The petrol price hike as well as rising interest rates has begun to affect the used car market. Mumbai-based dealers said they are receiving more inquiries for pre-owned diesels – a hot favourite at any time – even as buyers look for ways to cope with the increasing fuel hike.
Petrol prices rose by Rs 5 a litre in mid-May, the ninth increase since prices were de-controlled a year ago, and the highest increase so far. Indications are that another hike is not too far away. Earlier this week, the Reserve Bank of India upped interest rates once again in an attempt to cool inflationary pressures.
Moreover, the used car market is now flooded with petrol cars, some barely a few months old, as buyers switch to diesel or postpone buying decisions. Even as some consumers dump their petrol cars, getting a pre-owned diesel at a time like this is not easy.
Meanwhile, players in the organised sector have also said that sales of used cars slowed down in April-May 2011. According to them, customers are holding back their decisions to buy pre-owned cars because of the petrol price rise.
Last year, used cars sales increased 30 percent which is about the same increase as new hatches. Organised dealers whose business went up 50 percent expect it to fall to 30-32 percent this year. India’s pre-owned car sales have been estimated at over two million. Incidentally, there were fewer inquiries in May thanks to it being the holiday season.