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Used Car Market Witnesses Drop Of 30%, GST Makes This difference

Posted on: Oct-2017 | By: 9Dimen Group | Automotive

Post implementation of Goods and Service Tax regime, the overall automobile sector witnessed a profitable sales growth owing to reduction of various taxes. However, the impetus of the used car market seems to be impacted and at present, the sector is going through a restraining growth on the occasion of the festive season.

With the introduction of this new tax regime, the sales of used car market has dropped by 30% in the festive occasion, as it is considered as a fortunate period for vehicle purchase or any new.

As per the analysis, the pre-owned car sales volume has dropped by 30% compared to the previous Navratri season.

According to the market projection on an average 5,500–6,000 used cars were sold per month and the same number has declined to 3,500 units to 4,000 units this month.

Dealers of used cars stated that rise in the GST rates have unfavorably affected the sales. With the application of the new tax, if an individual purchases a pre-owned car, 28% GST with additional cess has to be levied. This has resulted in changing the buying mindset of the customer and has decreased the budget of the buyer.

Though the slab of GST and cess depend on the engine capacity of the vehicle, it is too high than what was applied pre-introduction of GST. Previously a customer had to pay only 1% VAT with a maximum limit up to Rs 2,000 for used cars.

However, there isn’t a scenario that the prices of the pre-owned have witnessed a price drop, but as per the dealers, it is projected that majority of the customers will prefer low-budget cars to avoid the impact of GST to some extent.

There are millions of customers who change their vehicles with the time span of 2–3 Years and a majority of them opt certified pre-owned cars. Thus this category of customers have shunned the trend and preferred to withdraw the plans of buying another vehicle.

Though the process of taxation has been streamlined, yet there is ample of confusion and queries owing to diverse purchasing methods of the buyers.