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Delhi government’s recent crackdown on diesel vehicles over 10 years old, seemed like a juicy fruit cake when announced. Finally, the world’s most polluted city will get its air cleaned up and everyone comes out a winner because of this. However, that doesn’t seem to be the case as this greenpeace movement has had some consequences. India has always had a healthy used car market and many buyers in this segment tend to pick fuel-efficient cars for their day to day use. Even though the gap between petrol and diesel fuel is narrowing, the latter is still cheaper and a favourite pick for many Indians.
There are tonnes of used diesel 4x4s floating in the market, many are over 6 years old.
National Green Tribunal’s (NGT) decision to ban older diesel vehicles, automatically makes tonnes of used diesel cars in the market almost obsolete. This has hit the trade pretty hard and the number of buyers has dropped significantly. The news is equally grim for cars that are around 7-8 years old, with barely any takers for them in sight. The subsidising of diesel fuel by the govt. last year has lead the manufacturers to make changes to their diesel cars. This has lead them to be even more frugal than before, attracting some much needed buyers for this fuel type. The days of diesel cars as being a no-brainer pick has almost vanished, especially since current day petrol cars are gaining more frugality as time goes by.
Many petrol-powered cars are gaining pace in the market, thanks to improved frugality.
According to industry top brass, customer confidence on diesel cars has been shaken even though the NGT hasn’t marched any restrictions on new diesel vehicles. Potential takers for used or new diesel vehicles are left with a dilemma, especially concerning their purchase’ future prospects during resale. Thanks to the various factors now affecting older diesel vehicles, many of them in the used car market are up for grabs for some ludicrous prices. For example, a 2008-9 Ford Endeavour can be had for just over Rs. 2 lakh, while a 2007 Mahindra Scorpio sells for around Rs. 1 lakh. The former used to command a price tag of approximately Rs. 8-9 lakh before the ban, while the Scorpio was upwards of Rs. 5 lakh. Reports suggest that there are loads of used diesel cars (some over 10 years-old) with odo readings of between 45,000-50,000 km and are in a good nick.
Expecting negative impact on their trade, the All India Car Dealers’ Association (AICDA) has planned to reel in the Supreme Court for assistance. Lokesh Munjal, vice president of AICDA said, “There are no customers willing to buy older cars that form the bulk of our business. We have no option but to seek a legal recourse. While the government has taken the road tax for 15 years, it is silent over the ban.” The NGT’s pollution control rule may make its way to other cities in the future. If that happens, the only other solution for older vehicles would be heading to the nearest scrapyard, which was discussed by the Society of Indian Automobile Manufacturers (SIAM), earlier.
Source – ET Auto