These are worst of times. Hammered by a pandemic that has left thousands dead and economies bruised, the disruptions across the world has been unprecedented. As people struggle to fit into a changed world order where social distancing and quarantine are everyday terms, striking the right balance between COVID-19 concerns and the must-do has become the biggest challenge. So, how is the world moving on this slow and painful road?
Second-hand car is a safe bet for many, it seems.
Indians, mostly those who have to travel daily for work, are buying used four-wheelers in far greater number than before the pandemic, driven by the need for personal hygiene and to avoid shared cabs and public transport, which too has seen scaled down operations since March. Many are also opting for new cars to cut down on expenditures due to economic uncertainty.
A car was once seen as a step up from two-wheelers and most people preferred their first four-wheeler to be a shiny, brand new machine. Not anymore. Ask Rajkumar, who works as an office assistant in Gurgaon and used public transport to commute from his home in Delhi. When the pandemic hit and he no longer wanted to share travel space with others, Rajkumar invested in a second-hand Maruti Suzuki WagonR that runs on CNG. He says many of his colleagues too have either bought or are on the lookout for used cars in good condition as an alternative to two-wheelers.
“Used car sales have been strong right from the time when lockdown norms were eased gradually (late May-early June). Sales have already crossed pre-Covid levels by 10-15 per cent,” says Niraj Singh, founder and CEO of Spinny, a full-stack used car platform. Spinny’s sales crossed March 2020 levels and has seen a 19 per cent increase in demand since May for cars in the Rs 3 lath to Rs 5 lakh price range. Cars in this price range contribute to about 50 per cent of the overall demand.
In October, Spinny sold close to 6,000 cars, a growth of about 30 per cent in comparison to same month last year. Of these, 50 per cent of the sales have been recorded in Bangalore, followed by Delhi-NCR (35 per cent) and Hyderabad and Pune. Earlier, around 30,000 used cars were sold in a month on an average in Delhi-NCR. This September saw sales touching 35,000. “The reasons are obvious as post-Covid more and more people are shifting from public transport or shared cabs to self-owned vehicles out of health concerns and personal convenience,” says Singh.
Some are buying used cars to cut down expenses. Like Sunil K.M., a marketing official in a construction firm, who swapped his old Volkswagon Polo for a second-hand sedan “as it is value for money, particularly if you buy it from a reputed dealer who takes responsibility for the quality of the vehicle, gives good service, including documentation and facilitating the loan”.
It was a similar case for Deepika Arvinder Singh, who works at a market research company in Gorgaon. Deepika says she and her husband opted for a second-hand four-wheeler as “we did not want to spend too much”. It also helped that their first car was also pre-owned and the previous experience had already made them “comfortable with the idea of buying second-hand vehicles”, particularly as it makes even mid-segment cars more affordable.
Dealers in pre-owned cars also reported a staggering 400 per cent jump in queries from women, a segment which forms the bulk of public transport users. Currently, about 20 per cent of the customers are women, compared to 10 per cent over the same period last year.
One of the downsides of this demand is the low availability of used cars in the market. “Pre-owned car sales could have done better but for the constraint in the availability of such cars. Though there is considerable demand for used cars in the market, but procurement of such cars is not adequate,” says Vinkesh Gulati, president of the Federation of Automobile Dealers’ Associations (FADA).
Dealers say that the highest demand is in the Rs three-six lakh price range for cars that are up to five years old and have been driven anywhere between 20,000 km and 60,000 km. There is also considerable demand for mid-segment cars that would normally cost between Rs 6 lakh and Rs 15 lakh but are available in the pre-owned car market for half the price or even less. With stress on equal stress on quality, reliability and performance of pre-owned cars, like in new cars, buyers are also showing a preference for dealers like Maruti Suzuki’s True Value, Carnation and Spinny, among others.
With manufacturers coming up with generous offers and banks cutting rates for the festive season, sale of new cars too showed a slight improvement since September. “October continued to see positive momentum on monthly basis but on a yearly basis the negative slide continues to increase. The nine-day Navratri period witnessed robust vehicle registrations but could not save October from going into red as compared to last year when both Navratri and Diwali were in the same month,” said Gulati.
For the automobile sector, one positive was the good Rabi crop that left farmers with disposable incomes and spurred increased demand in the rural market, one of the major barometers of economic revival. Industry bodies said the rural market saw increased demand for two-wheeler, small passenger vehicles and small commercial vehicles.
According to the Society of Indian Automobile Manufacturers (SIAM), September data for the auto industry recorded a 26.45 per cent growth in sale of passenger vehicles and 11.64 per cent growth in two-wheelers sales. Striving to cash in on the improvement in demand for new cars, automobile manufacturers too have stepped up production.
“The Indian automotive industry is working hard amidst this tough COVID-19 situation to increase production and sales, while ensuring the safety of customers and employees across the whole value chain,” said SIAM president Kenichi Ayukawa in a statement. The improvement in consumer sentiment is in part due to government intervention and auto loan interest rates falling below 8 per cent, the lowest in a decade. A FADA study has shown that sales pickup is more in states where economic revival is taking root, more so in semi-rural areas and small towns.
