Study Of Factors Affecting Consumers’ Buying Behavior Of

Pre-Owned Cars in Mumbai City

Industry Oriented Project

Submitted in partial fulfillment of the requirements for

Post Graduate Diploma in Management (Marketing)

Academic Year: 2022-23

Submitted By

Name: Jayesh Sen

Roll No.: 39
PGDM/ PGDM(M) Batch: 2021-2023
Declaration

I hereby declare that this project report titled ‘Study of Factors Affecting Consumers Buying Behavior
of Pre-Owned Cars in Mumbai City’ submitted in partial fulfilment of the requirement of Post Graduate
Diploma in Management to Chetana’s Institute of Management and Research is my original work and
not submitted for the award of any degree or diploma fellowship or similar title or prize. References to
work and related sources of information have been duly acknowledged in the report.

The project has been carried out under the guidance of _ Dr. Shraddha Bandivadekar

I further declare that I have no objection and grant the rights to Chetana’s Institute of Management and
Research to publish any chapter/project or use it for future reference if they deem fit.

Place : Mumbai

Date : 29-07-2023

Name : Jayesh Sen

Division : M2

Roll No. : 39

Digital Signature : ___________

Certificate

This is to certify that the project titled ‘Study of Factors Affecting Consumers’ Buying Behavior of Pre-
Owned Cars in Mumbai City’ submitted by Jayesh Sen to Chetana’s Institute of Management &
Research in partial fulfillment of the requirement of, Post Graduate Diploma in Management has been
done under the guidance of the undersigned during the period December 2022 to April 2023.

Date: 29-07-2023

Place: Mumbai

Dr. Nandita Mishra Dr. Shraddha Bandivadekar

Director Faculty Guide

ACKNOWLEDGEMENT

I express my sincere thanks to my project guide, Dr. Shraddha Bandivadekar, for guiding me right from
the inception until the successful completion of the project. I sincerely acknowledge them for extending
her guidance, support for literature, critical reviews of the project and the report, and above all the
moral support provided to me during all stages of this project.

Signature of the Student

TABLE OF CONTENTS
Table of Content Page No

 Introduction 6

 SWOT 8

 Process of Buying & Selling of Pre Owned Cars 10

 Objectives 12

 Research Method 13

 Analysis and Findings 14

 Conclusions 20

 Recommendations 21

 Limitations 22

 ANNEXURES 23

 References 24

 Turnitin Report 25

INTRODUCTION

Sector Details:

The pre-owned car industry market is flourishing in Indian Auto Industry for years. The unorganized
sector is moving more towards an organized one. The market has been witnessing tremendous growth
over a period of years. Among all the second-hand markets, the development of pre-owned car market is
prominent and the trading volume of used cars is increasing rapidly.

With the right business strategies and business marketing models, the pre-owned car market has more
potential to grow and expand. Reasons why the scale of pre-owned car market is expanding constantly is
because of the rapid increase in domestic car ownership and the amount of people who want to change a
car.

Since India is a price-conscious market, the value of new car depreciates about 30% in the first year of
purchase itself. This makes buying a used car a better value of money option. The consumers have
become specific about their brand preferences. The factors affecting their purchases are value,
comfortability, efficiency, accessibility, ambition and need.

The consumer behavior also depends on various factors while buying pre owned cars like psychological,
cultural, social and personal needs. Cars are increasingly being purchased for the reasons of
functionality and transportation. The customers give more importance to product performance while
buying a pre-owned car. Attributes like reliability, performance, driving comfort, status conveying
interiors, residual value, cost of driving and look of car are some of the benefits the consumers are
looking for while buying a pre-owned car.

Marketing is also a major factor that influences consumer’s selection of cars. Marketing offers are often
designed to induce purchase, and create a positive impact about the product. These offers magnetize the
segment of customer and frame their decision making. The promotional schemes like extended
warranties, free accessories exchange schemes play an influential role while buying pre-owned cars.

The decision of buying pre-owned car is extremely complex and requires huge investment in terms of
money and time. A typical customer only thinks about those brands in this consideration which match
his own image.

There are various risk factors associated with buying pre-owned cars without any warranty, from
unregistered dealers, without any proper documentation.

New car dealers in India sell about 3% to 5% of used cars in the country compared to 33%. New car
owners in India have not yet used all their real estate and assets to realize the full potential of the used
car market. This includes leveraging existing processes and staff, as well as innovation and technology-
driven new age platforms.

With a population of 3 billion, India has a huge consumer base in the used car industry. Also, as more
young people enter the workforce, the demand for used cars is expected to increase. The future of the
Indian used car market is bright with huge growth and innovation potential. But to realize its full
potential, the business must focus on building customer trust through transparency and good security.
With a good strategy and business model, the Indian used car market has the potential to double and
expand.
Measured to provide a huge boost to the Indian auto industry, growing 5% from US$23 billion in FY22
to FY2026-27

Market Share Of Cars PV From Aprile – June 2022

SWOT

Strengths

The trust and reputation of the car dealers can be built through improved marketing and after sales
services, unorganized sector working towards being more organized one. The automobile industry is
focusing on their product development, so that it can flourish more in upcoming years. It has the
potential to have a huge impact on the GDP of India.
The dealership can offer the benefit of low-down payments on luxury cars. Car dealerships need to
undergo rigid inspections for quality, functionality and reliability.

The organized dealer will provide excellent after sales services to maintain a lifelong relationship with
the customer. They may also offer credit scores which can be redeemable in future purchases.

The car dealership companies identify their strengths and use it towards their advantage.

Weakness

The consumers may find it difficult to rely on unregistered dealers. The cars may be sold as-is, any
issues the consumers may face will be their responsibility The consumers fear increasing cost of
maintenance will override the cost benefits derived from the purchase of pre-owned car.

Lack of proper documents, the cases of forgery may affect the consumers decision of purchasing a
second-hand car. Paperwork associated with ownership, title transfer and registration may not be
handled by unverified dealers. The private party car dealers may fail to provide a car history check.
They do not have a reputation to lose and will be gone after sale. There is a possibility that important
facts may not be disclosed.

Buying from the private party dealers will increase the risk of the consumer as they are not bound by the
same strict and federal laws as dealerships

There will be less negotiation opportunities for the consumers when buying from organized and reputed
dealers. They will charge higher prices than the private dealers

Opportunities

There is more room for negotiation for the consumers. Buying from a reputed dealer improve the quality
assurance and transparency of the vehicle. There are certain tax benefits associated, if the purchase is
being made for business purposes.

By offering flexible payment methods, the car dealers may increase their market size.
Growing market opportunities, consumer wants to improve standard of living, buying a pre-owned car
would be more economical for him.

Emerging car dealing companies can collaborate with car repair service companies for better after sales
services, which will help the small businesses to grow as well.

Threats

Many popular brands are producing affordable cars to increase gain new target market. This will lead to
increase in competition. Also, with the increasing fuel prices the consumers may be selective about their
buying options.

If cars are purchased from unverified dealers there may be a risk of buying a stolen vehicle. There may
be threat of malfunction and leaks, alarming rates of oil consumption. Roadside assistance may not be
provided by the dealers

PROCESS OF AUTHORIZED AND UNAUTHORIZED DEALER FOR BUYING & SELLING

OF PRE-OWNED CARS

Buying the Car As an dealer

 The car dealer has various sources to buy cars such as personal contact, Car mechanics, Car
Spare part shops, etc,
 There are a few sets of people who loves to change cars on a frequent basis for upgradation or
change so they do the transaction with the same
 The car dealers also have contact with various Car mechanics who gives information about the
car to the car dealer
 The car mechanics also influence the car owner to sell the car any buy a new one
 There are various spare part shop that also acts as an agent for the car dealer
 All these various people call and ask that we have this car and the buyer wants to sell the car
 Then the dealer comes and checks the car & documents
 Then the dealers try to understand what all work needs to be done in the car
 He starts doing all his calculations (Buying Price, Repair, Changes, Commission if any, Selling
Price)
 If everything is clear then they negotiate
 Then the deal is finalized
 Document Exchange

Dealers Work after Buying the Car

Car Directly goes to Gurage for various work such as (only if needed)

 Physical condition repair work of doing painting

 Repairing all the dents
 Remove all the scratches
 Checking about all the works needed
 Checking any part need to be added
 Solving all the sound issues
 Doing Basic oiling & Servicing
 Adding New Seat Covers and all if needed
 Getting Car ready in an mint condition

Selling Car as a dealer to End customer

 There are various Car dealers and Personal Leads of contact looking for car
 The car dealer shows the car to the seller
 The car buyer comes with his mechanic
 The mechanic checks the car and once approved
 The buyer quotes a price to the dealer
 Negotiation Happens between buyers & seller
 And once both parties aggress
 Document work and car is been sold

During This whole Process the intermediaries (Agents also get commission so it’s a Win-Win situation
for both parties)

OBJECTIVES

 The objectives of this study include the following:

 To study and understand pre-owned markets.

 To understand customer behavior towards the purchase of pre-owned cars.

 To explore the customer preferences towards organized and unorganized market during the

purchase of pre-owned car

RESEARCH METHOD

 Type of Research - Primary & Secondary

 Sampling Technique- Convenient Sampling

 Area of sampling - Mumbai Suburban

 Tools used for Data Collection: Structured close ended questionnaire(Google forms)

 Tools used for Data Analysis: Excel, Pie Chart & Bar Diagram.

ANALYSIS AND FINDINGS

As per the research max. respondents were males 79.7% and females 20.3%

62.2% of people have brought a Pre-Owned Car

Count of If yes then for how long are you using that
No. of Years
car? (If yes, number of years)
1 4
2 10
3 9
4 7
5 9
6 5
7 3
8 3
(blank)
Grand Total 50
The average number of years a pre-owned car is used as per the survey is 6 Years.

A pre-owned car is majorly brought by the Register Dealer i.e., 33.3% and 31.4%
are brought from Family or friend, and local payers also have a share up to 27.5%,
and rest 7.8% are from social media apps
As per the research 35.3% of people have brought Maruti Suzuki cars and 17.6% of
people have purchased Honda & Hyundai Cars and rest are of other companies

90.6% of people consider 1st about the Physical condition of the car, 83% year of the
Model,
79.2% documents
The majority i.e. 36% of people have purchased pre-owned cars in the range of 3 to 7 lakh and 0
to 3 lakhs by 24% of people and further

50.9% of People have brought Petrol car, 30.2% of people have brought diesel car and the rest
18.9% of people have brought CNG cars
35.3% of people have brought a car with 20k to 40k Kms driven, and 33.3% people brought car
for 40 to 60 % of kms driven

35.3% of people had faced documents issue and rest 64.7% of people did not faced and
docuements issue
The majority of the people 34% brought cars for their personal use and rest 32% of people
brought cars for upgrades and learning purposes
CONCLUSIONS

The pre-owned car industry has the potential to be transformed into a more organized market. Further, a
study pointed out that 54% of buyers prefer an unorganized market for purchasing pre-owned cars.

Un-organized market dealers are striving to make efforts to build effective after sales service by
collaborating with car service and repairs, improving their relationship marketing services to gain
buyer’s trust.

If considered from a consumers point of view,

The consumers consider vehicle buying a huge decision and will contain lot of research and
responsibility.

The consumers need to be careful of frauds and sales techniques, they must be mindful and know that
they have the power in their hands and are not obliged to sign any contact in any way.

They must complete their thorough research in all possible ways and decide the best vehicle for them.

Buying pre-owned cars are sustainable option for the environment as they prevent the vehicle from
going into landfill and scrap yard, reducing the carbon emissions.
RECOMMENDATIONS

The consumers should not base their decision solely on price.

The vehicle history reports must be checked, check whether the car has been in an accident. Almost 16%
of cars listed for sale have been involved in an accident.

It is preferable that consumers be accompanied by the person who has the knowledge of the mechanics
of the car.

The car dealerships must ensure that the sales team focus on customers. They should focus on social
media marketing strategies to create and maintain their brand image. They must be well equipped to
understand the needs and preferences to deliver as per customer requirements.

The organized sectors may create an advantage by increasing the awareness of quality certificates,
which may not be provided by unorganized sectors.
Limitations

The consumer may have trust issues towards the seller especially when dealing with small car
dealerships or private sellers.

They may have doubt towards the accuracy of the information provided and overall condition of the
vehicle

Pre-owned cars can vary significantly in terms of age, mileage, wear and tear, it may be difficult to
access their actual life and value.

The consumers may find it difficult to obtain financing for buying pre owned cars. The lenders may
offer less favorable terms and higher interest rates.

The consumers may have limited options available in terms of specific model and color options as
compared to the new ones.
ANNEXURES

 Questionnaire
Name

Email

Q Gender

 Male
 Female

Q Have you ever brought a pre-owned car?

 YES
 NO

Q If yes then for how long are you using that car?

 Ans no of years

Q From whom have you purchased a pre-owned car?

 Ans Register Dealer

 Local Dealer
 Family or friend
 Social Media Apps / Third Party apps

Q which company car have your purchase

 Hyundai
 Maruti Suzuki
 Honda
 Toyota
 Skoda
 Mahindra
 Audi
 BMW
 Mercedes
 Other__
Q what are the things you looked at while buying a pre-owned car?

 KMS
 No of the Previous owners
 Year Model
 Documents
 Physical conditions
 others:

Q How much was the car price?

 0 to 3 lakh
 3 to 7 lakh
 7 to 10 lakh
 10 to 15 Lakh
 15 & above

Q Which Fuel type did you choose?

 Petrol
 Deisel
 CNG

Q How much was the Kilo Metter’s Driven by the Car?

 0 to 20k
 20k to 40k
 40k to 60k
 60k to more

Q Have you ever experienced document issues while buying a preowned car?

 Yes
 No

Q Any specific reason to buy the pre-owned card?

 Learning
 Upgrade
 Personal use
 Any other ______
REFERENCES

( https://www.business-standard.com/article/automobile/domestic-pv-sales-may-touch-record-level-at-
nearly-4-mn-units-in-2022-122091200444_1.html)

https://www.cartoq.com/used-cars/10-big-dangers-of-buying-used-cars/

https://cargiant.co.in/blogs/benefits-of-buying-used-car-from-a-dealer

http://www.tooeasytravel.com.au/why-us/pros-cons-of-purchasing-your-car-with-a-dealer-vs-private-
seller/
TURNITIN REPORT