"Price-Rise'

But there’s a flip side. Organised players will typically seek to extract their respective cut (including trasitionary expenditure) and profits from any sale. So, eventually the organised sector will ensure stable prices, but prices that are higher than prevailing prices in the disorganised market. Analysts predict that this ‘price-rise’ may eventually put off consumers (as they will be ultimately shelling out higher prices to organised players). This is where some organised players – like Maruti’s ‘True Value’ and Ford’s erstwhile ‘Ford Assured’ – fared well by offering better value to consumers in the form of warranty and service facilities. As an additional assurance, used cars are checked and inspected for road worthiness, making both the buyer and seller satisfied with respect to ownership and vehicle service issues. But is this enough to justify 15-20% extra that a consumer has to pay? Argues Gaur, “today you just can’t hide a vehicle’s history. It is all there in the papers. This is not a USP for the organized retail players at all as such issues can be verified independently too.” Not to give up easily, organised biggies in the used car market have thought of back up plans for their survival, by offering service & maintenance amenities.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist)