Festive cheer drives used-car sales this October

Latent demand created as customers had postponed buying decision after demonetisation, GST implementation

With cheer back in the new vehicles industry, it has also rubbed off the used-vehicles segment this festive season, especially the organised segment.

The new vehicles segment (all types of vehicles) saw 9.4 per cent growth in the first half of the financial year. In September alone, the passenger vehicles saw an 11.32 per cent growth year-on-year.

Shubh Bansal, co-founder of Truebil, a second-hand car portal, says: “For the overall segment, growth rates are 15-20 per cent, year-on-year. But, this October, we have seen 40 per cent growth in actual purchases on our platform, when compared to September.”

He says demonetisation and implementation of the goods and services tax had delayed car purchase decisions. This had led to latent demand, resulting in a spike during the festive season.

There was a 42 per cent drop in last November’s used-car sales; the demonetisation announcement was on November 8.

The earlier months were, however, reasonably good; the used passenger car market grew 16 per cent in 2016 (3.5 million units), despite the steep drop in November, more than new car sales. Around 3 million new cars were sold in the domestic market last year, while 3.5 million used cars were sold. Those in the sector say the new car market has been growing at eight per cent to nine per cent annually; the used-car market is growing at 15 per cent.

Puneet Bhaskar, associate vicepresident of category management at Droom, an online vehicle sales platform, said this month had seen significant traction as compared to September, with their portal showing two-three times growth. For that matter, the portal also reports good growth in new vehicle sales.

Unorganised sector dealers also report a sales spike in October. “This year, both September and October have had the benefit of festive demand. Demand has been good for October, growing 30 per cent over September,” said S Vaghnani, an used-car dealer in Ahmedabad who runs multiple showrooms.

Unorganised sector players in Ahmedabad also said that cash transactions have not stopped and are especially common in cases of used two-wheelers.

The organised sector comprises 17-20 per cent of the country’s usedcar market. Around 35 per cent of the transactions are customer to customer; the rest is part of the unorganised industry. It was growing at 30-35 per cent last year and then had seen a steep drop after demonetisation.