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New car price drops due to GST cuts are impacting the used car market.If you think the GST windfall is restricted to new cars this festival season, think again. With new cars – particularly sub- ₹10 lakh models – now cheaper by 7 per cent to 10.6 per cent (depending on the model and variant), used car prices are seeing a knock-on effect. According to top used car marketers, comparable models (new and 2023 or 2024 model-year used cars) have seen anywhere between a 5 per cent to 10 per cent price correction this festive season. In some cases, it’s higher than the GST correction because it is intended to take on the double bonanza of GST cuts and festive season OEM incentives being offered on new cars.For example, a new Alto 1.0 VXi (O) K10 is available for ₹5.45 lakh (down from over ₹6 lakh after the GST cut), while a used 2024 version of the same model is available for ₹4.2 lakh in Delhi-NCR. (Of course, like-to-like comparisons are difficult in used cars because of the condition and previous usage of the vehicle in question) Ravi Bhatia, president, JATO Dynamics, said, “The streamlined GST structure is creating unprecedented pricing pressure in the ₹2.65 lakh crore used car market. New vehicle prices have dropped 5 per cent to 15 per cent due to the simplified tax slabs, and we’re now tracking a 5 per cent to 10 per cent correction in used car valuations over the next three to six months.” In other words, he added, a typical two-to three-year-old hatchback “may drop ₹20,000 to ₹50,000 in value as buyers shift to more affordable new vehicles. Digital platforms like Spinny and OLX are reporting a 15 per cent to 20 per cent increase in trade-in volumes.”
Mohammed Turra, CEO, Mahindra First Choice Wheels, said, “When new car prices come down, there is a correlation with used car prices, particularly with cars that are two-three years old. If new car prices are down by around 8 per cent, the comparable two-three-year-old used model will see nearly an 8 per cent drop in prices.” The good news is that the used car market is seeing a sharp increase in supply as customers opt for exchange offers.
