One of the worst-hit sectors during the Covid-19 pandemic in India has been the automobile industry. However, industry players are optimistic about a turnaround because they believe people who fear they could contract the virus if they rely on public transport or cabs may decide to buy personal vehicles.
However, the prevailing economic uncertainty may deter many people from buying a new car. Moreover, new car prices are rising, thereby widening the price gap with used ones. Experts also point out that banks have tightened financing models for new vehicle purchases.
In such a scenario, many may opt for a less expensive used car. Experts also believe entry-level used cars will be in greater demand, with many motorcycle owners looking for an upgrade. However, the price of used cars will depend on the supply side. Due to the prevailing uncertainty, car owners may want to hold on to their vehicles for a longer period.
India’s used car market is over 1.5 times bigger than the new car market. In the financial year ending March 2019, India’s used-car sector was valued at $90 billion, selling 4.8 million units.
Car makers such as Maruti Suzuki, Hyundai and Mahindra & Mahindra also own pre-owned car dealerships under the brand names True Value, H Promise and Mahindra First Choice, respectively. They offer a wide variety of brands under one roof and also provide other benefits in the form of pre-inspected certified cars and warranty and easy-finance options. They are hopeful that once the lockdown is fully eased, there will be a great demand for used cars.
Online car-trading platform CarDekho said there was a 99% recovery in customer traffic for used cars after the lockdown was eased. While Maruti Suzuki and Tata Motors cars top the search list, Honda has the highest share in the mid-segment category, it added.
Most online sellers say they are once again receiving inquiries regarding the purchase and sale of pre-owned vehicles in areas that are relatively virus-free.
Sandeep Aggarwal, founder and CEO of Droom, a used car platform, expects sales to rise at least 20% in the coming months as two-wheeler users look to upgrade to cars, which are seen as a safer option given the need for social distancing, Quartz reports.
A recent survey on first-time car buyers by Ernst & Young found that 57% of car buyers were likely to buy a pre-owned car. Among the pre-owned cars, hatchbacks and sports utility vehicles are the favourites. It also pointed out that millennials prefer pre-owned cars due to their affordability.
