'Wait and see' attitude in second hand car market?
The second hand car market seems to have suffered a setback due to
the newly introduced import tax regime. Buyers anticipating a big drop
in second hand vehicle prices due to the inevitable price slash in brand
new and reconditioned vehicles have adopted a 'wait-and-see' attitude.
Vehicle dealers said that due to the 'wait-and-see' attitude of
buyers there has been a significant drop in second hand car sales within
the past month. The new customs tax regime which proposed up to a 50 per
cent reduction in the existing import tax component came into effect on
June 1.However, despite the buyers' wish, the prices of used vehicles
have remained unchanged or not come down as much as the brand new and
reconditioned vehicles because the owners were still reluctant to sell
the vehicles under the expected range.
"The sellers are still trying to get the best price for their used
cars. But once the new shipments at the reduced prices swarm the market,
the owners will have to give in ultimately," said Aruna Perera of Siva's
Car Sales at Kohuwala adding that it would be a gradual process.
He said a Maruti car with a H series number plate can be sold at Rs.
570, 000. Before June it costs Rs. 675,000 - Rs. 700,000.
A used Toyota Prado which cost Rs. 12 million earlier can be bought
for Rs. 8.5-9 million and a Mitsubishi Montero which was sold for Rs.9
million earlier can be now purchased at Rs. 6.5-7 million.
However, the value of discontinued models such as Toyota Starlet will
not see much of a difference. A Starlet with an English number plate can
still be sold for Rs. 1.3 Rs. 1.5 million he said.
He said due to the small margin in used and unregistered car prices
there may be a big demand in the near future for unregistered vehicles.
However, an increase in used vehicle prices in Japan has been observed
due to the heightened local demand.
Vehicle Importers 'Association Secretary Zeeniya Rasheed said that
the rush for reconditioned vehicles in the local market has created an
artificial demand in countries such as Japan.
This will be reflected in the prices of re-conditioned vehicles once
these shipments arrive in about three to four months. A sea passage
between the EU and Japan takes about three to four months.Rasheed said
that brand new vehicle prices dropped from 25 to 30 percent last week.
"The dealers were selling their stocks at lower prices hoping to cover
up the losses with their new shipments."
A brand new Toyota Hilux double cab which was sold at Rs. 11.5
million earlier can now be purchased at Rs.6.7 million. The price of a
Toyota Allion, another popular car in the market, is currently sold at
Rs.6.5 million, down from Rs.9.5 million earlier.
The Customs Department Motor vehicle unit official said there was a
significant increase in the number of vehicles cleared at the Customs
during the past month following the tax reduction.