The coronavirus-induced economic slowdown has eroded consumers’ purchasing power in a big way, and bringing significant changes in their car buying behaviour, showed a study by online auto classified Olx Auto.
Even as the preference for a personal vehicle is growing owing to safety concerns, buyers are not willing to fork out much, and 54 per cent Indians who want to buy a car in the next six months would prefer to buy a pre-owned car, said the study released on Tuesday.
However, with 56 per cent of the respondents planning to buy a car in the next three-six months, the automobile industry is expected to witness green shoots of recovery. “While the Covid-19 pandemic has been a black swan event for the automobile industry at large, we are starting to witness signs of improvement, especially in the pre-owned cars segment,” said Sunny Kataria, vice-president, Auto at OLX India.
In a clear trend towards downshifting, buyers’ preference is likely to veer towards entry-level models. Seven out of every 10 respondents said they have reduced their car-buying budget because of the pandemic. For a new car, while 39 per cent buyers have a budget under Rs 3 lakh, 24 per cent are willing to spend between Rs 4 and Rs 7 lakh. For a pre-owned car, 50 per cent buyers have a budget under Rs 3 lakh, the survey found. Only 20 per cent buyers have a budget of Rs 4-7 lakh for a pre-owned car. Meanwhile, smaller towns and cities are seeing a lot more traction for used cars. Of all the respondents keen to buy a car in non-metro towns, 70 per cent are interested in a pre-owned car and rest are interested in a new car.
The narrative flips for metro towns, wherein 70 per cent of the respondents are more likely to buy a new car.
OLX estimates that non-metros are expected to surpass metros in demand and supply in 2020. The key factor for this is that non-metros have seen the lesser impact of Covid-19. “The pandemic has been a stress test for the dealer community and the pre-owned car retail business overall.
For pre-owned car dealers, the focus right now would be on liquidating their existing inventory, in order to meet their working capital requirements,” said Amit Kumar, business head, OLX Cash MyCar.