Nano impasse kindles new hope for used cars market

By Rajat Rai, Lucknow, Sep 5 : The cloud of uncertainty over the Tata Nano roll-out from West Bengal is raising new hope far away in Uttar Pradesh for the used small car market.

The sale of second-hand small cars, which faced a slump this year, suddenly picked up last month.

Industry experts say the small car segment in the used car market has registered a sharp rise of 30 percent during the last 30 days. They expect the figure to touch 50 percent by October.

"With the present deadlock and confusion over the production and supply of Nano, we believe it will take another eight to 12 months for the car to hit the road," said Nazir Kazmi, a Lucknow-based automobile consultant.

Car dealers here are excited with the current market trend.

"The second hand car market, particularly small cars, was in a lull for the past six months but it has suddenly seen a rise," Ajit Singh, manager of the Maruti Suzuki true-value chain of second hand cars, told IANS.

"The most preferred second hand cars include Maruti 800, Maruti Alto, while there are a few buyers for Hyundai Santro also," he added.

While the sale of used Maruti 800 has doubled from an average 12 to 23 per month since August in Lucknow, other models have also seen a similar rise. Alto sales have risen from 12 to 25 and Santro from 13 to 17.

These are average figures of five leading used car dealers in Lucknow, out of the total 30 registered second hand car sellers. They estimate that there are as many as 120 unregistered sellers of second hand cars in the city.

According to the prevailing market rates, second hand small cars go for Rs.60,000 to Rs.160,000.

Nano is to be priced at Rs.100,000, but dealers say this does not include the registration fees and other post-production costs. The total price may touch Rs.130,000.

"Besides affordable prices, these used cars also have good exchange benefits and the buyer can upgrade to a higher model anytime by simply paying the difference," Sanjiv Sahani of Rama Car Bazar told IANS.

Besides good resale value of second hand cars, a majority of the second hand car dealers are facilitating easy loans for the buyers, he added.

Meanwhile, the new small car segment in the state has also shown a marginal improvement in the past one month.

"Lower end models of Maruti 800 and Alto are available in a price range up to Rs.200,000 and the difference with the expected price of Nano is only between Rs.60,000 and Rs.80,000," a senior executive of a Maruti Suzuki showroom TS Motors, explained, preferring anonymity.

"This is hardly a big amount and seeing the Nano delay, people are opting for other small cars," he added.

As against the 30 percent spurt in used car sales, the new small car market has witnessed a growth of nearly 15 percent in the past one month, he said.

Dealers of other car brands also shared a similar view.

"Nano has made no difference to the sale of big and premium cars but sales of small cars were affected. Now it has started picking up and we expect the trend to continue until Tata Motors announces the formal date of Nano launch," a senior manager of BEEAAR Motors, dealing in Hyundai cars, said.