The prices of used cars have shot up, with pre-owned vehicles being sold at a premium of 7-10 percent over 2020, said industry experts.
On the OLX Auto platform, the average selling price of used cars was 21 percent higher at Rs 4.84 lakh this January compared to Rs 3.99 lakh in January 2021, Amit Kumar, Chief Executive of OLX Auto, said.
“The average buying price of a used car has gone up by 7-8 percent in the last one year,” Shashank Srivastava, Executive Director of Maruti Suzuki, told Mint.
By the time customers manage finances to buy new cars and get to the market, prices go up. For such customers, a used car fits the budget, Srivastava said.
Higher prices are fuelled by a surge in demand for personal mobility amid the COVID-19 pandemic. There is also a shortage in supply as consumers refrain from selling their old cars or upgrading existing vehicles due to job and income losses, experts said. High inflation has also reduced the purchasing power of consumers.
A recent study by Cars24, the e-commerce platform for pre-owned vehicles, showed easy access to finance is also boosting sales of used cars across the country.
According to the ‘Future of Mobility 2022’ report by Cars24, 76 percent millennial buyers availed financing for used cars with an average loan size of Rs 3.5 lakh, PTI reported.
The study said the biggest markets for pre-owned cars are Delhi-NCR, Mumbai, Ahmedabad, Pune, Hyderabad, Bengaluru and Chennai.
Meanwhile, prices of cars nearing 10 years were sliding as various states brought in policies to scrap older vehicles.
As more people were holding on to their old cars, the percentage of customers replacing a used car with a new one as a percentage of total sales or exchange penetration was down from 28 percent in pre-COVID years to 18 percent in 2020-21, Mint reported.
Sales of used cars from True Value, the pre-owned car business of Maruti Suzuki, is expected to cross 310,000 in FY22 compared to 270,000 units last year, Srivastava said.
Mahindra First Choice Wheels has been witnessing 100 percent year-on-year growth in the past few months, with the total number of used cars sold in the fourth quarter being equal to the overall volumes sold last fiscal, Ashutosh Pandey, Chief Executive and Managing Director, Mahindra First Choice Wheels, told Mint.
(Edited by : Shoma Bhattacharjee)