Companies

Volkswagen gung-ho about used car business prospects

L N Revathy Coimbatore | Updated on November 13, 2020

The trend towards individual mobility in the aftermath of Covid 19 is driving new and used car sales. While the interest in individual mobility has increased, the willingness to spend has dropped, observed a top Volkswagen official.

In a brief chat with Business Line, he said “India will see an amazing pick up – a V-shaped, incredibly fast recovery when the lockdown is fully lifted (without restrictions). And this is obvious from the numbers we’ve clocked.

“While July was at the same level as in the earlier year, August 2020 was ahead 20 per cent of the corresponding month of the previous year and in September, we registered a 32 per cent growth vis-à-vis September 2019. Growth is actually bouncing back.

“During the weeks of complete lockdown, the supply chain was impacted badly; movement restrictions coupled with border control, quarantine rules, multiple rules and restrictions at district and state borders made things difficult. It is amazing to note how the automobile industry has pulled back within a short span.

Used car sales market

“At the moment, there is an incredible increase in used car sales. The challenge is in sourcing vehicles. We are offering interesting options, financial package, transparency in valuation and so on.

“The used car sales market started to see signs of growth from 2019 and is expected to grow more than 50 per cent in the next two years. The volumes in 2019 hovered around 4.2 and 4.3 million (traded in India). We expect to see this grow to over 6 million used cars by 2022.

“In 2017, only 15 per cent of the used car sales were in an organised platform. This has already risen to 25 per cent in 2020. This indicates that people are tending to go for a safe business model, transparent valuation and no doubt about the deal/vehicle. We follow a checklist for all used cars at Volkswagen.

“We have multiple digital platforms, the customer can evaluate the vehicle on an App without going to the dealer, buy or sell on the digital platform. By doing this, we have to a large extent addressed the concerns of our customers.

“We are today selling five times more used cars that we did last year. Evaluation is the key; you need to have people who can evaluate the vehicle properly,” he added.

The company has opened five Centres of Excellence (CoE) in the used car space in the South. With 70 per cent business in the South and strongest markets being Tamil Nadu, Kerala and Andhra Pradesh, the company is planning to ramp it up to 17 by 2021.

To a query on the demand-supply gap in the used car space in view of the rising demand, the official conceded that the demand was higher than the supply., he added.

Published on November 13, 2020

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