On comparing with the last year sales,the used car business have slowed down by 30%.Dealers pointed out that he increase in supply of used cars because of rising loan defaults and attractive discounts being offered by automakers on new vehicles.
"Prices of most used cars are down 20-30% from last year," said Jaspal Singh, owner of the Mumbai-based used-car dealership VM Motors. "They have been dropping since last year, but the fall has been higher since January this year. We used to sell about 20 cars a month, but now we manage only 7-8."
According to Ravi Narayanan, head, auto loans, ICICI Bank, the reason being cited in three conditions."First, there is a huge discount on new cars," he said. "Second, the Nano is coming. Third, the financing of used cars has stopped completely."
Experts pointed out that discounts of 10-30% are available on cars with an engine capacity above 1,000cc.The category of sub-1,000cc cars will be affected once the Nano hits the roads. Car dealers say that while prices have not fallen in the Maruti product range, discounts are large on petrol cars in the Tata and Hyundai range as people prefer the diesel variants.Banks and financiers have also become selective about financing cars, used ones in particular.
"Of 10 files, at least six get rejected," said Deepak Lakhani, assistant sales manager at Millennium Toyota. "Earlier, about 70% of used cars were financed through loans. But over the past eight months, only 25-35% have been bought on loan." he added.