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Used Car Sales To Edge Past New Car Sales
The new car business on the other hand is only expected to register a single digit growth rate this year. Several first time car buyers prefer to buy use cars rather than new. Further the initial investment for a used car is much lower than a new car. With all major carmakers establishing their own used car businesses, it is now easier for car buyers to buy a certified used car.
Jagdish Khattar, the CEO of nationwide car service provider Carnation said: “ Currently the new is to old ratio in India is 1:1.1. So the old car market will grow much faster than the new and within that segment the organized sector will grow the fastest to bring the ratio closer to the 1:2.5-3 new versus old cars. That's the norm in developed markets."
The preference for used cars is also at the luxury car sector as luxury cars tend to depreciate more quickly that regular cars. Buyers can now buy a 15 month BMW or Mercedes-Benz for anywhere between Rs.25 lakhs to 28 lakhs which is much lower than the sticker price of more than Rs.35 lakhs.
Used car sales have increased whenever that has been an economic slowdown in the US. A similar market response can be expected in India as well. The used car sector can also expect a slight drop in sales not because of a drop in demand but due to reduced supply. Car owners might decide to postpone buying a new car thus reducing supply. Another dampener for the used car sector is the higher interest rates charged for used cars when compared of new cars.
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