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    Pre-owned cars to see greater demand post-lockdown, say M&M, Maruti Suzuki

    Pre-owned cars to see greater demand post-lockdown, say M&M, Maruti Suzuki

    Pre-owned cars to see greater demand post-lockdown, say M&M, Maruti Suzuki
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    By Parikshit Luthra   IST (Updated)

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    According to a study commissioned by the Mahindra Group, 75 percent of the respondents want to buy a personal vehicle post lockdown and the number of enquiries for used cars almost doubled in April.

    COVID-19 is set to have a major impact on customer behaviour and India’s automobile industry is a clear example. As customers defer car purchases, there may be a greater demand for used cars.
    According to a study commissioned by the Mahindra Group, 75 percent of the respondents want to buy a personal vehicle post lockdown and the number of enquiries for used cars almost doubled in April.
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    "We have had 1,500 bookings in the past 15 days, especially from markets which have been closed like Delhi and Maharashtra. It is about 2X of what we would like in times like these. Wherever markets are reopening we are seeing a shift towards used cars," said Ashutosh Pandey, managing director and chief executive officer, First Choice Wheels in an exclusive interview to CNBC-TV18. Mahindra’s used car vertical has over 1,700 outlets across the country.
    The coronavirus pandemic is likely to create a greater preference for personal mobility. Ashutosh said the number of customers wanting a personal vehicle has gone up by 15 percent and statistics show a preference for used cars.
    "At least 50 percent of customers would like to have a private vehicle. Customer budgets are also coming down by 10-30 percent but at the same time 70 percent of customers would still like to buy the vehicle they wanted to before COVID-19 and the lockdown," he said.
    Ashutosh feels that customers looking to buy a new two wheeler may now think of buying a used passenger car instead. "Amount of money that a customer has to spend on buying a new two wheeler, roughly for the same amount as down payment, he can buy a used car," he said.
    Maruti Suzuki, which has 570 True Value outlets across the country is also confident that demand for used cars will bounce back quickly. Speaking to CNBC-TV18 exclusively, the company's executive director, sales and marketing, Shashank Srivastava said, "Nearly 85 percent pre-owned car customers are two wheeler upgrades and we are confident that the current situation and sentiments will have a positive rub off on the used car market as the price of the new vehicle would be higher leading to a higher demand for pre- owned cars."
    Maruti Suzuki has sold 2,700 pre-owned cars through its 400 True Value outlets which have reopened so far. "3,000 customers have visited our True Value showrooms since reopening. Hatchback contribution in the pre-owned market is the highest and may go up further," said a company spokesperson.
    The company has rolled out a 376 point SOP to boost pre owned car sales amidst COVID-19. Maruti Suzuki has said all True Value outlets are now equipped to complete the entire purchase process online and showrooms have thermal scanners and personal protection kits for staff. The company has also laid out extensive sanitation guidelines for its pre-owned car showrooms and test drives.
    Both automobile majors agree that better finance availability would encourage sale of used cars. According to the Mahindra Group, finance penetration for the new car segment is 80 percent compared to just 18-20 percent for used cars.
    "We are trying to bring down the difference in interest rates from 400 to 200 basis points. Our tie ups will give customers bettering financing options and higher loan to value ratios. This will make the used cars more affordable in the first few months," said Ashutosh Pandey.
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