Opinion: The Impact of COVID-19 on the Used-Car Market

How will Covid-19 shape the used-car market? Will the second-hand car market be able to capture a larger market share in the post-COVID-19 era? And, what role should the government play? To answer these questions, we reached out to a few industry experts. Excerpts below: Shailendra ShresthaKathmandu AutomobilesDue to the government’s high taxation structure, the Nepalese automotive sector has always fallen under the premium-price bracket. Moreover, with an expected slowdown in the economy, expenditure by the public is expected to go down. This will lead to lower sales and a general stagnation, or a slowdown, in the circular flow of income.Looking beyond our borders, automobile sales have gone up due to a greater inclination towards private vehicle usage over public transport. The questions regarding sanitation and social distancing in public transport can be self-regulated through the use of a private vehicle. Hence, in terms of the overall safety of the public, the usage of private vehicles is also recommended abroad. This makes private vehicles a necessity, rather than a luxury.With this possibility in mind, all financial institutions should look into used car financing. While some banks still finance second-hand cars, a supportive policy from the central bank will help all concerned.While times are uncertain, we, at Kathmandu Automobiles, will continue to provide reliable and trustworthy service. Once lockdown is lifted, we will do our best to maintain a healthy and sanitary work environment, for our customers and our employees.  For now, you can reach out to us on Facebook for any queries. Rakesh KhadgiBaba Basera Auto GroupSafety concerns when it comes to public transportation, social distancing and hygiene have become the talk of the town. And, I think people will prioritize that.  In my viewpoint, the demand for a cheaper used car will go up. The second-hand car market will capture a minimal portion of the budgeted new car segment.  However, it is unlikely that the used-car market will capture a larger market share.Used car sales are directly dependent on the new car sales because people tend to spend more when the affordability is higher and vice-versa. However, recession is likely to occur bringing a complete halt to the economic activities. This will greatly affect the sales of both old and new vehicles.  At the end of the day, automobiles, whether old or new, are still a luxury for many of us because of the exorbitant tax amount as compared to the other countries.Ambar KhadkaLucky AutolinkI don’t think the market is going to recover anytime soon especially the automobiles sector, whether it’s brand new or used. It is going to take some time before consumers feel confident. In fact, as the coronavirus precautions restrict people to stay at home and travel only for essential works, it is going to be very difficult for us to stay optimistic.However, the government should lend a helping hand during this difficult period. Also, the financial institutions have a bigger role to play. By instructing the financial institutions to decrease the interest rates, the government can ease our pressure to a larger extent. Therefore, we are really looking forward to the government’s decision on this matter.Sundeesh BhujuReal Car CentreThe Covid-19 outbreak has definitely led to a difficult market condition.  This is destined to continue even in the post-COVID-19 scenario.Talking about the used-car market, I think the demand will be very slow for the first few months.  The demand for vehicles in the lower price bracket (below 15-20 lakhs) will not likely be affected as compared to the demand in the higher bracket (40-50 lakhs above).  In the lower range, customers usually tend to pay the entire amount without much assistance from the financial institutions, whereas in the upper range, customers usually finance their vehicles.The good thing about this chaos is that people have started to understand the importance of savings and its importance on these unprecedented crises. So, people will try to minimize their spending and cut down on any unnecessary needs. In my view, people will probably avoid getting a new car and the financial commitments that come with it for a brief time knowing that the depreciation for a first-hand vehicle is astronomical.