India’s auto industry is currently buzzing with excitement over Hyundai’s much-anticipated IPO, but there’s another interesting story happening in the background—the increasing demand for used cars. This growing trend has become particularly favorable for a company that left India three years ago: Ford.
While most used car prices are dropping, Ford’s models seem to be bucking the trend, maintaining solid demand. For example, the average price of a five-year-old Ford EcoSport has actually risen by 3%, defying the downward trend seen in other brands. Let’s dive deeper into India’s used car market and how Ford is still making an impact despite its exit.
The Growing Demand in India’s Used Car Market
The used car market in India is on the rise and is expected to grow significantly in the coming years. As of FY23, around 51 lakh used cars were sold, but this number is set to more than double to 1.09 crore units by FY28. The value of the market today stands at $32.44 billion, and by FY28, it is projected to reach a staggering $73 billion.
Several factors are driving this growth. One of the primary reasons is the rising cost of new cars, which has made them less affordable for many buyers. Used cars are becoming a more attractive option for those who want a reliable vehicle without the hefty price tag. Another important factor is the improved financing options available for pre-owned vehicles, making it easier for people to purchase them.
The used car market is also being shaped by changes in consumer preferences. Small hatchbacks, which were once the go-to choice for many buyers, are losing popularity. Instead, SUVs have taken the spotlight, and Ford’s models like the EcoSport and Endeavour are benefiting from this shift in demand.
Why Ford’s Cars Are Still in Demand
Ford may have stopped selling new cars in India, but its presence in the used car market remains strong. One reason for this is Ford’s reputation for producing reliable and high-quality vehicles. Even after the company stopped operations in the country, it continues to provide after-sales services, offering support to its customers for up to ten years in the cities where it previously had a presence.
Ford has also implemented smart strategies that have kept its vehicles appealing to used car buyers. For example, the company has fixed the prices of consumables and spare parts for five years, giving buyers confidence that they can maintain their vehicles without unexpected costs.
These factors have led to Ford’s vehicles holding their value better than many others in the market. For instance, the EcoSport, which is popular among SUV enthusiasts, has seen its price increase over the past year. The average price of a five-year-old model has risen to ₹5.55 lakh, reflecting a 3% increase. On the other hand, the larger Ford Endeavour has seen a slight price dip of 3%, but it still commands a respectable resale value of ₹18.8 lakh.
Ford’s dominance in the SUV category plays a big role in its continued popularity. As more Indian consumers shift away from hatchbacks and toward SUVs, Ford’s models are becoming increasingly desirable. In fact, SUVs have become so popular that they now account for nearly one-third of all auto sales in India.
The SUV Boom and Its Impact on the Market
India’s love affair with SUVs is evident, especially in the under-₹10 lakh category, where sales have grown by a whopping 72% in the early months of FY24. Over the last three years, SUVs have taken over a larger portion of the market, and it’s clear that this trend is here to stay.
The growing demand for SUVs has also influenced the used car market, where models like Ford’s EcoSport and Endeavour, along with other popular vehicles like the Hyundai Creta, Tata Nexon, Mahindra Scorpio, and Thar, are seeing strong resale values.
SUVs have gained popularity for several reasons. They offer more space and comfort compared to smaller hatchbacks, making them ideal for Indian families. SUVs also tend to perform better on India’s varied and sometimes challenging road conditions. In addition, they have a commanding road presence, which many buyers find appealing.
While Ford’s departure from the Indian market initially seemed like a blow, its focus on SUVs has helped it maintain a solid foothold in the used car space. Unlike smaller hatchback models, SUVs are less affected by price depreciation, further cementing their role as valuable assets for used car buyers.
Ford’s New Plan for India
While Ford’s vehicles continue to perform well in the used car market, the automaker has bigger plans for India. It is considering re-entering the market, this time with a focus on manufacturing. The company is planning to establish a manufacturing hub in Tamil Nadu, which is already a key location for automobile production in India.
Ford’s strategy this time around goes beyond just producing vehicles for the Indian market. The company is also looking to turn India into an export hub, leveraging the country’s strategic location and manufacturing capabilities to produce cars for international markets.
This move aligns with India’s growing role in the global automotive industry, as more companies are looking to establish production facilities in the country to serve both domestic and international demand.
The Bottom Line
India’s used car market is growing rapidly, with Ford being one of the surprising winners in this space. Despite leaving the country’s new car market, Ford’s focus on quality, service assurance, and smart pricing strategies for spare parts have helped it retain a strong presence in the used car segment.
With SUVs continuing to dominate the preferences of Indian buyers, Ford’s models like the EcoSport and Endeavour are well-positioned to thrive. Meanwhile, Ford’s potential return to India with a focus on manufacturing and exports could further bolster its standing in the country’s automotive landscape.
