Demand for used diesel cars rise with hike in petrol prices

The current gap between the petrol and the diesel prices now stands to be Rs 25, after the recent revision of the petrol price by Rs 3.14 a litre. The increase in the demand for the diesel cars is more profound than ever. As we all know that the price of a car depreciates with age, however, this seems to be older convention as the prices of the used diesel cars are said to be increased by 12% during the past six months.

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The prices of the used cars of Maruti Swift, Maruti Swift Dzire, Mahindra Logan and Ford Fiesta in the diesel variants are reported to have gone up by 10-15%. On the contrary, the petrol cars (used cars) are said to come down by 20% in both the sedan and the SUV segment in Honda Civic, Hyundai Sonata, Honda CR-V and Mitsubishi Outlander. With the increasing demand for the diesel cars in the market, the car makers are having a hard time keeping up with the supply. Based on the prevalent situation, the used car business is flourishing. The lending rates on the used cars remain stable at 18% against the interests on the used cars, which have risen by at least 3% - 4% on 13%.

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The used car business in India is growing at a rate of 15-20% per annum selling 2.5 million cars in a year. The used car market sales are about 1.1 times the new car sales. The organized sector of the used car market accounts for 12% of sales and the brokers are responsible for around 30% used car sales. One of the oldest used car dealers in Mumbai, Fazulbhoys Motors had mentioned that noticing the current trend in the market, they have increased their diesel car portfolio at their store. Apparently after the petrol price hike in March this year, the price of the diesel driven used cars of Maruti Swift and Maruti Swift Dzire has grown by 10% to 20%.

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Shubhabrata Saha, CEO of Mahindra First Choice, Mahindra’s used car dealer had said that the diesel driven used car demand has witnessed an increase of 15% , while the petrol car demand has suffered a decline from 75% to 50%. The CNG variants account for the 10% of the used car sales. One of the biggest online used car dealer had commented that presently 20% of the used cars sold are diesel cars, which is expected to go up by 30% during this year. Apart from that, the consumers seeking to buy a diesel used car on the internet has also increased from 45% to 65% in the month of August-September. According to Maruti India’s used car dealer, Maruti True Value, the growth in the used car business has also fallen by 20%. This is mainly due to lesser number of people opting to buy a new car in exchange for a used car.

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