The Used Car Market has been outpacing the New Car Market and it is likely to do so in 2022 as well. According to the ‘OLX Autos-CRISIL Study 2021’ in FY22, the used car market in 2022 is projected to grow healthily at a rate of 15%.
A Boon and A Bane! In 2020, the sales of new cars came to a standstill due to social distancing and multiple lockdowns. Production of new cars and spare parts decreased. In-proportion, this decreased the selection range in the used car-market and increased the second-hand car price in FY21.
Decrease in selection range and increased prices?? Why are customers preferring used cars than new cars?
With the Pandemic ‘Not-Over-Yet,’ social distancing runs in the mind of all individuals boosting preference for personal mobility. Consumers, currently facing loss of Jobs and decrease in salary, are forced to buy used cars that offer rich features at a lower cost.
Yes, the cost of used cars have increased in FY21; but it is still significantly lower than getting a new car.
Semiconductor shortage impact on the used car market?
The federation of automobile dealers associations (FADA) states that the passenger vehicle sales declined 10.7% in January 2022 when compared to January 2021. This has been due to the decline in production of cars by the manufacturers owing to the shortage of semiconductors.
What caused the semiconductor shortage?
A series of events have caused the semiconductor shortage. A storm in 2021 in the U.S.A. and a factory fire in Japan started the semiconductor shortage. Japan and the U.S.A. account to about 50% of the semiconductor chips produced in the world. By the second half of 2021, the new car market started recovering from the COVID-19 pandemic.
How the semiconductor shortage affected new car production?
Cars are reliant on semiconductors for many critical functions such as safety features, power management, sensing, displays and the control of the vehicle. As the demand for the cars increased, the shortage of semiconductors grew.
With production of new cars slowing down, all eyes have turned toward the used car market, increasing used car sales.
What lies ahead!
The production of new cars and the shortage of spare parts have slowly normalized across FY21 owing to lesser restrictions and lockdowns. Used car dealers are now finding it easier to Refurbish and certify cars.
Used cars are filling up the void left by the slowing of new car production.
With the rise of start-ups, stiffer competition is expected in the Used Car Market. Dealers are trying to get the best deals and provide exciting prices for each car that they show-case. The combination of trusted online platforms and manual offline certification by certified used car dealers such as GaadiBazaar has removed queries and fears from the minds of customers.