35

Do you own a car?

•

yes

•

no
If yes,which type of car you posses? If no,which do you select?

•

used car

•

new car
If yes, which brand of cars do you posses? If no,which do you want to posses?

•

Toyota

•

Maruti

•

Hyundai

•

TATA

•

Ford

•

Mahindra

•

Skoda

•

Mercedes

•

Other:

36

How important are the following attributes before you decide to buy a car?Price

1

2

3

4

5

not
important

very
important

Brand

1

2

3

4

5

not
important

very
important

Mileage

1

2

3

4

5

not
important

very
important

Style

1

2

3

4

5

not
important

very
important

Durability

1
not
important

2

3

4

5
very
important

37

comfort and convenience

1

2

3

4

5

not
important

very
important

warranty and working condition(in case of used cars)

1

2

3

4

5

not
important

very
important

After sales service

1
not
important

2

3

4

5
very
important

which mode of payment you made in purchasing the existing car? If you dont posses which will you prefer
to purchase?

•

cash

•

Bank finance

•

Installments

•

Other:

38

where did you purchase from or prefer to purchase from?

•

dealers

•

companies

•

certified cars from companies(in case of used cars)

Submit

References

➢

www.wikipedia.org/usedcar

➢
➢

www.marutisuzuki.com
www.marutitruevalue.com

➢

www.mahindra.com

➢ http://en.wikipedia.org/wiki/Ford_Motor_Company
➢ http://franchiseinindia.blogspot.com/2010/01/mahindra-first-choice-to-aim
➢ http://automobiles.mapsofindia.com/second-hand-car-market-in-india/usedcars.html
➢

Marketing management by Philip Kotler,12th edition

39