Local pre-owned car dealers compete with organised players

The battle for supremacy in the automobile sector is not only between the automotive majors in the new car market, it has percolated to the bottom of the pyramid.

The pre-owned car segment is now witnessing the entry of local dealers in the organised market space. The used car market in Uttar Pradesh is estimated at 5,000 units per month. The Lucknow market alone accounts for 400-500 units per month.

This is happening at a time, when top automobile majors have presence in the pre-owned car vertical, including Maruti True Value, Tata Motors Assured, Mahindra First Choice, Hyundai Advantage and Honda Terrace.

“The used car market in Lucknow is growing by 20 per cent and the profile of cars being sold is growing fast in line with the launch of newer models,” Lucknow Car Dealers’ Association President Sanjeev Sahni told Business Standard.

Sahni, who is also the Managing Director of Lucknow-based Rama Car Sales Private Limited, has recently forayed in the organised used car segment.

“We are planning to open two franchisee outlets in Bareilly and Lakhimpur districts soon. More outlets would be added in due course,” he said.

While, Lucknow has about 12 pre-owned car dealerships of big players viz. Maruti, Tata Motors, Mahindra, Hundai and Honda, there are 25 odd authorised old car players in the local market.

“While, 25 outlets are registered with us, there would be almost 100 unauthorised players operating locally,” Sanhi said.

The local players claim cost advantage over organised dealerships due to low operating cost, low margins and personalised service to customers. They operate at a margin of around 4 per cent. “We give same quality assurance and even free insurance to customers,” he said.

The good old Maruti 800 of 1990 make is available for Rs 35,000 in the old car market, while Nissan X-Trail can be bought for Rs 16 lakh, although Nissan still does not have an authorised dealership in Lucknow.

Small car wonder Tata Nano is also available for the interested buyers.