Chip shortage boosts used car demand | Ahmedabad News


Ahmedabad: Dinesh Joshi, a city-based developer, was looking for a new car but ended up buying a pre-owned sedan car. “I travel between Changodar and Ahmedabad every day and wanted a CNG car. However, company-fitted CNG models for high-end cars come costly. Therefore, I opted for a second-hand car and got the CNG kit retro-fitted. It gives me the comfort of driving the car I like and it takes care of fuel cost too,” Joshi said.
Increased waiting time for delivery and rising cost of new cars have led customers towards the after-market, pushing up the sale of used cars. Estimates by Ahmedabad-based dealers suggest that used car sales have grown by a significant 25% against pre-pandemic levels, going by sales figures of July and August.
“Key factors propelling pre-owned car demand include increased waiting time for new cars, which has increased up to five months for new cars, due to the ongoing semi-conductor shortage faced by auto-makers globally. People are not getting their preferred model and the delay continues. Therefore, many are opting for used cars,” said Pranav Shah, chairman, Gujarat region, Federation of Automobile Dealers’ Association (FADA).
“New cars are getting costlier due to BS-VI transition and also a change in tax structure on automobiles due to which customers are getting diverted towards the second-hand car market,” he said.
The demand for pre-owned luxury cars has also gone up for similar reasons. “I always wanted to buy a BMW 3 Series and preferred a car which is under warranty. When I checked used cars, I got one which was cheaper by Rs 15 lakh. The car was barely used for a year and is in brilliant condition. Instead of shelling out more money on a luxury car which has become costlier, I opted for a pre-owned variant,” said Aadhar Kumar, owner of a pathology and diagnostics firm.
Used car dealers attribute the surge in demand to increased preference for a personal vehicle post-pandemic. Suresh Ramnani, director of an Ahmedabad-based used car dealership, said, “The overall demand is good because people want a personal vehicle for themselves and are discouraging use of public transport. We are sealing deals on at least 80 cars every month and people come with various budgets. Cars that are up to 3-4 years old are in maximum demand.”

Rising cost of ownership of cars due to surge in fuel prices is also one of the crucial factors impacting sale of cars, according to dealers. “As petrol and diesel prices have skyrocketed, preference for CNG cars has gone up. While the waiting period for company-fitted CNG cars is as high as five months, new BS-VI enabled vehicles cannot be retro-fitted with CNG kits later as per RTO norms. As a consequence, customers are increasingly opting for used cars and getting their vehicles retro-fitted with CNG kits,” said Jigar Vyas, CEO of a city-based dealership.

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