Impact of (Bharat Stage) BS VI Implementation for Used Car Demand | AU Small Finance Bank 
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Policy Watch - How has BS VI Implementation Impacted Used Car Demand?

    Implementation of BS VI emission norms has not just ushered in a new wave of environmentally sustainable vehicles but also resulted in a significant uptick in the demand for used cars. Industry estimates and sales details indicate that there is a 10-15 percent rise in used car demand in India.
    The uptick in the past three months has taken the sales momentum to pre-COVID levels. In fact, the used car market is now 1.3-1.4 times that of the new car market. But are you wondering how the used car market benefitted from BS VI implementation?
    Well, in a world still grappling with the COVID pandemic, the need for personal mobility has grown manifold. People are preferring their own cars compared to shared mobility alternatives like cabs and buses. But the economic slowdown due to COVID has also curbed the purchasing power of consumers to an extent. This, coupled with economic uncertainty, is pushing consumers to look for affordable mobility alternatives. In that scenario, the used car comes across as a convenient, affordable alternative to address one’s mobility needs without burning a huge hole in one’s pocket.
    However, given the huge investment that car manufacturers have undertaken to meet the new emission norms, BS VI-compliant cars are invariably more expensive than BS IV ones, an average of 10-12 percent uptick in prices. In that perspective, the used cars have come across a viable option for those looking for cost efficient personal mobility alternatives.
    Nearly 40-50 lakh used cars are being sold in the country and the biggest demand is there in the entry segments that are offering easy and affordable transportation option of for consumers. Maximum demand if for cars in the ticket size of INR 3 lakh on an average. Demand has risen by nearly 10-15 percent in the past few months. For those looking at two-wheelers as affordable transport options, the used cars offer the scope to climb up the mobility ladder for a relatively low premium.
    Moreover, the BS IV to BS VI transition is not just about the difference in the price of cars. The cost the fuel used also needs to be taken into account. The BS VI fuel has significantly lesser sulphur content as this will be instrumental in bringing down the NOx or oxides of nitrogen during the combustion process.
    As a result, for customers who are operating on a tight budget, it can be a double whammy of sorts, with not just a sizeable hike in the initial pay-out for new vehicle but also an incremental hike in fuel cost on a regular basis. In that backdrop, the used cars come across as a viable option to address the rising need for mobility, without stretching the budget too much.
    Disclaimer: The opinions expressed in this article do not purport to reflect the views or opinions of AU Bank or its employees.