With the GST Council slashing tax rates on cars, industry watchers say the impact has not yet seeped into the used-car market.
"The effects of the price cut haven't yet entered the used car market," said Sundeep Bafna, managing director at Fortpoint Automotive Cars Pvt. He pointed out that exchange prices are bound to soften once the new GST-driven rates play out. "Exchange prices are supposed to go down and they will go down."
According to him, this is the right window for car owners looking to upgrade. "I think it is the best time right now to go ahead and do it and not keep waiting," Bafna said.
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Delaying, he cautioned, could mean losing out on both ends, with resale values on old cars falling while new cars become cheaper. "Later on, if there's going to be a drop in price on your used car, then effectively you would not make the kind of money you want to make, and new cars would of course be cheaper," he explained.
Leading Indian carmakers have already announced steep price cuts across their portfolios after the GST Council reduced tax rates on automobiles last week.
Under the next-generation GST reforms, the government has lowered the goods and services tax rate on small cars from 28% to 18%, while luxury vehicles now attract a flat 40% rate.
According to Kotak Institutional Equities, on-road prices are expected to fall 5-8% on average, with passenger vehicles seeing reductions of 2-9% in overall cost. Automakers have moved quickly to pass on the benefit, announcing cuts ranging from thousands to a few lakhs across several models.
A host of companies have already passed the benefits on to customers or announced price cuts in their range of models, including Mahindra & Mahindra, Tata Motors, Hyundai Motor India, Mercedes-Benz India and more.
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