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Nano volumes drive used-car prices

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Low volumes of the 'common man's car', expected to encourage people to buy a brand new car instead of an used one, has, however, put prices in the used car market back on track.

In March this year, the anticipation of Nano launch coupled with a sluggish demand had made a sharp dent in used car prices by 25-30 per cent. Dealers had feared a further dip in prices by around 10 per cent.

"People were postponing purchases in anticipation of the Tata Nano which was pegged at Rs 1 lakh for a starting price, and prices of base cars like a Maruti-800 in the used car market was down to Rs 85,000-90,000 then," said a Delhi-based dealer.

However, now prices are now picking up partly because the demand is growing and also because one may have to wait for as long as one year to own the world's most affordable car, claimed organised multi-brand used car players. Vinay Sanghi, chief executive officer of Mumbai-based Motor Exchange claimed that there is hardly any impact of the Nano on used car prices across the country currently.

Industry insiders claimed that the Nano has definitely not been able to bring down prices in the used car market as was expected before its launch.

A senior official in a Mumbai-based organised multi-brand used car company who did not want to be identified said, "During the launch of the Nano in March-April this year there was a general lull in the market when car sales had dipped. A lot of it was speculated to be the Nano impact. However, the market is now getting back on track and the used car sales are also picking up without much impact on their prices for the Nano."

He also explained that the Nano has to reach a critical mass in the market to be able to exert pressure on used car prices. Currently, Tata Motors has been able to deliver around 10,000 cars since July this year. It plans to roll out around 200 cars per day from its Sanand plant from March 2010 onwards, while it will continue with the car's production at its Pantnagar plant.

Sanghvi Motors, an Ahmedabad-based dealer in used cars and spare parts said, "The hype around the car is perhaps slowing down. Currently, the used cars are trading as usual with hardly any pressure on their prices from the Tata Nano."

Delhi-based A K Motors claimed that prices of used cars were back to the February levels with a 2007-make Maruti Zen Estillo selling now for around Rs 1.85 lakh in the capital. "This is primarily because the Nano is not available in sufficient numbers in the market," the dealership claimed.

A Tata Motors' dealer in West Bengal who sells Nano, admitted that the hype around the car is perhaps not as high as it was before the launch primarily because of the year-long wait period.

"Many customers coming over to our showrooms cannot go for a test-drive. We are not really working on marketing the car, but are now involved in the process of delivering it to the allottees. Things are expected to get better once the Sanand facility starts rolling out cars next year," he said while wishing annonymity.

It was expected that the Tata Nano comes with a price tag of Rs 1.3 lakh to Rs 1.7 lakh would even pull down the prices of entry level sedans like the Tata Indigo CS, Hyundai Accent and Maruti Esteem.

Prices in the un-organised used car space, that accounts for nearly 70 per cent of the entire market, is definitely up now.

Currently, a 2007 make Hyundai Accent is available for a price of around Rs 3 lakh, while a Maruti Esteem is available for Rs 2.45 lakh. Prices of entry level compact cars like the Maruti-800 and Maruti Alto have not picked up much in the last six months which are selling around Rs 1.25 - Rs1.45 lakh.