GST may boost online market for used cars

Online pre-owned vehicle dealers believe that the Goods and Services Tax (GST), once in place, will accelerate the growth of the online market in this space.

“Currently, registration into other states is an entry barrier in terms of extra cost. GST will remove these complexities and will accelerate the adoption of online as far as used vehicles are concerned,” online automobile transactional marketplace Droom founder and CEO Sandeep Aggarwal said.

According to him, GST will also bring a better equilibrium of price because the demand and supply can be matched with a lesser friction and better efficiency.

As per the GST rules released last week, second-hand cars will attract GST only on transaction value. Some states charge additional octroi charges of 4.5 per cent over and above of road tax. It will be covered under standard SGST rates, which will enable car owners to transfer from other cities without paying additional 4.5 per cent.

The rise in used-car prices has attracted many organised players such as Cars24, CarDekho, CarTrade and QuikrCars to enter into this business. Still, the organised sector accounts only 10 per cent of the used-car market.

Second-hand cars portal Truebil co-founder Shubh Bansal said, “Used-cars market in India has huge growth potential going forward. Close to 35 lakh used-cars were sold in the country, while around 30 lakh new cars were sold during the last financial year. The new car market is growing at 8 per cent, whereas the used car market is growing at 15 per cent.”