Will India’s pre-owned vehicle market boom amidst the chip shortage?

By Karan Singh | on February 9, 2022

With longer and longer waiting periods on new cars, resale prices of pre-owned vehicles could skyrocket.

The global semiconductor shortage has been an absolute menace for the car industry everywhere. Here in India too, popular models like the Mahindra XUV700 have waiting periods upward of two years thanks to the chip shortage. While the XUV700 is the most obvious example, even slightly more niche products like the Volkswagen Tiguan and the Skoda Kodiaq have quickly sold out for the current year. This means that buyers, especially in the high-end segment, won’t be able to drive their shiny new cars until many months after they’ve paid for them! But the solution seems obvious – buy pre-owned, right?

Well, to an extent, buying pre-owned can be a huge benefit. For starters, you can get almost immediate delivery of the car and, if you buy a relatively recent version, it should also have most of the creature comforts of that latest one. The last-gen Mercedes-Benz S-Class isn’t as cutting-edge as the latest one, but you could get a great deal on a pre-owned one without having to wait a few months.  

S Class Front Dynamic

Moreover, a lot of manufacturers have their own pre-owned vehicle programs which allows you to have a manufacturer’s warranty and more assurance over the quality and condition of the pre-owned vehicle. 

Pre-owned vehicles also face less depreciation and in some cases you can even flip a brand new car on the resale market for a profit! Think about it for a second. If you get delivery of your brand new XUV700 today, you can easily sell it on to someone (without driving it of course) whose delivery date is still some time away and they wouldn’t mind paying a premium over the sticker price for the convenience.

More widely available cars with shorter waiting periods won’t be as profitable investments, but hyped cars with the longer waiting periods could make you a buck on the pre-owned market.

In some cases today, like the with the Volkswagen Taigun and Skoda Kushaq, the manufacturer is removing features like auto-folding ORVMs to reduce the number of chips required. This also means that a pre-owned top-spec Taigun or Kushaq will have this feature, while new ones won't.

VW Taigun Yellow Rear Quarter Motion

Of course, you and I aren’t the only ones thinking about this and that’s why we could see pre-owned vehicle prices soar in the coming months if the supply isn’t sorted out soon. Older vehicles may not see the same rise in prices, but prices for ones that are just 2-3 years old could start creeping up. 

Also read:

Skoda Kodiaq to get its first price hike; sold out for 2022

Toyota Hilux bookings temporarily halted

Tags: Pre-owned market second hand cars second hand pre owned

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