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Boom time for used car market

Swathi.V

Sales up by at least 20 per cent following hike in VAT and lifetime tax

Photo: Nagara Gopal

IN DEMAND: The used car market in the city is on an upward swing. —

HYDERABAD: Market for used cars, usually upbeat when compared to that of new ones, has received yet another fillip from the recent rise in the Value Added Tax and Lifetime Tax.

First-time buyers are queuing up to the pre-owned car showrooms, and browsing feverishly through the classified advertisements of the newspapers to find a car of their choice and affordability.

“I was considering a new car when the tax hike was announced. Reckoning that the price of a decent small car would escalate by Rs.10,000 to Rs.12,000 with the hike, I immediately shifted my attentions to used cars. Presently, I am looking for an Alto, not more than five years old,” said G.Narayana Reddy, a retired employee.

According to sources, used car sales have picked up by at least 20 per cent, when compared to the figures in December last.

Maruti brands like 800, Alto, Wagon R LXi and Swift VDi are highly sought-after, matched only by Hyundai’s Santro and Tata Indica.

“There has been marked increase in enquiries over the last 15 days. On an average day, we are selling nine cars, and the number increases on weekends when the customer turnout is very high,” said Ravikumar, the manager of Dr.Cars, the used cars dealership on the NTR Marg.

Dr.Cars, by its business model, is more of a commission agent rather than a dealer.

It facilitates transactions between prospective buyers and sellers by bringing them on a common platform.

However, unlike the authorised pre-owned car dealers, it offers no guarantee or free servicing for the cars.

“Over 300 cars are on display here at any time of the day. Despite the troubled times, car manufacturers are coming up with new launches, and customers are eager to have them, resulting in constant stream of old vehicles being released into the market,” said Mr.Ravikumar.

Second hand cars usually have better market than the new ones, because depreciation would be high on the latter.

“New cars lose at least Rs.30,000 on their market value as soon as they are on road. The loss increases to Rs.1 lakh to Rs.1.5 lakh by the time the car is two years old, whereas in case of used cars, it does not exceed Rs.30,000 to Rs.50,000,” says a sales person.

Zero waiting time

One more reason for the ever-increasing demand for used cars is the zero waiting time. A few brands such as Swift VDI, if new, would need at least four to five months for delivery.

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