Economy

Used-cars segment sees renewed buyer interest

G Balachander, S Ronendra Singh G Balachandar, S Ronendra Singh Chennai/New Delhi | Updated on June 18, 2020 Published on June 18, 2020

Preference for personal transportation is likely to spur sales of used- and entry-level category cars. Also, financial pressure may drive buyers to opt for pre-owned cars rather than new ones

With growing emphasis on personal mobility due to fear of Covid-19, there is renewed interest in used cars and the good news is that customers are spoilt for choice.

According to K Mahalingam, Partner, TS Mahalingam & Sons, a Chennai-based player in the pre-owned car space, there are more sellers than buyers at this point of time in the used car market.

“On the buying side, walk-ins are not that great due to restrictions on account of the Covid-19 lockdown. But enquiries are coming as lot of people are now interested in using personal transport,” he says. Chennai is, incidentally, bracing for another lockdown beginning Friday.

However, it is still not clear if more people are selling their cars due to the pressure of having to pay EMIs. “There could be a small portion doing that. But I don’t think it is the primary factor for more pre-owned cars available for sale,” he says.

Interestingly, there are more enquiries in the ₹2-5 lakh space. Whether this is a Chennai-specific trend is a moot point considering that behavioural patterns are different across the country.

Shashank Srivastava, Executive Director of Maruti Suzuki, insists that there is renewed interest in used cars due to the growing emphasis on personal mobility. The need for social distancing, coupled with concerns on safety and hygiene, will give an impetus to this business, he adds.

Maruti Suzuki, which operates 570 True Value used car outlets, has also observed that nearly 85 per cent of pre-owned car customers are two-wheeler upgrades. “In terms of demand, we have seen over 10 per cent growth in enquiries this month,” says Srivastava.

Estimates indicate that over four million pre-owned cars were sold last year. “We sold 4.19 lakh units at True Value in 2019-20 compared to 4.22 lakh units in 2018-19,” he adds.

Maruti’s closest rival, Hyundai Motor India, is also upbeat about this business. Tarun Garg, Director (Sales, Marketing & Service), is confident that there will be an “increase in traction” for used cars. “Hyundai has a strong used car business with a vast network of H Promise outlets across India,” he says.

Digital platforms

Beyond brick and mortar, car digital platforms such as CarDekho claim 99 per cent recovery in customer traffic for used cars. The recovery rate of cars in the ₹1-5 lakh segment is the highest. Among SUVs, the ₹5-15 lakh segment has the highest share while sedans in the ₹15-20 lakh range are the most searched. Maruti and Tata Motors cars top the search list by consumers. Honda has the highest share in the mid-segment category.

However, not everything is hunky-dory going by what Vinkesh Gulati, Vice-President, Federation of Automobile Dealers Associations (FADA), says. “There is a fear psychosis amongst the dealers of used car business, especially the unorganised ones.”

According to him, many are closing down due to a severe cash crunch. Normally, the used car business does well during this time of the year, but due to the Covid scare, things are not so great right now.

Yet, the fact remains that there are attractive bargains on offer. For those seeking a great deal on wheels, this could be an ideal time to buy.

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Published on June 18, 2020
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