High Depreciation Rate May Bridge The Supply And Demand In The Used Car Market

There is always a fresh supply of used cars at dealerships which are in good condition and in the latest models. Buyers of used cars can simply spruce up the car interiors with custom seat covers to further enhance its aesthetics and resale value. More and more choices are available to interested consumers unless the high depreciation rate is controlled.

According to Finance Minister Nirmala Sitharaman, depreciation rates will double to 30% for vehicles that are purchased until March 31, 2020. Industry players say that this augurs well for the used vehicles market. Higher depreciation rate means that resale value will come down faster prompting consumers to replace their cars sooner. Insurance premiums will go down from the second year and businesses can claim higher business expenses that can lead to more tax benefits.

Consumers in general including corporate customers like companies, fleets and leasing companies will be encouraged by the 30% depreciation rate to buy BS-4 vehicles. At least 25% to 35% of cases will accompanied by the sale of existing used vehicles. It is expected that this will lead to a 5% to 10% incremental growth for used vehicles or about 20,000 to 30,000 per month.

According to Ashutosh Pandey, MD and CEO of Mahindra First Choice, Ltd, BS-4 vehicles can be used throughout the registration period. The clarification clears any doubts or misapprehensions on the part of prospective buyers who are considering used vehicles. There has been a cooling off in used vehicles sales for the past couple of months because of confusion but growing momentum will be regained in the coming months.

Depreciation is the most important factor in long-term value and total cost of car ownership. If depreciation is increased, the resale value of vehicles goes down faster. This will prompt consumers to opt for a replacement sooner and will bridge the demand and supply gap in the used car market.

While most seat covers in the marketplace are of high quality, nothing beats custom seat covers with their luxurious ambiance that perfectly matches the car’s interiors. While it is true that you might pay more for customization but you are getting higher quality and guaranteed long term use.