The Telegraph
Since 1st March, 1999
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Hero Honda hot on second-hand trail

New Delhi, Sept. 17: The second-hand auto market seems to be getting hotter by the day. First it was cars, now it is bike manufacturers who are fighting for a slice of the pie.

Hero Honda, the country’s biggest two-wheeler company, plans to start selling spruced-up second-hand motorcycles within a couple of months.

The trend began with car makers like Maruti which devised a quality assurance programme for used cars to reassure prospective customers that they would not be sold a lemon by some shyster in a back alley.

Hero Honda has cottoned on to the idea. “We have already initiated an internal process to study the second-hand market and how the old bikes are sold. In a couple of months, the final proposal will be ready and we will enter the second hand bike business,” senior vice-president (marketing and sales) Atul Sobti said.

However, Sobti reckons that the second-hand motorcycle business will not be as lucrative as the used car business. Motorcycles are generally sold by those upgrading to cars and in some cases to a better motorcycle. So, second-hand motorcycles will only be attractive for those who cannot cough up Rs 40,000-50,000 for a new motorcycle. As a general rule, second-hand bikes are sold for less than half the value of the new product.

“This is not a money-making proposition. It is to help customers so that they do not have to worry about the resale value of the product they are buying now. The Indian two-wheeler market is slowly maturing to heavier bikes with higher engine capacities. With so many models coming in, the customers also want to upgrade, but are unable to dispose of the previous bike fast enough. This venture will help them,” Sobti said.

The company, however, has yet to decide on the nitty gritties—for instance, whether the same dealerships will sell the new and used mobikes. The dealers’ benefits are expected to be very limited in this business.

This is probably the reason why TVS and Bajaj —the two other top motorcycle manufacturers —are still not thinking of entering the used-bike business. Although none of the officials of TVS Motors were reachable, market sources said, “TVS had also done some preliminary study on the second-hand bike market.”

“The business will be one of our customer care incentives. So, obviously we will try to give maximum value to the customers and the dealers will get minimal margins. Good deals will increase the prestige of their showroom but will not bring them that much money. So it will take some more time to decide on these issues,” Sobti said.

Hero Honda sold 135,935 vehicles this August up from 107,363 vehicles a year ago, a 26.61 per cent growth.

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