can be seen from the fact that we are selling one used car for every new car we sell”.
Mahindra First Choice is expecting its sales for the year to be anywhere between 60,000 and 65,000 units, up from 46,000 units last year. Anticipating a jump in demand for used cars, Mahindra & Mahindra Ltd has increased its dealer network significantly over the last one year from 180 in August 2012 to 287 now.
“Impact of the economy is a lot more muted on the used car business,” says Nagendra Palle, CEO of Mahindra First Choice. Between May and August, his business has jumped 40 per cent to 17,000 units from 12,000 in the same period a year ago.
Conversely, the rupee fell by 25 per cent against the dollar during the same period. Also, over the last couple of months, GM and Mahindra & Mahindra raised prices by up to Rs 10,000, contributing to a general feeling that new vehicles were getting expensive. Other manufacturers are expected to follow suit.
“In a tough economic environment for new cars, used car prices are holding and sales are robust,” Mahindra & Mahindra chairman Anand Mahindra tweeted on Monday.
Auto Terrace, Honda’s arm that sells pre-owned cars, saw 2012-13 sales jump 58 per cent. An official associated with Honda-Auto Terrace said demand is robust and the company is expecting to double its sales this year.
The official said prices of petrol cars have begun to harden in the used car segment. “The residual price of a three-year-old petrol car had dipped from 64 per cent in 2010 to 54 per cent in 2012. It has, however, gone up to 61 per cent in 2013,” the official said.
Although players such as Mahindra, Maruti and Honda feel there is lots of room for them to grow, industry insiders said as new car prices rise and sales fall, there will be some supply constraint in the used car segment too and that will lead to a hardening in their prices as well.