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Total Population

To estimate the size of India's used car market, I would: 1) Calculate the portion of the population that can afford used cars, which is the lower middle class (35% of population) and half of the upper middle class, totaling 47.5% of the population or approximately 617.5 million people. 2) Assume that this target audience purchases a used car once every 8-12 years based on typical vehicle lifespans. 3) Validate the assumptions around income brackets and vehicle usage against available market data.

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Neelanshi b
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170 views

Total Population

To estimate the size of India's used car market, I would: 1) Calculate the portion of the population that can afford used cars, which is the lower middle class (35% of population) and half of the upper middle class, totaling 47.5% of the population or approximately 617.5 million people. 2) Assume that this target audience purchases a used car once every 8-12 years based on typical vehicle lifespans. 3) Validate the assumptions around income brackets and vehicle usage against available market data.

Uploaded by

Neelanshi b
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

You are approached by one of the key player in online used car market in India, CARS24, for
understanding the market size of used car industry in India in terms of number of cars sold. Mention
the approach you will follow to extrapolate the market size and how would you validate the
assumptions considered in the approach.

Total population of India is 1.3 billion.

If we look at the approximate values of the income brackets of Indian population,


Rich (income: above 20 lakh p/a)=10%
Upper middle class (income: above 8 lakh p/a)=25%
Lower middle class (income: above 1.5 lakh p/a)=35%
Poor (income: less than 1.5 lakh p/a)=30%
(Since more than 50% of India’s population is middle class.)

People in Rich and Poor categories won’t be buying used cars, since the rich would rather buy brand new
ones and the poor can’t afford them. That removes 40% of the population.

This would leave us with the middle class population.


Lower middle class is more likely to buy used cars as compared to Upper middle class.
We can take the entire population of lower middle class and 50% of Upper middle class as an
approximate.
(Many upper middle class people could buy a used car as their second car.)
This would leave us with 47.5% of the population which is 617.5 million or 61.75 crore people.

We would also need to consider the average life of used cars.


Typical diesel cars last upto 10 years and petrol lasts upto 15. Since these are used cars, the average life
would be around 8 to 12 years on average.

Therefore, our target audience is middle class people once every 8 to 12 years.

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