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R.Y. Narayanan

COIMBATORE, Dec. 12

WITH the organised players entering the second hand car market in India in a big way, the used cars' prices are getting stabilised in line with international trend.

India will also witness in about a decade or so a far quicker replacement of cars than at present when cars even two or three decades old are still plying on the roads.

Speaking to Business Line in Coimbatore, Mr Sharath Vijayaraghavan, Vice-President, Sundaram Motors, Chennai, said his company started its used car division in 2001 and has them styled `Ford Assured' and `Auto Terrace' for Honda cars both in Hyderabad, `Auto Terrace' in Chennai and pre-owned car divisions for Mercedes- Benz vehicles in Chennai and Bangalore.

He said currently, the used car market in India was not very organised and brokers dominate the show by playing the role of a facilitator. But his company dealt only with the used cars of the brands that it sold as an original vehicle distributor. (His company is a distributor for Honda, Mercedes, Fiat and Ford in different locations).

Hence it has the expertise in evaluating and maintaining the cars and provided warranty on the cars sold as used cars and the entire transaction was transparent. He said once the price for the car brought for sale was agreed upon, the company allowed the owner to continue to use the old car till a new car was delivered.

Asked about the precautions the company took to ensure genuineness of ownership of vehicles offered for sale, he said by and large the company dealt with cars that it sold or serviced and hence it was aware of the history of the vehicles. The company also purchased cars from those who bought new cars from it and did not buy old cars for cash value alone.

Mr Vijayaraghavan said the used cars division in his company was relatively new and the business was complex. But the market was getting regulated with more and more organised players like Sundaram Motors entering the used car market in the country. He felt that more and more people would be prepared to pay a premium to purchase the used cars from companies like Sundaram Motors because of the genuineness of ownership, the service quality etc.

Actually, his company was targeting the `premium end' of the used car business — those who look for quality and were prepared to pay a slightly higher cost. He said it was a small market for the company now but expected to evolve into a big market in the future.

Asked for the reasons for some of the car manufacturers like Ford and Maruti themselves making an aggressive foray into the used car business, the Sundaram Motors Vice-President said primarily it facilitated sale of new cars. It also allowed the used car prices to stabilise rather than `yo yo'. Hopefully, the intrinsic worth of the used car would improve. This has happened worldwide and it would happen in India also.

When asked whether in India too replacement of cars could happen faster as in the developed countries at the level of individuals (for corporate looking for depreciation benefits it was happening already), Mr Vijayaraghavan said India was at a very early stage of motoring.

In mature markets, people replace their cars once in three years (or four years), coinciding with the closure of the car loans and go for a new vehicle. Probably, in India such a trend may catch up by 2010-2012. But we are moving in that direction and individuals may phase out their cars more frequently because of greater safety features, more economy, comfort etc.

He said comfort and satisfaction levels were like moving goal posts and as people's lifestyle changes, the levels of comfort, satisfaction and more importantly safety considerations would bring about a quicker turnaround of vehicles.

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