Used car sales in top gear as economy slows down, rupee sputters

Sep 06 2013, 04:06 IST
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File photo of Chandigarh’s used car bazar.	 Express ARCHIVE File photo of Chandigarh’s used car bazar. Express ARCHIVE
SummaryPre-owned segment sales jump 22-25% in April-July, new cars fall 9.7%.

On Boulevard Road in West Delhi, prospective car buyers are given an unusual tour of choices by the salesmen these days. Among the models lined up are ones that have been used as well.

Many customers coming to buy a new car inevitably stop at his used car showroom too, located right next door, says Ajay Saxena, GM of Rana Motors.

“In many cases, the customer ends up buying a used car if he gets one in good condition which is priced Rs 1-2 lakh lower than a new car. In some cases the customer says the savings from buying a used car can fund his fuel consumption for three years,” Saxena said.

The trend, it seems, is not a blip or limited to a particular market. The economic slowdown and the steep fall in the value of the rupee have erased the dividing line between those who scouted for a new car and those willing to settle for a well maintained used car. The depreciation of the rupee, among others, has also meant an increase in input costs, leading to prices of cars being raised even as demand was falling.

As a result, for the first time in the history of the Indian automobile market, the used car segment has witnessed a 22-25 per cent rise in sales during April-July 2013 as against a 9.7 per cent decline in new car sales in the same period, industry experts said.

According to one estimate, the used car market is expected to see sales of between 28 lakh and 30 lakh units this year, with the organised sector accounting for about 20 per cent of the market share.

The economics are clear, says Saxena, as he shuffles between his Maruti showroom and the True Value dealership next door. “Between April and July, we have seen our used car sales grow by around 20 per cent.”

Business seems to be brisker in some pockets. For instance, Deepak Dogra, sales manager at Competent Automobiles in Gurgaon, says, “The growth can be seen from the fact that we are selling one used car for every new car we sell”.

Mahindra First Choice is expecting its sales for the year to be anywhere between 60,000 and 65,000 units, up from 46,000 units last year. Anticipating a jump in demand for used cars, Mahindra has increased its dealer network significantly over the last one year from 180 in August 2012 to 287

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