Auto cos remain bullish on long-term growth of used car business

New Delhi, May 23 (PTI): Leading automakers Maruti Suzuki India (MSI), Mahindra & Mahindra and Toyota Kirloskar Motor are bullish on the long-term growth prospects of their respective used car verticals even as the second wave of COVID-19 continues to pose severe challenges to the business activities across the country.
The companies remain a bit circumspect regarding the near-term situation owing to the pandemic but expect the segment to grow on a long-term basis with personal mobility gaining acceptance amid the coronavirus pandemic.
“It is very difficult to predict how used car business will perform this fiscal year due to COVID situation. Demand for such cars is there in the market but there is pressure on their availability because of restrictions across states on account of lockdowns and curfews,” MSI Executive Director (Sales and Marketing) Shashank Srivastava told PTI in an interaction. The auto major currently has 570 True Value outlets across the country where it certifies the pre-owned cars it takes from various sources, including customers who exchange their old cars for new Maruti models.
Srivastava said that due to COVID situation, the business remained impacted with around 416 of the outlets currently closed across the country. He however noted that demand for the used cars is very strong due to a shift towards personal mobility and the only challenge was availability of the vehicles in the current circumstances.
MSI saw its pre-owned car sales drop by around 36 per cent last fiscal at 2.65 lakh units from 4.18 lakh units in 2019-20. It has sold 4.22 lakh units in 2018-19, 3.54 lakh units in 21017-18 and 3.46 lakh units in 2016-17. “If it goes like this (pandemic situation), then we would expect a similar trend like last year which means the exchange of cars will remain low, which we are already witnessing in April and May. It will impact availability of used cars for sale. So demand would be there for such vehicles, like last year but there would be less availability of used cars which would mean drop in sales,” Srivastava noted. However, if the pandemic situation recovers there can be a bounce back as has been witnessed in the new car sales, he added.
“The only question is when would that happen…in the meantime we continue to invest in digitisation of the outlets to make the buying process easy for customers,” Srivastava said.
Toyota Kirloskar Motor (TKM) Vice President Naveen Soni noted that it would be a tough call to assess the outlook considering the current situation in hand.
“There was a semblance of normalcy during the period January to March 2021, in which we saw a more than 40 per cent jump in used car sales compared to the corresponding period last year. Therefore, we have a positive outlook, based on how the pandemic situation improves,” he added.