Used car prices drop on Budget impact

The 4 per cent excise cut on small cars in Budget 2008-09 is expected to accelerate sales in the second-hand car market.

Just three days after the Budget, prices of second-hand small car models have dropped nearly 10 per cent and dealers said they expect sales to accelerate as a result.

The March price drop follows the 15 to 30 per cent fall in second-hand car prices in January owing to the impending launch of the Nano, which went on display at the Auto Expo in Delhi. The world's cheapest car will be available for Rs 1 lakh in October this year.

"The fall in small car prices in the second-hand car market is much sharper than the price cuts announced by car manufacturers after the Budget," said Arif Fazulbhoy, director of Fazulbhoy Motors, a leading dealer for second-hand cars in Mumbai.

Two-year-old small cars have seen prices drop 6 to 7 per cent and for three-year-old cars it is around 5 per cent, he added. 
 

BUDGET BRAKE
Model	Age	Pre-budget price	Post-budget price
HYUNDAI SANTRO	One	3.00	2.7
HYUNDAI SANTRO	Three	2.10	1.95
MARUTI 800	One	1.70	1.55
MARUTI 800	Three	1.02	90,000
WAGONR	One	3.10	2.7
Price in Rs lakh

Meanwhile, Maruti Suzuki announced price cuts ranging from Rs 6,500 for the Maruti 800 to Rs 18,030 for the Swift Diesel (ex-showroom Delhi).

Hyundai slashed prices between Rs 12,000 and Rs 14,000 on the Santro, Getz and i10.

GM also lowered prices between Rs 7,500 and Rs 14,000 on the Spark and UVA Aveo variants.

The sharp fall in second-hand car prices is expected to stimulate demand. "We think the contribution of small cars will go up from 65 to 70 per cent of our sales," said Ankit Sharma, manager of Delhi- based second-hand car dealer Patliputra Automart.

Sharma said the Santro LT power-steering model popular with youngsters now has a post-Budget price tag of Rs 1,95,000 compared with Rs 2,10,000 before the Budget.

"The shake-up in the small car segment will also have an impact on prices of larger cars in the months to come," admits a senior executive at TVS Motors, which is in the second-hand car market.

Others said the price impact is already palpable in this segment. "The price of the Tata Indigo has fallen Rs 15,000 to Rs 20,000 and the Accent GLX is down Rs 20,000 after the excise cut. And all these cars are three to four years old," said Sharma.