India Insight

Organised players, growing acceptance boost India’s used car market

One would expect the former head of India’s No. 1 car maker to drive a glitzy new SUV or an imported luxury car, but Jagdish Khattar thinks differently. The industry veteran who spent 14 years at Maruti Suzuki now buys only second-hand cars and drives a used Volkswagen Passat.

Rich people buy new cars, intelligent people buy second-hand cars,” said Khattar, the founder of Carnation Auto, a service and used-cars company he started in 2008 after leaving Maruti. The used car market, he said, is the future of automobiles.

The rising presence of well known car brands in the used cars business, coupled with growing acceptance of second-hand vehicles, is spurring demand. That is putting in shape the largely unorganised used-car business at a time when new car sales have slumped for the first time in more than a decade.

Customer-to-customer sales and small dealers still dominate used car sales in India, while workshops and mechanics also double up as agents to help people sell or buy cars.

Now, companies such as Maruti True Value, Mahindra First Choice and Carnation Auto account for about 15 percent of the market share, experts said. Despite a slowing economy and a gloomy outlook for India’s auto industry, these companies are expanding.

Tracking Sensex: Top five gainers, losers this week

The BSE Sensex ended above the 20,000 mark on Friday after gaining 2.6 percent in the last five trading sessions. The index has now risen for four straight weeks. Here are the top five Sensex gainers and losers of the week:

GAINERS

Tata Motors: The automaker’s stock surged 8.15 percent in the week ending May 10, making it the best Sensex performer. Though the stock is still flat in 2013, it has gained nearly 15 percent since April. However, Ambareesh Baliga of Edelweiss Financial Services advises caution: “Tata Motors’ overdependence on Jaguar Land Rover (JLR) to negate the Indian underperformance makes it a risky investment at this juncture especially in view of lower margins at JLR”

Hindalco: Shares of India’s largest aluminium producer surged 8 percent this week. The stock extended gains throughout the week after rising 3.5 percent on Monday, on expectations of better realizations after copper prices rose more than 6 percent last Friday.

India’s busy Auto Expo and the risk of an industry believing its own publicity

After fighting through the sea of camera-wielding car enthusiasts clutching their bags filled with corporate gifts to meet with Anand Mahindra, vice-chairman of the Mahindra group, it was difficult to argue with his rosy view of India’s car industry.

“Just look at all these people,” said Mahindra. “If these crowds translate into market appetite, it’s not much of a slowdown,” he added, shaking his head at the view from a glass-walled office high above the teeming masses at the India Auto Expo on Friday.

Mahindra has reason to be cheerful. Sales of cars by his group’s autos arm have remained strong this year. But he wasn’t the only executive shrugging off a slump in India’s car industry with glib comments about the sharp elbows of hundreds of thousands of excited punters that thronged the India Auto Expo this weekend.

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