Mumbai: The sales of new cars plummeted in the October to November 2008 period but those of used cars gained pace. This, despite the used car segment being completely dependent on the sales of new cars. In financial year 2007-08, about 14 lakh used cars were sold.
But the good times may well be over, at least in the short term, with the segment likely to see a fall of 15-20% in sales in FY09, say experts. Banwari Lal Sharma, assistant vice-president (product), CarWale.com, said, "Used car prices have gone down significantly, 10-12% in last seven months alone. This is true especially for large sedans that are in the range of Rs 5 lakh plus. Despite the fall in prices, the sales of sedans haven't picked up. Besides recession, tightened availability of auto loans could be the reason."
Sharma said low sales have been seen across brands. From small cars like Swift and Getz, which cost Rs 3-5 lakh, to big ones such as Chevrolet Yuva and Skoda Fabia, all have been affected badly. But sales have been pretty stable in some small cars like M800 and Alto, which fall below the Rs 2-lakh range.
"Mid-sized and upper mid-sized segments are the worst hit. Anything above the Rs 2-lakh price tag has been suffering," Sharma said.
Deepak Lakhani, the assistant sales manager at Millennium Toyota, the Toyota dealership that sells used cars of other automakers too, said that demand for Hyundai Accent as well as petrol variants of Indigo, Indica and Getz is low. Worse off are General Motors products where demand is zero, he said.
Nipun Jolly, the manager of the used cars division at Fortune Cars, the dealer for Tata Motors, added that there has been a fall of about Rs 20,000 in the prices of second-hand cars across brands and segments.
"Companies are giving huge discounts on new cars and this is reflecting in used cars too. We see a huge demand coming for Indica (diesel variant) from the middle-class segment. The petrol variants and SUVs are not doing well."
Pervez Ansari, a sales executive at Maruti True Value, the dealership for second-hand Maruti cars, said sedan sales have dropped 10% and mid-segment cars 15% but small cars are still growing 45%.
An analyst with a domestic brokerage felt the slump in the used cars segment is temporary and will pick up pace due to falling prices. Hemal Talati, the finance and insurance manager at BMW dealer Infinity Cars, said, "The prices of BMW have fallen and there are heavy discounts. November-December sales were low but January was good. We sold 3 BMWs and 2 Mercedes. In Mercedes E-Class, there is a discount of Rs 12 lakh, which bought down the price of the used car too. Same with BMW, which is offering a discount of Rs 2 lakh on its 3 series.
According to S Saha, chief executive officer of Mahindra First Choice Wheels Ltd, used cars are a value purchase and customers look for value and brand during a downturn when they can't afford new vehicles. "So growth in this segment is bound to be good," he said.
Saha said there are only 10-15% of the used cars market is organised. "There is a need for consolidation in the organised segment. The market is huge and the base is small. It provides OEMs with a strong exchange platform and a sales support tool," he said.
Buyers of such vehicles are mostly first-timers and seasonal buyers who change their cars frequently.


