The recent move by the government to flush out black money and bring the economy back on track for sustainable growth is not even six months old yet, the effects are far reaching. To begin with, the cashless and digitised economy is as close to becoming a reality as ever. At the same time, the legitimised flow of money in and out of various industries has also been forced to come to the forefront. The used cars market is one such industry that has borne the positive effects of the same. Let us see how.
Earlier, used cars were purchased with cash. In fact, as per various reports, 85% of used car transactions were carried out using cash. Also, the informal loans segment was one that was often associated with the used cars market. Post the demonetisation move, this segment and its unreasonably high interest rates have seen a crash. In addition to this, customers have put off their decision to buy a car with many of them, opting to pay in installments through proper loans and savings. This has prompted a smoother functioning of the transactions in the sense that papers, taxes and other filings are being done in a correct way.
This has had a dual positive effect. To begin with, many buyers for these cars do not feel blindsided now because they have all the papers and the people they buy from, are also forced to legitimately declare the papers so that they can justify the inflow of funds through the bank. The banking sector has also received a push in the upward direction because the used cars loan market is a growing one thanks to the demonetisation move. Due to this move, people are now forced to incur taxes if they use cash. So, more and more people are turning to banks for loans. In such conditions, the spike in used car financing has gone from 15% to 25%, which is a major growth measure.
Another major benefit for the used cars market is the fact that the demonetisation move has prompted many e-commerce transactions in this segment. This helps in further digitisation of the economy. Also, with these portals, one can find instant and reliable information regarding the different cars, their pricing, features, etc. online. This information can also be compared to help buyers find the best possible car for their needs, an at suitable prices that fit into their budgets.
Therefore, demonetization has proven to be a boon for this industry in more ways than one. It has contributed to making the procedures much more transparent and this has led to the boom that this industry has seen.