While preference for personal mobility is likely to increase post the lockdown benefiting used car sales, organised used car business is likely to gain more traction offering improved service, product warranty and better purchasing experience.
The used car market is slowly beginning to thrive and for obvious reasons. While the aspirational value is surely compromised, it has affordable models on offer at almost half the price of an equivalent new model and you can still use it for a relatively longer period. The used car market has been outperforming the new car market in terms of sales since 2017 and it is expected to flourish even further post the lockdown with an upward shift in preference for personal mobility.
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Yes! The shared mobility space has taken a hit after the Coronavirus outbreak as people practice social distancing and are using personal commodities to a large extent. The used car segment being the most affordable one in the auto business is likely to get the boon of it. Speaking to Siddharth Vinayak Patankar, Editor-In-Chief, carandbike on the latest Freewheeling With SVP webisode, Shashank Srivastava, Executive Director, Marketing & Sales- Maruti Suzuki India said, “What we’re seeing is a very common phenomenon, whenever the markets are stressed there is transfer of demands. So the demand starts moving from the top on the upper side of the segment to the middle and then comes to the lower and the lower goes even down. In this case the lower is the used car segment. Even if you will see used cars sales last year or a couple of years before that, it has outgrown the new car sales. There was a growth till February in our used car business, till before the lockdown.”
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True value is Maruti’s used car market wing and commands close to 60 per cent market share in the organised used car market. Having said that, the unorganised used car business where deal happens between the seller and buyer or through some private broker, still has the lion’s share of the market while the organised used car business just has around 80 per cent of the market. With the market maturing and more buyers preferring authorised dealers who offer warranty, checks for insurance, takes care of the paperwork and refurbishes the car before handing over, the organised used car market has a greater potential and its share is likely to increase.
“The used cars in car business have always had that question mark on the actual value and actual condition of the car. So we have extensive check points and we price the vehicles in a transparent way. So now we’re seeing a trend that the organised sector in the used car market is getting bigger and True Value is a part of that. So I think people want more transparency going forward when they buy used cars and what Maruti does is that it doesn’t only evaluates it, it also refurbishes it and make it worthy of giving warranty on these cars.” Srivastava added.
Also Read: Lockdown 4.0: Government’s Economic Relief Package Expected To Boost Demand For Automobiles And Restore Supply Chain
Moreover, as part of government’s ₹ 20 lakh crore economic relief package , Finance Minister Nirmala Sitharaman had announced several incentives to improve the liquidity situation in the country like ₹ 50,000 crore booster for tax payers, 25 per cent deduction in TDS and TCS for non-salaried class, PF deduction being reduced to 10 per cent from 12 per cent for salaried class, pending income-tax refunds up to ₹ 5 lakh and liquidity support guarantee of an estimated ₹ 6,750 crore among others. Better liquidity flow and credit availability are expected to boost customers buying sentiments as well which is likely to benefit the sales of used cars and compact vehicles.