Pre-owned vehicles, an alternative that seeks to maintain its upward trend in the automotive market

Acquiring a pre-owned vehicle has been a trend that showed growth in 2021 in the country, and businesses dedicated to this segment expect that this trend will continue to rise this year.

The specialized portals confirm the growth and expose the main reasons.

According Patrick Lopez, commercial manager of OLX Autos Ecuador, the percentage growth of pre-owned vehicle sales in 2021 was 25,53 %, what represents $16 million about.

According to firm figures, in 2021 more than 1′600.000 people visited OLX Autos looking for their car, and in 2022 online transactions are expected to be even higher.

Sales of new vehicles in Ecuador in five months have remained at levels close to those prior to the COVID-19 pandemic

López explained that the growing trend in the sale of used vehicles is due to the current need to obtain liquidity for priority expenses in the face of the economic crisis; and, in turn, two scenarios are reflected with the purchase: as an alternative means to avoid the use of public transport and prevent contagion, and for commercial purposes.

“With the economic recession since the pandemic, preowned vehicles have remained in trend over a 0 km car. Hence, the most sought-after models have been the SUV (with 43% of sales in 2021), followed by sedan, pick-up Y hatchbackLopez said.

He assured that the lack of stock of new cars, due to the scarcity of imports and the decrease in manufacturing due to the lack of parts, such as semiconductor chips, also contributes to the rise in demand for pre-owned cars, which has caused certain models and ranges of these maintain or increase their value as scarcity persists.

He added that there are several car brands that seek to gain a foothold in the second-hand car channel. Due to the delay in imports, the shortage of assembly parts and other factors caused by the pandemic, some automotive brands have become aware of the potential of pre-owned cars and have begun to bet on this segment that has been boosted in the market.

For example, one of these dealerships is Automotores y Annexes, a distributor of brands such as Renault and Nissan in the country, which manages a pre-owned car division that is promoted through networks such as Facebook or Instagram, where various brands are offered, such as , a 2019 Chevrolet Spark Life five-door, $9,600; or a 2018 Nissan Kicks 4×2 at $16,900.

For its part, Christhian Cazar, Chery brand manager in Ecuador, highlighted the dynamism of the pre-owned market, since he assured that it would represent approximately three times more than that of new ones, which during 2021 also had a good year when commercializing 119,316 units.

Cazar acknowledged that currently some brands are a bit short on stock, so some customers are delaying the purchase of new vehicles and keeping their current vehicles. However, in the case of Chery, he assured that they have planned their logistics and have been able to have enough stock to meet the demand for new cars.

“In 2016 the used market was almost six times that of new ones. Now, with better prices and more competition, the used market should be three times larger than the new one, but it has reduced its share,” said Cazar, who explained the characteristics that a vehicle must have to be considered preowned, that a dealer accepts it as part payment for a new one and can be sold later.

With 88,165 units sold until September, the automotive market exceeded 2020 sales

Among these requirements is that it has less than 100,000 km, less than five years old, that it is normally still within the brand’s warranty period and that it has had less than three domain changes.

“In addition, it has to be impeccable, zero blows, little use, completely integral mechanically and aesthetically. If it doesn’t meet those characteristics, it’s a used car,” said Cazar, who argued that dealers and yards do normally receive vehicles of any kind, but they always evaluate the condition, and if they meet the pre-owned characteristics, the appraisal is a little older.

From the pre-owned sales yards, the rise is also confirmed.

Christian Barberán, owner of Autos Barberán, located in La Garzota, in the north of Guayaquil, indicated that 2021 marked the recovery of the pre-owned market with a return to a sales level of a pre-pandemic year, in 2019.

The best-selling brands in this segment, according to Barberan, are Kia, Hyundai and Chevrolet, in that order.

Likewise, Barberán corroborated the lack of stock of some makes and models of cars or kilometers.

“New vehicles sold quite a bit in 2021, so much so that by the end of the year dealers ran out of vehicles. stock; Of course, the lack of freight for the ships for the importation of vehicles also had a great influence. For this reason, many used units were sold”, explained the expert, who assured that the second-hand vehicle business depends on the movement of the new market.

He assured that currently pre-owned vehicles experience a price increase. Why? “Because there is a lot of demand, because people do not want to acquire debts of 3, 4 and 5 years and in the end pay more than half a car more,” said the businessman, who added that another reason is the entry of Chinese brands into the local market.

Preowned car sector recovers and innovates with new services

“The advantage is the price, for example, a new Chevrolet D-max truck costs $44,000, a diesel 4×4 full; a china of the same characteristics, between $29,990 and $32,990. A type of Chinese SUV is sold from $16,700, when the cheapest SUV like Chevrolet is from $23,000″, compared the expert, who assured that this interaction of Chinese brands also causes the prices of pre-owned vehicles to increase.

“90% of Chinese cars are purchased by people with a low budget, because the one with the best possibilities buys vehicles with a recognized brand,” said Barberán, who expects similar sales this year or up to 40% more than in 2021, “As long as the pandemic doesn’t get worse.” (I)