CHENNAI: Job uncertainty combined with the prospect of big medical bills is resulting in a substantial part of personal vehicle demand shifting to used cars.
With car companies taking multiple price hikes in the last 6-8 months, customers are looking at used cars to better fit tighter budgets.
Enquiries have also picked up although no registrations are happening now due to local lockdowns.
Said Hetal Gandhi, director, Crisil Research: “The second wave of Covid-19 and fear of the third wave is anticipated to have a negative bearing on consumer sentiment so buyers are expected to be cautious about new purchase decisions and interest for used cars is expected to increase.”
For organized used car retailers the tell-tale signs are beginning to show up. Said Sandeep Aggarwal, founder-CEO, Droom: ‘We have been witnessing a lot of trends proving that the financial uncertainty and decrease in disposable income have shifted the consumers towards used vehicles. For the first time, we crossed Rs 1000 crore GMV (gross merchandise value) in March’21 and, 99% of it came from used automobiles. In April ’21, despite the second wave of COVID pandemic, we registered significant growth. The traffic on our used vehicle category has gone up by 100% in the last 6 months.”
Used retailers say dealers are already building stocks and in a supply-driven market like used cars that means the demand will follow.
Said Ashutosh Pandey, CEO, Mahindra First Choice Wheels: “The demand for used cars is likely to spike once the lockdown eases. We are working with our dealers to ramp up inventory which should be higher by 50% by end-June. Customer searches online for used cars are showing an increase.”
With large parts of India under local lockdown, May has seen demand for skid sharply. However the prices of popular brands and models have shot up despite the dip in demand.
On OLX, the average price of an used
Swift Dzire is up 40% while a Maruti Suzuki Swift is up 34%. Said Amit Kumar, CEO, OLX Autos India: “This is a temporary dip in demand and will bounce back in a couple of months because the demand for used cars continues to outpace the supply.”