How Covid-19 Will Impact The Used Two-Wheeler Industry
In today’s world, daily commute plays a very important role in every person’s life. Whether a student is travelling between the hostel and college, a homemaker-trying to buy groceries or an employee commuting to work every day. A convenient mode of commute is sought out by so many segments of consumers, regardless of demographics and geographies. In India, where narrow lanes and traffic often pose major commute challenges, two-wheelers have emerged as the perfect mode of private transport, in areas with poor last-mile connectivity. Moreover, two-wheelers are easy to manoeuvre and park, provide easier access to smaller lanes and markets, and are pocket friendly in terms of maintenance costs.
In today’s scenario, this becomes all the more relevant. The fear of coronavirus amongst citizens will lead today's consumers to opt for private transport and avoid shared mobility or public transportation. Additionally, a predictable fall in consumers’ disposable incomes and the change in behaviours of not opting for public transport and shared mobility, we will see a paradigm shift towards used two-wheelers. This kind of trend was also observed in the past, during the post-SARS-outbreak period as well, when the people of China shifted away from public transportation and preferred a private mode of commute.
As per a recent report published in Livemint, the sales of pre-owned cars and entry-level motorcycles and scooters may increase in the aftermath of the Covid-19 pandemic, as commuters will likely prefer private conveyance but financial constraints may hamper purchases of new vehicles. Due to job insecurity or unemployment, people would be cautious in making high-value purchases. As both, individuals and companies will be facing the crisis of dwindling incomes, people in the post-pandemic era, will most probably opt for used goods in all spheres of life.
According to a report published by Anand Rathi Financial Services Limited, two in every five passenger-vehicle bookings, done in March, have been cancelled citing budget constraints, job uncertainty and a precautionary hesitation in making big expenses. Several dealers are reworking cost reductions, renegotiating showroom rents, reducing staff, inventories, salaries and incentives, to ensure continuity in operations.
This similar sentiment has been observed in China recently, where the second-hand market grew exponentially during these last few months. China's largest online resale marketplace, owned by Alibaba, witnessed that its daily average transactions and gross merchandise volume in March broke records. New transactions increased by 38.8% and purchase of newly-listed used products grew by 40% compared to March last year.
As per an estimation issued by CredR, a leading Indian brand that deals in used two-wheelers, there will be a spurt of approximately 50% in the used two-wheeler market. The sudden spike in the demand can be attributed to the shift of customers from market segments of new bikes /shared mobility to the second-hand bike segment. This spurt will be observed majorly in metros, tier 1 and tier 2 cities, where a daily commute is expected to increase drastically once the lockdown is lifted. They also added that the current demand-trends show that consumers are increasingly looking for value-for-money products at this point and they are evaluating their buying decisions very carefully. The organised used two-wheeler market, will, therefore, experience lots of product innovations in the coming months.
Here are some reasons why customers should consider buying a used two-wheeler in the Covid-19 Scenario:
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