Economy

BS-III discount sales throw a spanner in the wheels of used two-wheeler market

G Balachandar Chennai April 12 | Updated on January 15, 2018 Published on April 12, 2017

Prices of used two-wheelers are reported to have dropped by 20-25 per cent

March-end bonanza clogs market forsecondhand bikes

The used two-wheeler market is staring at a weak outlook in the near term as a consequence of massive sale of heavily discounted new vehicles a couple of days ahead of new BSIV emission norms kicking in from April 1.

On March 29, the Supreme Court banned registrations of BS-III vehicles after March 31, sending shock waves through the industry which at that time was estimated to hold an inventory of 6.7 lakh units.

Unless sold over the next couple of days, the vehicles would be scrap metal on April 1.

With just a couple of days to go ahead of the deadline, there was a rush to sell the vehicles and discounts of 10 to 30 per cent were offered.

Trends upset

This sudden, heavily discounted sale of two-wheelers upset the market trend. People planning to buy a used vehicle rushed to buy new ones. Those who would have normally traded in their old vehicle had no time to wait. Prices for used two-wheelers are reported to have dropped by 20-25 per cent within a fortnight in the second half of March.

Tie-ups with brokers

A two-year-old 100cc bike, with 26,000 km on the odometer, fetched ₹14,000, which was ₹3,000-3,500 lower than earlier prices, according to a dealer.

Dealers usually tie up with a few brokers of secondhand vehicles.

When customers come for a purchase of a new vehicle through exchange of old vehicle, officials at the dealerships provide details about the old vehicle to the brokers. The best price offered by the brokers is passed on to the customer.

After the BS-III rush, brokers are not interested in buying vehicles older than two or three years, said a sales officer at a Honda two-wheeler outlet.

An official at a Hero dealership said the momentum would pick up after 3-4 months. “What happened was people made purchases earlier than planned . So, the recovery would be a gradual,” he said.

Meanwhile, even new vehicle sales have slowed down since April 1.

Published on April 12, 2017
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