Will used car prices to drop faster in 2017

The automobile industry in India is well developed. For several years the industry has boomed and now after the internet age the market scenario has changed tremendously. In the year 2015 2.6 million new cars have been sold and 3.0 million used cars have been sold. Today cars are bought not only from showroom but also online. There are several car sites in India which sell first hand cars and thus the online marketing has hiked the sale of cars and banks quite easily provide car loan for purchasing first hand car. The used cars are often bought from dealers and the transaction is carried out through cash and no loans are available in buying used cars.

In India on 8th November 2016 the government of India announced demonetisation. Demonetisation has hit every one hard and each and every industry and people of the country has faced issues. The automobile industry also got a good hit. The sales of new cars dropped tremendously right from November to January and the selling used car business is worst. Banks provide car loans for purchasing new vehicle but no loan is given for buying used vehicle. The person who is buying deals with the dealer directly, bargains the price and is paid in cash. Thus when demonetisation occurred there were shortage of cash as people did not have new cash and the government had put restrictions on the withdrawn of cash. So purchasing of used car was not easy due to cash restriction.

The government has removed the bar for withdrawing cash but in these three months the business graph has definitely come down. The sales of used car has gone down quite a lot as people could not buy used cars for lack of cash and its expected that in this the price of used car will further drop. It is expected that the companies will increase the new cars price thus which means there will be more demand of used cars as people are usually not able to meet the high cost of a new car. Here the demand increasing for used car does not mean increasing of its price but decreasing. The used car prices will decrease this year.

Thus the demonetisation did hit the automobile industry hard and people are expecting now that there will be price hike in the new cars and the used car prices will be lower because of more demand for used cars.