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Forget used cars, Ford warns dealers

V Phani Kumar

Ford India has issued the first warning to its dealers by saying it will not allow them to indulge in the import and sale of used cars through its authorised dealerships.

Further, the company said it could even penalise those dealers who indulge in trading imported used cars on their own by taking away their dealerships.

"If our authorised dealers trade in second-hand imported cars, it would affect the Ford brand name in the country. Ford India will not support dealers involved in such imports," Randy Shockley, Ford India's executive vice-president (marketing, sales and service) said.

The company's stand is seen as the first warning signal to car dealers in the country who might take to dealing in second-hand imported cars through their dealerships, following the lifting of quantitative restrictions on used imported cars. The Union government has freed second-hand cars from the list of restricted items with effect from April 1.

According to industry sources, car dealers are unlikely to pass up the chance to indulge in the import and sale of used cars through their dealership, or through a separate company network.

Although the effective import duties on second-hand cars are as high as 181 per cent, they still pose a threat to the domestic industry, as the prices of a 3-4 year old used car would still be attractively low to entice customers.

An analyst at a leading financial institution said, "In western countries, most people sell their cars after a period of three years. In the used car market, these cars are priced at just about 40 per cent of the price of a brand new car. Even after adding the high import tariffs, these cars will be priced attractively, and hence will pose a threat to the domestic industry."

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