Impact of COVID-19 on Used Car Market

1. MyCar Impact of COVID-19 on Used Car Market

2. COVID-19 is leaving detrimental effects on numerous industries at the global level. However, some sectors like pharmacy and grocery have remained unaffected; in fact, the sales have grown. A similar impact or less negative impact was gauged in the used car global market, some countries witnessed staggering growth in sales of the used cars while others witnessed stable sales or less severe loss. • The COVID-19 pandemic has led to several changes in the car-buying behaviour of customers. There are two significant reasons for that- one of the critical reasons is hygiene and safety amidst coronavirus owning to which customers are preferring to buy a used car for once instead of travelling through public transport. The other reason is budget strains due to the economic downturn, due to which customers are reluctant to invest a considerable amount in cars.

3. The USED CAR DEALERSHIPS worldwide have started to report an increase in demand for used cars, especially online sales, indicating much faster recovery for global used car sales as compared to new cars.

4. Let’s look at the pre-owned car market country wise US In March as the US went under lockdown to combat the spread of COVID -19, the sales of new-cars plummeted. Sales were down by 47% in April and then 30% in May but the sales of the pre-owned car grew faster. As per the recorded statements by media of Geog Arison, Co-CEO of online used car seller Shift, said “We actually have an issue now, which is that we don’t have enough inventory”. This is because the car remains the essential commodity to travel in the US where getting to work is difficult without a personal vehicle. Furthermore, as per the Cox automotive report, the sales of new-vehicles dropped by 28% in May, but during the same period the sales of the used car went up by 6%. A leading online used car platform Carvana reported a 43% increase in sales during Quarter 2020, and now the company plans to expand its business. The reports are evident to understand that pandemic is leaving a positive impact on used car sales in the US market.

6. India The sales of used cars in India also grew amidst COVID-19. It is because the broad audience of India is price sensitive. The customers look for more affordable means to transport with lower cash outflow, and the employment uncertainties have triggered the idea of investing in the pre-owned car, which would cost cheaper than a new car. If we look at the statistics, the sales of used cars reached 40-lakh units in FY’20, which is approximately 40% higher than the new car sales. And if the opinions of experts are to be believed, the craze of the used car is going to swell as people are looking for more personalized mobility options to ensure safety from virus contraction. According to media reports, the online USED CAR DEALERSHIP in India, Droom announced the traffic on its platform is up by 175% and leads up by 250% during the April-June period. In the same period, Maruti Suzuki True Value reported that the used car sales grew by 15% as compared to the previous year.

7. Europe The impact of the pandemic has affected all the sectors, including the USED CAR market in Europe badly. As per the data, the European markets revealed that the sale of used-car declined in 2020 compared to 2019. The market of new-car suffered more severe consequences owing to lockdown. However, Italy witnessed deep burns as it suffered a double-digit decline in the entire automobile industry. A similar market situation was witnessed by the used-car market in Spain, where the coronavirus crises caused the market to shut for the first time after 2013. In March the market of the pre-owned car was dropped by 35% due to the stoppage of commercial activity in the country.

8. Canada The demand for used-car is strong amid pandemic in Canada. According to the Canadian Black Book, the sale of the used car grew by 0.35% within the ending week of August. The sale of SUVs, vans saw a rise of 0.49%. According to the estimated release by DesRosiers Automotive Consultants in the initial days of the pandemic, the sale of new cars and trucks fell to around 95,000 which sums up to 48% collapse compared to the same month in the previous year.

9. China According to China’s Automobile Dealers Association, the dip in used car sales was experienced after the average percentage of used car sales plummeted by 70% in February as compared to the previous year data. However, the market condition was improved in May and the sales went up by 4%. The sale of new cars was impacted heavily as compared to a used car. As per media reports, in the first six months of 2020, an average of 1.3 million new passengers’ cars were sold every month, which is 23% lower than the first half of the year 2019. However, the market in China has started to recover.

10. Conclusion Despite all the troubles and uncertainty hovering around the auto industry, it is quite likely that the market of a used car will recover faster as compared to the new car. Few diverse factors that would trigger used car sales are low price, less production of new cars and growing need among people to have personalized vehicles for safe travel.

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