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Unlock 1.0: Used cars may see spurt in demand as consumers shun public transport

Founders of used car platforms say stress on income and higher price of new BS6 vehicles could prompt consumers looking for a personal vehicle to settle for a cheaper used car.

June 04, 2020 / 07:50 PM IST

At a time when automobile sales are expected to be depressed for quite a few quarters, used cars as a segment could see jump in demand, predict industry insiders.

Startups which buy and sell used cars are seeing some early signs of interest among consumers, say founders. They believe that in the post-COVID world, fear of public transport will push consumers towards owning a vehicle. But given the financial stress among middle-income consumers, they could settle for a used car.

There is a general aversion among consumers to using public transport, and used cars can be an alternate option for them, said Niraj Singh, chief executive officer of Spinny, a used car platform which operates in Delhi NCR, Pune, Bengaluru and Hyderabad.

Cars24, one of the largest online used car platforms, is also expecting a major boost to business as their retail stores start opening across locations, with the lockdown easing slowly.

“The price gap between a new and a pre-owned car is going to be massive. Hence customers are more likely to buy more pre-owned cars than the new ones,” said Gajendra Jangid, co-founder of Cars24. BS6 vehicles will be significantly more expensive, given the engine upgrades and higher emission standards.

In a recent survey conducted by Cars24, 20 percent of respondents said they would be looking for a new car because of the fear of infections in shared mobility. Up to 22.5 percent of those who were looking for a new car would be settling for a used car given the price considerations.

“We were doing around 900 vehicle transactions before COVID hit the country. We are looking to get back to that level by early June and then it should grow further,” said Singh.

Another interesting trend that Singh has witnessed among his Delhi customers is the propensity to look for cars in the sub Rs 3 lakh range as well, which could indicate that many consumers might be hesitant to pitch in a big sum for a large asset and could settle for a smaller or cheaper variant.

Jangid further added that there will be a push for consumers to buy affordable pre-owned vehicles for their daily commute.

Scooter rental and subscription platforms said they had seen a massive demand for long term rentals and subscriptions from the likes of doctors, paramedical staff and executives who were engaged in essential services. A bulk of them could get their own vehicles as the lockdown gets withdrawn.

Ride-hailing startups such as Bounce are offering their used scooters for sale as well. Recently, Bounce listed multiple cycles, old Honda Activa branded scooters and others for sale on the platform. Bounce co-founder Vivekananda Hallekere recently took to social media to announce the sale as well.

Another segment which could see some bulk sales in the market could be cabs. Many of the drivers will not be in a position to pay the EMIs and banks might sell off some of these assets to recover money.

“Once things come back to some level of normal, there will be strong tailwinds in our business; there will be some teething operating challenges as well because of the fear of the virus, but overall the used car segment could benefit,” said Singh.

Pratik Bhakta
first published: Jun 4, 2020 07:50 pm

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