Festive cheer drives used car sales this October post GST implementation

The festive season brought cheer to the new and used vehicles industry, especially in the organised segment. Players point out that so far, while the year-on-year (YoY) growth in October so far is in the range of 15-20 per cent, the growth over September 2017 in the used vehicles space has been a staggering 40 per cent.

The new vehicle segment (consisting of all segments such as passenger vehicles, two-wheelers, commercial vehicles) has seen 9.4 per cent growth during the first half of the financial year. In September alone, the passenger vehicles saw a YoY growth of 11.32 per cent.

Shubh Bansal, co-founder, second-hand cars portal Truebil explained, "When we see YoY for the overall segment, the growth rates are in the 15-20 per cent range. But, this October we have seen 40 per cent growth in actual purchases on our platform when it is compared to September."

Bansal feels that macro economic decisions like demonetisation and implementation of goods and services tax (GST) had delayed car purchase decisions. This led to a latent demand, which resulted in a spike during the festive season.

Last year there was a sharp fall in used car sales in November (post demonetisation announcement on November 8). There was a 42 per cent drop in the November sales figures last year. The previous months were, however, reasonably good, something that can be gauged from the fact that the used passenger car market grew by 16 per cent in 2016 (selling around 3.5 million units) despite the steep drop in November.

Bansal feels that people who had deferred buying decisions have started buying during festivals this year.

In 2016 used car sales had beat new car sales as such. Around 3 million new cars were sold in the domestic market last year, while 3.5 million used cars were sold. 

Players claimed that while the new car market has been growing at 8-9 per cent, whereas the used car market is growing at 15 per cent.

Puneet Bhaskar, AVP, category management, Droom, an online vehicle sales platform said that October this year has seen significant traction compared to September, and as a portal, they have witnessed around two-three times growth in month-on-month (MoM) terms. Droom incidentally has also started selling new vehicles and has seen good growth in the segment as well.

Unorganised sector dealers too have witnessed a spike in October. "The festival season has been good this year. Last year both Dussehra and Diwali were in October. This year both September and October have had the benefit of festive demand. However, demand has been good for October, growing 30 per cent over September," said S Vaghnani, a used car dealer in Ahmedabad who runs multiple showrooms.

The organised sector comprises around 17-20 per cent of the overall used car market in the country. Around 35 per cent of the transactions are customer-to-customer, and the remaining is part of the unorganised industry. It was clocking a 30-35 per cent growth rate last year, and then had seen a steep drop post demonetisation.

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

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