BackUsed cars’ supply may surge in Sept
More people may sell their vehicles amid job losses, WFH routines after moratorium ends on 31 August.This could narrow the demand and supply gap for used cars and two-wheelers, which has widened lately
PremiumMUMBAI : More car owners are likely to offer their vehicles for sale, said executives at used car resellers, due to a mix of factors such as job losses, salary cuts and continuing work from home routines.
This could help narrow the demand and supply gap for used cars and two-wheelers which has widened as more people opt for private modes of transportation on fears of catching infection.
“Once the moratorium gets over on 31 August, we will definitely see more supply of used cars in the market," said Amit Jain, chief executive officer and co-founder, CarDekho, an auto portals run by Girnar Software Pvt. Ltd. “The demand for used cars has seen a sharp rise as people are increasingly looking for affordable vehicles for personal mobility while avoiding public transportation amid the coronavirus scare".
“Besides our 50 Gaadi stores, we are also conducting home inspections for acquiring pre-owned cars. We see owners selling an average of 4,000 pre-owned cars per month through our platform as against 3,500 cars before the pandemic," Jain said.
CarDekho plans to invest $20 million in the used car business this fiscal to grow its operations and tap the demand momentum. It plans to open 250 franchise stores this year, and to over 1,000 retail locations by 2022. Rating agency Crisil expects the resale market to also see an increase in supply of commercial vehicles after the end of moratorium, in addition to passenger vehicles. “This supply would provide good support to rising demand for used cars where consumers opt for them as loan to value (LTV) of new cars keep coming down in a risk averse scenario," said Hetal Gandhi, director, Crisil Research.
According to a recent study by OLX India, an online marketplace , the recovery in supply of used cars is at 90% of pre-covid levels, while demand is at 120%.
“In the initial recovery phase, the demand-supply gap has only widened," said Amit Kumar, head, OLX Autos India.
Kumar estimates that increased supply of used cars after the moratorium period ends will come from commercial as well as private sources as people with weak financial profiles may be forced to surrender their assets. “Company paid cars used as personal vehicles, vehicles bought for mixed personal and business reasons, and those bought by small travel agencies may be sold in the used car market after the moratorium ends. This segment constitutes 15-20% of all used cars," Ashutosh Pandey, chief executive officer, Mahindra First Choice Wheels Ltd said in a phone interview. The supply of pre-owned vehicles will increase over the next two to three months as banks are also likely to start taking repossession of vehicles of loan defaulters after the end of the moratorium, he said.
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