Proposed GST hike may not shake up used car market much
ET Year-end Special Reads
Top 10 equity mutual funds of the year. Do you have any?
How India flexed its global power muscles in 2024
2024 was the year India became the talk of America
With only a tenth of used cars sold annually being through GST-registered, branded used car platforms such as Maruti True Value, Cars24, Mahindra First Choice, Droom and Spinny, the net impact on the overall used car market will be minimal, said Sandeep Aggarwal, founder of Droom, an online marketplace for used cars.
For instance, if a dealer for Maruti True Value, the largest brand in the organised used car space, is buying a five-year-old Swift for Rs 4 lakh and selling it for Rs 4.25 lakh, which includes Rs 10,000 towards refurbishing the car, he will now have to pay a GST of 18 per cent on the margin of Rs 25,000 he earns as against the current practice of 12 per cent. His net tax outgo, therefore, will increase by Rs 1,500 to Rs 4,500 from Rs 3,000, which he may pass on to the buyer partially. On small used cars, typically dealers make a margin of 6-8 per cent.
«It will have some impact in the short term as the dealer will pass on the hike to the end buyer,» said Vikram Chopra, CEO, Cars24, another online marketplace for used cars. Chopra is worried that the GST hike can unintentionally impact affordability. A spokesperson for Maruti True Value was not available for comment.
«While the GST rate has gone up by 50 per cent on small used cars, the material impact may be negligible (1 per cent of the value of the product). Hence, it
