Is The Global Rally In Used Cars Stalling? | AU Small Finance Bank
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Is the global rally in used cars stalling?

    Average prices of pre-owned cars have come off their early 2021 highs and the steep surge is now cooling off, both in India and key global markets. This is as per the indications from global used car index – Manheim Used Vehicle Value Index, which is seen by both financial and economic analysts as the leading indicator of pricing trends in the pre-owned cars market.
     
    Both in June as well as July the average price of pre-owned cars fell well over 1 percent and the graph shows a gradual flattening trend. Interestingly this was the first dip in prices for two months in a row on the Index since December 2020.
     
    That said, one must also remember that even at current levels, the prices are up more than 30 percent on a year-on year comparison. Market experts see the current Manheim Index movement as indication that this could result in some rationalisation of prices from the steep spike seen in early 2021.
     
    Internationally, the Manheim Index is seen by analysts as the key indicator of pricing trends in the used vehicle market. However, in the Indian context the implication of the Index movement is fairly limited given the unique demand supply dynamics.
     
    Moreover, the semiconductor shortage continues to delay production schedules of new cars across India. With key carmakers in the country seeing delays or temporary rescheduling of production as a result of chip shortage, used cars continue to find buyers across India. Especially, with lockdown norms being eased in most states, the need for personal mobility continues to be firm. Most industry stakeholders expect total pre-owned car sales to exceed 7 million by the end of FY2022.