Demand for used cars has gone up substantiallyand this is reflected in the enquiry levels, which are up 15-18 percent year-on-year.
04 Feb 2021 | 7539 Views | By Sumana Sarkar
Used car sales have got a fillip given the renewed push for social distancing and personal mobility in a post-Covid world. Maruti Suzuki True Value, one of the largest pre-owned car brands in India, crossed the 4 million sales milestone.
In an interaction with Autocar Professional about the used ...
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Used car sales have got a fillip given the renewed push for social distancing and personal mobility in a post-Covid world. Maruti Suzuki True Value, one of the largest pre-owned car brands in India, crossed the 4 million sales milestone.
In an interaction with Autocar Professional about the used car demand in the current scenario, Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India said, “Physical distancing norms and the increased concerns regarding safety and hygiene have given an impetus to the personal mobility business. The Covid-19 pandemic has shifted customers' buying preference towards personal mobility. Demand for used cars has gone up substantiallyand this is reflected in the enquiry levels, which are up 15-18 percent year-on-year in a market (for new cars) that has declined by 18 percent so far this fiscal. However, the problem in the used car market is not of demand but of supply.”
Given the unprecedented slowdown induced by the Covid-19 pandemic, the problem in the used-car market is not of demand but of supply. Srivastava elaborated that, “While typically replacement demand is about 25 percent of the total new car sales, this fiscal it has dropped to 19 percent. This drop is reducing the availability of used cars, impacting its sales. This is also reflected in the average age of cars coming for exchange, which has gone up from a typical 6-7 years to 8-9 years. However, the situation is expected to improve as the current economic situation improves.”
The Budget announcements too are likely to impact the demand for used cars going forward. Srivastava highlighted that, “The contours of the Vehicle Scrappage Policy will have a significant impact, not just in new car sales but also used cars. Cars that will be closer to scrappage age (20 years) will obviously lose value and their prices will fall significantly.
As a lot of old cars will be off the roads, the old car park will reduce in volumes and that should see the upward pressure on prices. So an interesting scenario may emerge: younger used cars prices going up and older used car prices coming down significantly. The point of inflexion will be decided by the level of incentive or disincentive provided in the Scrappage policy.”
Over time, he expects more consumers to sell their old cars earlier so the expected average age of used cars available for sale will decrease and this will depress their prices. However he expects demand momentum to stay buoyant, “Digital car buying, contactless experience and servicing will see a major growth and we expect a further increase in the demand for doorstep, pickup and drop services. Digitalisation will be the way forward after the pandemic. The used car market is expected to continue the demand momentum and remain buoyant.”
Srivastava add, "Due to the drastic shift towards personal mobility, first-time buyers have increased by 45 percent. Around 85 percent of the customers who buy pre-owned cars are first-time buyers. People tend to upgrade their lifestyle at big life events and car purchase is one such upgrade. The average age of True Value customers ranges between 25-45 years with average monthly household income of approximately Rs 50,000. Hatchbacks contribute the most for the pre-owned segment led by the Swift, Alto and Wagon R.:
From the time it forayed into the pre-owned car market in 2001, True Value has expanded its reach with a wide network of over 550 outlets spread across 268 cities. The evaluation process adopted by the brand incorporates a rigorous 376 check quality points, refurbishment and certification process.