[BeantownThinker]

The used car market is bound to slow down as a large chunk of the transactions are in cash.

In the new car segment, apart from the people who have already completed the transactions, there is bound to be a slow down here as well. People purchasing in cash will be hard hit. And even the ones who take loans and buy the cars in white will adopt a wait and watch approach.

More than the customers, it will be the principals at the dealers who will be the most worried as they have to figure out ways of recycling their stacks of cash.

[GTO]

Originally Posted by vrprabhu

So, you bought a car with white money and when you try to sell it off now, where do you stand? Probably not sell in a hurry?

Originally Posted by pedrolourenco

In addition to this, you normally buy a new car after selling your old car. If you can't sell your old car (due to the used market taking a hit), it's difficult to buy a new one.

You can still sell it off, take cash, issue a full receipt and deposit that cash in the bank. My Civic was sold to a dude who owned a pan / cigarette shop. He paid the full amount in cash. I gave him a receipt for the full amount and deposited that cash in the bank. Remember, you can still deposit 500 & 1000 rupee notes in your bank till December end.

But yes, demand will be hit badly right now.

Originally Posted by sajo

Used car dealers are not like builders, they cannot afford to hold onto inventory forever

Well said! Unlike real estate, a car depreciates with time. Also, don't forget that we're at the end of a calendar year. Dealers are anyway keen to move inventory as in January, their cars will be 'another year older'.

This is the best time to buy used cars with legitimate money. The worst hit will be luxury cars. Trying to sell a 30+ lakh car at the moment will be akin to pushing a refrigerator to an Eskimo .

[Rajain]

Hi

I was also reading somewhere there for two days the tolls will not be collecting - for anyone who has done a highway run - has that been the case?

In the Bangalore newspapers there has been a photo of the airport toll seeing a long queue as the toll booth was not accepting 500 and 1000 denomination.

Lots of smaller workshops/garage also work on cash or certainly discourage use of credit card (by saying 2.2% additional surcharge). That could also be an issue with these higher denomination notes being out of circulation.

I also feel shops that support / sell automobiles - spare parts and accessories normally run on cash transaction. Customers will have to use 100s and 50s - or credit card/cheque (if at all accepted) in these establishments.

The tour operators who give cars/vans for outstation normally also operate on cash. They too would need to use other ways of getting their fares.

The organised sector of cabs - Ola, Uber, Zoom, Myles (and others like them) operate on credit card, e wallets and online payments. However, majority of cabs use cash. We know that anything more than 15-20 km ride could be more than 350-400 rs - and therefore a few 100s would be needed.

Again, these are just present time issues. Situation will ease off with the presence of newer 500 and 2000 rs notes.

Certainly freecharge, PayTM and other such platforms stand to benefit in the short and long term.

Cheers
Rajain

[deetjohn]

Yesterday's Hindu paper was very interesting.

The first two pages had a full blown advertisement for the new Fortuner and then we had the headline news of demonetisation of 500s and 1000s on the main page which was the third page. It couldn't be more ironic. Toyota couldn't have picked a worse date for the launch.

Let's see the sales trend of the expensive cars now. That will give us the exact picture.

One thing is for sure, the used car industry is going to suffer due to the curb on black money. And that's bad news for new car sales too. If you are going to loose a lot on resale, then people won't spend that much in the first place for a new one and stick to their needs and not wants.

Especially big trucks which are not really used to their full potential by most owners and bought mostly for making a statement.

[jetsetgo08]

Well the effect is imminent but definitely not immediate. It will take a few days for the sellers to realize that the inventory isn't moving as projected due to the demonetization fiasco. This might reduce the prices of only the ultra high-end and premium cars. A significant change in the <Rs.10-15lakh cars is highly unlikely, but I really wish to see prices morph from exorbitant to more realistic and affordable.

On the contrary, there was news that jewellers are selling gold at 50% extra price to the buyers who want to relieve themselves of 500's and 1000's. The situation could be a similar in the used car market as well.

[vrprabhu]

Originally Posted by jetsetgo08

.... there was news that jewellers are selling gold at 50% extra price to the buyers who want to relieve themselves of 500's and 1000's. The situation could be a similar in the used car market as well.

However, in this case, I look forward to a 50% discount .....

Because gold appreciates (which in fact it did yesterday) and car depreciates!

Like GTO said, the cash can be deposited in the bank till December, but onus is on the businessman (dealer / jeweler) to abide with the tax laws (PAN of the buyer, TCS above 10 lakh, and now tracking of all deposits made in bank accounts above certain limits etc.)

[vinit.merchant]

I would say this is just a momentary pause. Lets say around 6 months to max a year.

Once the new currency is widely circulated in the market, it will pick up again. It wont be at the same level though.

So, yes, the next 6 months are the best time to pick a good car from a used car dealer.

[pedrolourenco]

Originally Posted by GTO

You can still sell it off, take cash, issue a full receipt and deposit that cash in the bank. My Civic was sold to a dude who owned a pan / cigarette shop. He paid the full amount in cash. I gave him a receipt for the full amount and deposited that cash in the bank. Remember, you can still deposit 500 & 1000 rupee notes in your bank till December end.

I am aware of that. It is still white money if you issue a receipt. What I meant to say is it will be difficult to sell as most used car buyers pay in cash because the money is black.

And because of their inability to use black money like before..

demand will be hit badly right now.

This is the best time to buy used cars with legitimate money. The worst hit will be luxury cars. Trying to sell a 30+ lakh car at the moment will be akin to pushing a refrigerator to an Eskimo .

I am one such eskimo looking to buy a refrigerator. If I am able to negotiate a good deal for my dream car, I will be one happy eskimo.

[Sahil]

Originally Posted by GTO

For those who earn in white (salaried + ethical businessmen), it's business as usual. No difference. In fact, they will be able to squeeze out a better deal as the black moneyed are having sleepless nights....buying a car is the last thing on their mind now.

Damn right, can't wait for some distress premium real estate deals coming into the market

Originally Posted by GTO

This is the best time to buy used cars with legitimate money. The worst hit will be luxury cars.

As luck would have it, I managed to sell my Superb just last week after 2-3 months of struggle for nearly exactly my asking price

[Axe77]

Used cars market will definitely be depressed (less demand) since its a way in which buyers off load cash. This means more pressure on dealers to sell and I suspect for people with clean money, the ability to get a better deal. For people selling cars (including to dealers), it might mean you might receive lower prices than you expected.

Like real estate (builder sales as well as second sales), the used car market is going to see a depression in volume of business clearly.

[yamaniac]

Most small time used car dealers have an inventory, They have 3-4 cars parked for sale which they have purchased for an amount below the current market price expecting a profit on resale. They do not deposit the money into their bank accounts on sale fearing tax etc. But use the cash to buy another car after keeping aside the profit.

I am sure they would also have a few lakhs as spare cash to buy additional cars which may be in 500's and 1000's and which may be unaccounted for or is rather in black.

Now the scenario: The surgical strike has hit at a time when the year in ending. There is unsold inventory and the cars will be a year older. Most of the cars previously sold were bought using cash by the customer. People are now strapped for cash and no buyers. The cars will be unsold till the financial system stabilizes but they will be another year older. The dealer will have to find a person who either is willing to buy the car using 100's and 50 Rupees notes or accept cheque or DD. The moment the dealer deposits this he has to pay tax. There is no more running from the law.

The dealer who also has a few lakhs of unaccounted spare cash in 500's and 1000's is again in soup. He can neither use it to buy inventory or can either deposit it in a bank without the taxmen knocking on their doors. They are in real serious trouble. So expect the used car prices to plummet to a great extent.

Indeed good days for the honest tax payers.

[RSR]

If I were looking for a pre-owned car right now, I'd be quite thrilled at the mouth-watering deals that should be available till the end of this calendar year. I guess one would be able to purchase a car in a similar condition from a segment or two (maybe even three) above for a given budget.

There are reports of sacks of half-burned, shredded & torn 500 & 1000 rupee notes being discovered by the side of the road & in dustbins in some places in states that would go to the polls soon.

The job of the Election Commission of India has surely been made a lot easier by the demonetisation of the old high value notes.

On the economics thread, I have always maintained that fiat paper currency (not coins) is nothing but artificial (man-made) money that can be turned completely worthless in no time at all (like in Zimbabwe, ex-Yugoslavia, Weimar Republic etc.) and that only precious metals like gold, silver etc. are true (God-made / nature-made) money! The hardcore advocates of fiat paper currency had a huge problem with accepting such a basic truth about money on that thread.

I guess fiat money fanboys and fangirls would have received the biggest shock the day-before-yesterday (after the black money hoarding horde, of course) when a certain gentleman announced live on television that the highest value units of their beloved fiat currency were worth just the pieces of paper they were printed on!!!

[SnS_12]

All politicians will hold on to their old Fortuners as their Black money (hard cash) fortunes have become useless overnight. Things, will slow down for the next few months, till these guys think and make alternate arrangements. Also, the black market for high end phones like the i phone, will be hit, which in today's money cost almost the same price for an Activa

[DwarkaDelhiWala]

I think new fortuners etc. will soon be running on roads.

The system which generates black money is still very much intact - right from city municipalities to 'readers' of one and all the 'honorable courts' to the discretionary powers wielding civil servants and of course the votes for money voters. Only financial instruments will change. Its just a matter of time imho.

I'm amazed how govt. after govt. since independence with an army of income tax officials, sales tax inspectors, plethora of enforcement agencies and tribunals failed to check growth of black money - unles they themselves were involved.

Its always common man who is put to such an inconvenience in name of 'financial surgical strike/revolution'.

[chaudharysaab]

Fortuner will have worst effect. This car is just launched and almost a status symbol for all local Pradhans, MLAs, small leaders etc. And they always buy that with lots of black money.
I think they will have to revert back to scorpio and safaris for white money buys.