{"id":5763,"date":"2017-02-12T10:07:50","date_gmt":"2017-02-12T10:07:50","guid":{"rendered":"http:\/\/www.YourChennai.com\/?p=5763"},"modified":"2017-02-12T10:07:50","modified_gmt":"2017-02-12T10:07:50","slug":"impact-of-the-ban-on-cash-transactions-on-used-car-industry-in-india","status":"publish","type":"post","link":"https:\/\/yourchennai.com\/index.php\/2017\/02\/12\/impact-of-the-ban-on-cash-transactions-on-used-car-industry-in-india\/","title":{"rendered":"Impact of the Ban on Cash Transactions on Used Car Industry in India"},"content":{"rendered":"
<\/div>

Mr. Vikram Chopra, CEO & Co-Founder -\u00c2\u00a0CARS24.com<\/b><\/h2>\n

\"CARS24.comOne of the key highlights of Budget 2017 is the ban on cash transactions above Rs. 3 lakh. Any transaction in cash above this limit will attract a 100% fine. The budget mentioned 1.25 crore car transactions in 5 years<\/span>. However, it seems that this number only factors in the new car transactions. The used car market is much bigger with around 40 lakh cars transacting per year and it is growing aggressively at 20-25% year on year. In last 5 years, more than 2 crore car transactions would have happened in used car sales alone. To put things into perspective, the number of cars being transacted in a year is significantly higher – about 2.7 times – compared to 24 lakh tax payers.<\/p>\n

The implementation of the ban, no doubt, will further reduce the \u00e2\u20ac\u02dccash component\u00e2\u20ac\u2122 of the transactions. The used car dealers who allowed for cash transactions will tighten their businesses to do more white transactions to avoid government scrutiny and high penalties.<\/p>\n

On the other hand, an average consumer would also be much more careful and prefer a white transaction. This increased \u00e2\u20ac\u02dcbuy in\u00e2\u20ac\u2122 of both sides will supercharge formalization of the used car transactions.<\/p>\n

Understanding the Bigger Picture \u00e2\u20ac\u201c The Rise Of The Used Car Finance Industry<\/strong><\/p>\n

The bigger picture is not that the market will get more organized. There are second order benefits for the used car market that haven\u00e2\u20ac\u2122t yet been discussed. We are talking about the development of mammoth financing industry in the used car segment. This has the potential to be larger than the used car market itself.<\/p>\n

In India, new car finance is an attractive market. However, same isn\u00e2\u20ac\u2122t true for the used car market which is already larger than the new car market (25 lakh sales per year for new car vs 40 lakh sales per year for used car). In developed markets, used car financing is already a huge industry worth hundreds of billions of dollars.<\/p>\n

The increase in white transactions, as a result of the ban, will ensure proper invoices for the transactions. This will result in accurate data on actual car transactions. Once dealers generate white transactions, they will see benefits in terms of more organized lenders willing to fund their working capital requirements for business expansion. This will help many second-hand car businesses to expand by getting loans from mainstream lenders.<\/p>\n

On the other hand, this will also promote consumer lending in the used car segment – which is a very\u00c2\u00a0small percentage today when compared to new car lending. \u00c2\u00a0Once dealers are able to get funds to finance their car inventory, they would want to sell more cars. They will see that more consumers would buy cars if they could finance their purchase. This will create a positive flywheel once dealers realize that doing white transactions fuels their overall growth despite paying taxes.<\/p>\n

Overall, we can say that the ban on cash transactions above Rs. 3 lakh will accelerate the \u00e2\u20ac\u02dcfinancing\u00e2\u20ac\u2122 business of auto, thereby leading to faster growth of the used car industry.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mr. Vikram Chopra, CEO & Co-Founder -\u00c2\u00a0CARS24.com One of the key highlights of Budget 2017 is the ban on cash transactions above Rs. 3<\/p>\n","protected":false},"author":1,"featured_media":5765,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[71,32,30],"tags":[7656,7658,7659,7657],"class_list":["post-5763","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-auto-car-bus-truck-suv","category-business-companies-economy","category-news-business-political-national-realestate","tag-impact-of-the-ban-on-cash-transactions","tag-key-highlights-of-budget-2017","tag-used-car-finance-industry","tag-used-car-industry-in-india"],"views":2368,"jetpack_featured_media_url":"https:\/\/yourchennai.com\/wp-content\/uploads\/2017\/02\/Vikram-Chopra-CEO-and-Founder-CARS24dotcom.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/posts\/5763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/comments?post=5763"}],"version-history":[{"count":1,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/posts\/5763\/revisions"}],"predecessor-version":[{"id":5766,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/posts\/5763\/revisions\/5766"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/media\/5765"}],"wp:attachment":[{"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/media?parent=5763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/categories?post=5763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yourchennai.com\/index.php\/wp-json\/wp\/v2\/tags?post=5763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}