Home NEWS Used car sales grow 4x new ones, Auto News, ET Auto

Used car sales grow 4x new ones, Auto News, ET Auto

Chennai: While new passenger vehicle sales are stuck in first gear clocking just 2.7% increase in FY19, used vehicles are vrooming away with four-times that of new car sales, say officials dealing with resale of cars.

Organised used vehicle sellers like Mahindra First Choice Wheels, Droom and OLX say the main driver for this is that used car business is not as dependent on financing as new car market and used vehicles are now a better value proposition following regular price hikes taken by car companies.

“Sales of used passenger vehicles are moving at a 10-12% clip in Q4 and the growth was faster earlier at about 15%,” said Ashutosh Pandey, CEO, Mahindra First Choice Wheel. The reason, he explained, is that there is a cash crunch in the market and new vehicles are getting more expensive. “In used, for the same price you get one category higher vehicle. For Rs 5 lakh, instead of an Alto or Santro, customers are looking for a used Honda City,” said Pandey.

This demand, he explained, was coming more from smaller towns where used vehicles are bought on cash upfront basis so the liquidity crunch in auto financing is less relevant in these segments. “Loan penetration is still much less in used vehicles,” said Pandey.

What makes used vehicles a good deal is the price differential, added Sandeep Aggarwal, founder and CEO of online platform Droom. “On an average, a mint condition used car enjoys 40% arbitrage compared to same model new car,” said Aggarwal.

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