By Gajendra Jangid
March 31, 2020, was the deadline to stop the sale of BS4 vehicles in India. The Supreme Court extended it by 10 days post the coronavirus lockdown. Carmakers have started rolling out BS6-compliant cars, and retailers are in a hurry to clear BS4 inventory by offering irresistible discounts. What is the impact of all this on the used car industry?
The used car industry, surprisingly, is a net gainer in the switch to BS6, as the rule doesn’t restrict buying or selling of used cars post the deadline.
Pre-owned car prices depreciate anywhere between 20-35% in the first three years, and then the depreciation rate is 5-10% every year, depending on the make and model. In the case of BS4 to BS6 shift, extra 10-15% depreciation is not out of the question. This may lead to lower value for a used car when the consumer decides to sell post the deadline.
The next few days are expected to be flooded with BS4 and older cars. This leads to a high supply of pre-owned cars and a low demand for them in major Indian cities. But this will also open gates for used car buyers in smaller towns, where affordability is a major factor and a new segment of car buyers is emerging. Be it buying or selling, the dealers, the used car companies, car furbishers are all set to make some serious money.
The author is co-founder & CMO, Cars24. Views are personal.
