Hyderabad's secondhand two-wheeler dealers now riding on tough terrain

Times have changed for the dealers of secondhand two-wheelers in Hyderabad. From a flourishing business two years back the shops in King Koti, one of the traditional market places for secondhand goods, today hardly have any customers.

Of the estimated 400 secondhand motorcycle dealers spread across the city, close to 160 dealers are concentrated in the King Koti area alone.

According to Rafi Khan of ASR Motors, "In the last two years, the sales have dropped by more than 50 per cent. Earlier we used to keep our shops open on Sundays also; but nowadays demand for used vehicles has come down."

Khan said that the inventory of old vehicles was piling up in the shops. "Two years back, during the festival season there used to be so many buyers that sometimes it used to take time to deliver the vehicles. However,this year we have hardly sold any vehicle during the Diwali season," he said.

According to him, because of the lack of demand, an Escorts' Yamaha RX-100, although not in production now but still having a huge following among the youth, is available today for a price between Rs 10,000 to Rs 12,000 and a Bajaj Kawasaki KB-100 for as little as Rs 5,000. "Bikes here are bought or sold based on the model and the number of kilometres it has clocked," Khan said.

Other dealers in the area echo Khan's sentiments. "We used to sell about 30-40 vehicles during normal months and during Diwali it used to be around 60 vehicles. However, this year we have recorded sales numbers in single digits," Naser of Remco Motors said.

One of the major reasons that is attributed to this slump is the availability of vehicle exchange programmes round-the-year that the two wheeler companies offer through their dealerships.

"Two years ago, though there used to be exchange offers they were only during the festival season. Now, however, an owner of a two-wheeler can exchange his old vehicle for any new model that is available in the market," Naser said.

Profit margins for the dealers too have fallen sharply. "We used to make Rs 1,200 to Rs 1,500 per vehicle earlier but nowadays it ranges between Rs 800 to Rs 1,000 per vehicle," Khan said.

Khan added that most of the vehicles that were sold used to go to the districts and the rural parts of the state but with the two-wheeler companies increasing their rural penetrations with showrooms sales in these regions too have come down.

A dealer from Karimnagar pointed out that the sales of the 20 dealers in the region had dropped by around 50 per cent in the last six months.

"Earlier people used to sell their scooters and shift to bikes but from the time showrooms have started to come up in these cities our sales have been badly affected," he said.

Those who offer finance for secondhand two-wheeler financing too have been hit hard. "The number of customers who approach us has come down drastically in the last couple of years. We used to finance around 15-20 vehicles per month but nowadays we finance only two to three per month," one financier said.

According to another finance consultant, the financial assistance that the customers require has also come down over the last two years. "We used to finance anywhere between Rs 30,000 to Rs 40,000 but now customers are asking for financial assistance of below Rs 20,000," he said.

According to Ashok Kumar Arora of Sri Sai Motors, the interest in the last 24 months has come down from 24 per cent to 18 per cent per annum for secondhand two-wheelers.

"This is mainly due to the competition within the market and also because of the pressure from banks who offer zero per cent interest," he said.