Used cars business going slow

After a long time the car makers are going to celebrate one of their best Diwali. But in the market of pre-owned cars, the lack of celebration can be seen clearly. Usually, the sales are on a high during the period between Navratri and Diwali. One of the car dealers commented that the present year is not as thrilling as the earlier one. The reaction from the side of customers is too poor. In comparison of the earlier festival period, the footfalls have declined by around twenty percent after Navratri. Even worse is that the sales in the last two-three months have almost halved in comparison of the past year. Ankit Kumar of Om Cars commented that there are few selected customers who visit the showroom. The present period is possibly the worst festival season for the business, said Ankit.

On the other side, it is being expected that in this fiscal, the passenger car segment will grow by 23%, as per the analysis by the SIAM (Society of Indian Automobile Manufacturers’ Association). Then the obvious question is why  are sales not picking up. The marketmen say that one reason can be the lack of easy credit. The dealer further added that they are observing a big cash crunch presently in the market. Usually, the banks are not too keen on providing loans to the vehicles which are second-hand. Also, the rate of interest is around three to four percent higher in comparison of the rate of interest on the new vehicle’s loans. This confines the customers from spending in the second-hand vehicles, he added. Manager at the Honda dealership opined that customers kind of feel hesitant and that’s why they remain distant from taking loans for the used cars because the rate of interest is about 14.5-15%.

Sources reveal that the new car market is progressing with the growth of 30% month on month. The pre-used cars segment is unable to catch with this growth. Even the banks have got interesting and attractive schemes to attract the customers. The competition has also increased a lot and specifically after the presence of systematic players like Tata Motors Assured, First Choice (Mahindra and Mahindra), Hyundai Advantage and True Value (Maruti) into the used car business, this competition is constantly increasing.

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