11-09-2020

So far, 2020 has been a banner year for the pre-owned car market. But now it�s getting stuck in first gear. The problem is not lack of demand. The supply side is drying up owing to the slowdown in new car sales. Customers are delaying or cancelling their plan to buy new cars, and hence less number of vehicles are coming for exchange. This could potentially result in the price hike of pre-owned cars.

According to industry experts, the replacement cycle is going up. This is impacting the supply of pre-owned cars in the used car market. About 25% to 30% of the passenger car segment is constituted by replacement buyers who have not returned to the market as consumers are holding onto vehicles longer than ever before.

With the ongoing festive season and easing of the supply chain, passenger vehicle (PV) registrations saw a year-on-year drop of 7.12% to 1,78,513 units in August 2020, as per the data shared by the Federation of Automobile Dealers Association (FADA) based on VAHAN. The used car market size is around 1.5-1.7X (times) of the new car market.