Small Towns Will Buy 44 Lakh Second Hand Cars This Year: Side-Effects Of Auto Chaos In India?

“You can cut all the flowers but you cannot keep Spring from coming.” Pablo Neruda

The country’s pre-owned car business is flourishing while the Automobile industry continues to see a decline in the domestic market.

The demand for pre-owned cars is increased from smaller cities and towns, as consumer preferences and strict regulations on emissions in metropolitans rustled in discard of old vehicles replacing them by new ones.

Raise In Pre-Owned Car Sale

It is expected that the used car sale will raise around 4.4 million units this financial year compared to 4 million from the previous year, as informed by used car dealer Mahindra First Choice Wheels. Olx India also has a sales forecast of around 4.4-4.5 million units.   

According to car dealers, the trend will continue due to changing customer sentiments and also new regulations concerned with the auto industry.

The demand for used cars in tier-II cities have increased by 10% in the second half of this fiscal year as informed by Sunny Kataria, the vice president of auto at OLX India.

Why Used Car Sales Is Increasing In Small Towns of India?

According to Ashutosh Pandey, the chief executive of Mahindra First Choice Wheels “Car owners in metropolitan cities change their vehicles faster. Secondly, when government notifications ban vehicles such as petrol cars older than 15 years and diesel cars older than 10 years in Delhi-NCR, where do these vehicles go? They are sold in the used car market, refurbished and then sold again in the smaller cities and towns,”.

He said that the cities like Delhi, Mumbai and Bengaluru embraces huge supply of used cars.

Sunny Kataria said that “While supply of pre-owned cars largely rests on tier-I cities, the demand for the same is increasing in the tier II and smaller cities,”.

Used Car Market Segment

The pre-owned car segment in India can be broadly divided into original equipment manufacturer(OEM) retail franchisees, customer-to-business, classified players and other transactional platforms.

The demand for Used-cars improves when the automobile industry is facing weakening demand. The automobile giant Maruti Suzuki informed a 33% fall in August sales at 1,06,413 units and on the other hand, commercial vehicle manufacturer Tata Motors dropped 58% during August  

The Automobile industry is going through worse slowdown ever as reported companies have fired lacs of employees including Tata, Maruti, Honda, Mahindra companies are severely impacted by the decline. Around two lac employees were fired by car dealers in 180 days record time.

Around 10 lac employees faced job loss as of July,2019.

According to reports, about half a million vehicles $5 billion passenger vehicles are lying unsold, levying heavy inventory charges and loss to automakers. 

Shubh Bansal, co-founder of Truebil, a four-year-old online startup for used vehicles said that “There is a huge demand for 7-10-year-old cars in satellite cities situated adjacent to the large metros,”. (reference Mint)

Turebil has raised around $20 million, has also tied up with many dealers in small cities to hold auction for cars bought from bigger cities.