With rise in petrol prices, demand for diesel cars of Suzuki Swift, Mahindra Logan & Ford Fiesta have increased - The Economic Times

MUMBAI: Used diesel cars are defying conventional wisdom and appreciating with age, with prices revving up nearly 12% over the past six months. This has happened as the gap between petrol and diesel prices has widened, fuelling demand and increasing waiting time for the bestselling diesel cars. Following a flurry of price revisions, petrol is now more than Rs 25 a litre costlier than diesel.

The used-car market in the country is 1.1 times the new car market, at about 2.5 million cars a year and it is growing at 15-20% per annum. The organised sector comprises just about 12% of this market while brokers account for around 30% and the large majority of deals are struck directly between the consumers.

Prices of diesel-driven Suzuki Swift, Swift Dzire, Mahindra Logan and Ford Fiesta have risen 10% to 15% in the second-hand market. At the same time, prices of used petrol cars have fallen up to 20%, especially in the case of sedans such as Honda Civic and Hyundai Sonata, and SUVs such as Honda CRV and Mitsubishi Outlander.

Experts say that the prices of used diesel cars are rising also because of a paucity of supply in the market, even as demand is on the rise. Moreover, interest rates for used cars have remained stable at around 18%, while rates for new cars have risen by 3% to 4% at around 13%.

The increasing thirst for cars that drink the heavier fuel has led Fazulbhoys Motors, one of the oldest used-car companies in Mumbai, to reorient its inventory to source more diesel cars. "We are looking at stocking more and more diesel cars," says Arif Fazulbhoys, director, Fazulbhoys Motors,

"The demand for diesel cars has become pronounced especially after the petrol price hike in March." Fazulbhoys says the prices of diesel cars, especially those of Swift and Swift Dzire, have risen 10% to 20% over the last three to four months.

Since the beginning of this year, he says, sales of diesel cars at his company have grown 50% while those of petrol cars have slumped 20%. Shubhabrata Saha, CEO of Mahindra First Choice, the pre-owned dealer network which has a presence across 70 cities, says enquiries for diesel cars have risen from 25% to 40%, while the share of petrol cars has fallen from 75% to 50%, and CNG accounts for the rest 10%.

Source: http://economictimes.indiatimes.com