February will fan the sales momentum for used cars | AU Small Finance Bank
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February will fan the sales momentum for used cars

    By Naveen Vashisht, President & NBM – Used Wheels, AU Bank
     
    With vaccination and flattening curve in Covid-19 cases, schools and offices are opening as India is gradually moving towards normalcy and with this the demand for personal mobility is set to improve further. We do not expect any reduction in demand for used cars. The growth opportunity is going to be much higher. The basic demand for cars is growing and a second-hand car adds to the convenience and affordability factor.
     
    We continued with our growth momentum in January 2021 with good contribution from the used car business . We clocked all- time high business and saw growth of 14-15 percent on a month-on-month basis backed by demand from across segments.
     

    February will fan the sales momentum for used cars

    With vaccination and flattening curve in Covid-19 cases, schools and offices are opening as India is gradually moving towards normalcy and with this the demand for personal mobility is set to improve further. We do not expect any reduction in demand for used cars. The growth opportunity is going to be much higher. The basic demand for cars is growing and a second-hand car adds to the convenience and affordability factor.
     
    We continued with our growth momentum in January 2021 with good contribution from the used car business . We clocked all- time high business and saw growth of 14-15 percent on a month-on-month basis backed by demand from across segments.
     

    Union Budget almost a non-event for used car market

    The market was looking forward to the Union Budget with bated breath. However, the only thing related to used cars in Budget is the Scrappage Policy. But the Scrappage policy is voluntary and there is nothing mandatory. As a result, you are unlikely to see any immediate impact over the next 6 months to 1 year. When it is actually executed, that’s when we may see its impact.
     
    The hike in duties may lead to further hike in new car prices and that, coupled with the huge waiting period for the recent product launches, spells good news for the used car market.
     

    Momentum drivers

    It will not be wrong to say that rural demand has been the momentum driver for used cars in many markets across India and the Budget announcements add to that positive cheer. The announcements with regard to strengthening the MSP is likely to deepen demand from the rural markets. We expect this to add to the rural growth that we have been seeing in the past 4-5 months.
     
    Internally, we have been working on expanding our reach and identifying the available markets to boost our growth. We believe that focussed work on product pricing, packaging, distribution and reach will help overall growth. We are targeting 30-35 percent growth this year.
     
    The third quarter has been traditionally the best quarter and this fiscal (FY2021) is no exception. We saw 12-15 percent growth in the quarter gone by and hope to maintain the momentum in the last quarter of FY2021. We have seen enquiries levels going up in used car sector.  As we continue to dig deep in the existing branch distribution and added advantage of adding newer branches/geographies we are focussed on an aggregate 20-22 percent growth. While the new cars business is expected to have nominal growth subject to supply side, the high-yield products like tractors, used cars, refinance and two-wheelers are expected to provide the much-needed push.
     
    The supply constraints in the used car market are also showing signs of easing off and that is welcome news for the used car buyers and sellers. The market sentiment is improving and we continue to move ahead with expectation of double-digit growth for the year.