Coronavirus effect: Demand for second-hand vehicles shoots up in Delhi

The coronavirus pandemic has driven up the demand for second-hand cars in Delhi. As the government has mandated social distancing and commuters are getting increasingly wary of public transport, small family cars have moved up the demand ladder.

According to a report in India Today, Delhi's biggest second-hand car market, the Moti Nagar Car Market, that saw a drastic dip in response in the last two and a half months, is now buzzing again. The Association of Moti Nagar Car Market said that demand has started increasing and people are looking for small family cars. "Our business had been completely stalled during lockdown. We found it difficult to bear even the maintenance cost for the cars. But, now we have started working again. Demand has started surging. People are looking for small family car, instead of SUVs," said Lokesh Munjal, president of the association.

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Munjal added that most of the customers are young working couples. He said that couples where both husband and wife are employed individuals are looking for small family cars. As these are the initial days of unlocking, prices have been kept low, he added. 

While the government has restarted certain activities, it is yet to restart metro services. The Delhi Metro that connects the corners of the national capital is the lifeline of Delhi.

Also read: Coronavirus impact: Maruti registers 89% decline in sales in May 2020

The increase in demand for second-hand cars comes as automakers register a steep decline in sales. For instance, India's largest car maker Maruti Suzuki India registered a 89 percent decline in sales in the domestic market. It managed to sell 13,865 units in May as against 125,552 units in May 2019. Mahindra & Mahindra Ltd reported a 79 per cent decline in overall monthly vehicle sales in May. The company sold 3,867 vehicles in May in the passenger vehicles segment compared to 20,608 vehicles in May 2019. Similarly, Toyota Kirloskar Motor (TKM) reported a 86.49 per cent decline in domestic vehicle sales to 1,639 units in May as opposed to sales of 12,138 units in May 2019. Hyundai Motor India Ltd (HMIL) reported a 78.7 per cent decline in total sales at 12,583 units in May as against 59,102 units in May 2019.

Also read: Coronavirus impact: M&M registers 79% decline in sales in May

As the automobile industry faces the brunt of the economic fallout of the pandemic, auto dealers have sought higher margins from companies of at least 7 per cent. Federation of Auto Dealers Association (FADA) argued, "Automobile dealers in India operate on the lowest margins possible as compared to peers globally. Even this margin has been battered due to the slowdown in the last 15 months and many dealerships are operating at a loss. While volumes have dropped substantially, fixed costs have remained more or less the same."

Also read: Coronavirus fallout: MG Motor sells 710 units in India in May

Also read: Auto dealers demand 7% higher margins from auto firms