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Old 5th January 2012, 12:01   #1
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Default Exchange Bonus: Is it just a marketing gimmick?

Interested in the Exchange Bonus of 40,000 offered by Tata. I had my Wagon R evaluated by them.

My car' valuation as per Car Wale
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However, my car was purchased pre-owned. So there would be a reduction on account of me being the second owner.
Also I have a rattling cat con. Maruti had asked for 15k or so to fix it. Since the noise is at low speeds and only when the car is moving down a slope. I never bothered to fix it.
The car has had some tinkering work done on account of a minor parking lot accident. It was nothing major and it was fixed at one of the best garages in Hyderabad.

With these points in mind, I assume a price of 1,60,000 is a good price for my car.

Bu Tata evaluated it at 1,25,000.
Add the exchange bonus to it and its 1,65,000.

Because if I do sell my car privately. I might get 1,50,000 easily.
Now the SA also mentioned that even if I don't sell them the car, he may get me 25k as bonus.

But imho the sheer ease of selling it to the dealer is worth the extra 10k.

One of life's early lessons has always been, no free lunch.

Is the exchange bonus offered just a marketing gimmick?
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Old 5th January 2012, 12:45   #2
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Smile Re: Exchange Bonus: Is it just a marketing gimmick?

Absolutely the exchange bonus is a marketing gimmick although a profitable one I must say. Normally the dealer does not give this as this is from the manufacturer directly. Upon producing the RC copy of previous vehicle you get a cheque from manufacturer. In my case of Ford Fiesta, I was given an exchange bonus of 10K only, lucky that you would get 25K if the offer from Tata is taken.

Where did you get the car evaluated from Tata? Is it from their Tata Motor Assured?
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Old 5th January 2012, 12:53   #3
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

When I sold my 800 I got it evaluated by many dealers and showrooms. Tata evaluated it with 85K + 15K exchange bonus. Dealers were not going beyond 90K.

I gave paid Ad in Sulekha/Team-BHP and personally I sold this car to 1,32,000 Rupees. So, I sincerely advice all those who wants to exchange his/her car with new car. Sell it independently through many classifieds websites.

You know what? When I sold my car personally even after I got exchange bonus from Tata by just showing some RC book .

So, all in all total:Rs. 1,32,000 Cash + 15 K Exchange bonus from Tata.

So, do not get into Exchange bonus gimmick with any showroom.

Last edited by anujmishra : 5th January 2012 at 12:54.
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Old 5th January 2012, 12:58   #4
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

Well in normal circumstances when you exchange your car with any Dealer they will give you a much lower valuation than a Private Sale. So when there is an exchange bonus in the offing you can expect them to do a lower than usual valuation, and throw in the exchange bonus taking the entire valuation to slightly higher than a dealer valuation but still lower than a Private Sale. So ultimately the exchange bonus is just a gimmick and it completely depends on whether you have the time and patience to sell your car privately.

I have had a couple of experiences with this.

Case 1: I was thinking of exchanging my wife's 05 Petra ELX for a Punto Active, which had a Rs. 35,000/- exchange bonus going on. They valuated my car at 40,000 and adding the exchange bonus of 35,000/-, were ready to knock off 75,000/- from the price of the Punto. I didnt find this acceptable. So I put up the car on carwale and sold the same in 8days for 1.15lakhs to a Private Individual and bought a Chevy Beat LS for my wife.
Lesson: A non popular car like the Petra makes most sense to sell Privately because dealers undervalue the car tremendously.

Case 2: When I purchased my Scorpio VLX, Mahindra First Choice offered me 6.25lakhs for my 06 Laura LnK DSG, and they had a 10,000/- exchange bonus on the Scorpio. After making a few enquires in the market, I felt I couldnt get more than 6.6 to 6.8l for my car. Also I didnt have the moolah to pick up my Scorpio without selling my Laura and so couldnt hold the car for long in the hope of a Private Sale. So I chose to exchange the car in for a total of 6.35.
Lesson: A high end diesel automatic car with expensive parts, nearly 5yrs old can be hard to sell Privately, so if they valuate your car decently and throw in an exchange bonus it might be a decent choice to to go for it.

Case 3: When I purchased my Fabia 1.2, I exchanged my Swift Vdi in, they offered me 4.2lakhs for a car that run 40,000kms in close to 2yrs. There was no exchange bonus. A private sale could have fetched me 4.4 to 4.5l but I really didnt have the inclination to spend time finding a buyer. So since the difference was not much I decided to strip my car off the alloys yokohoma tyres (I put the OE bald tyres with rims back on), and the music system and trade in.
Lesson: Popular diesel hatchbacks are valuated well by dealers and the price difference from a private sale might be only 5 to 7%.
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Old 5th January 2012, 13:03   #5
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

So if I understand this correctly, it makes sense to sell to the dealer only if the difference between the price offered + exchange bonus is close to the actual market price of the car.
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Old 5th January 2012, 13:18   #6
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

^^^ Exactly!

Recently had an Alto (2007 model) evaluated by Tata and the deal was 75K + 40K = 115K. Got it evaluated at TrueValue and offer was 125K. Finally sold it, the same day, to an independent dealer for 135K. And later got a 25K (exchange bonus) from TATA too on a Safari.
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Old 5th January 2012, 13:21   #7
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

In May 2010 I bought a Ritz from Sai Service in Mumbai. The exchange car was a 14 year old Maruti 800. The car was in a not-so-good condition and was GJ-15 registerd first owner. I dont remember the exchange discount offered. But the sum I got was very good, keeping in mind the time and effort I saved. They accepted a GJ registed car with Green Tax due in 1 year.

In my case I was in a winning situation. This certainly is a marketing gimmic and most would fall for the ease of selling their old vehicle. I dont think most would even bother to evaluate their car elsewhere. Exchange is easy but might not be the best deal always. One must evaluate his case and decide. It will mostly be the price difference/cash availability vs effort/time.

Last edited by benzinblut : 5th January 2012 at 13:33.
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Old 5th January 2012, 13:32   #8
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

Exchange bonus are indeed a marketing gimmic. New Car Dealers do not really give a good price for preowned cars. At best this bonus only accounts for the poor price and jumps up the price to levels at which we would be ok selling to the new car dealer rather than looking for an individual or a second hand car dealer.

I was offered Rs. 1.15L for my 10 year old Safari by the Tata Dealer when I bought the Aria (a year back). I finally sold it for about about Rs. 2L through a second hand car dealer. Even it todays bonus of 40 K were to be added on there would still be a short fall of another 40K in the price.
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Old 5th January 2012, 14:07   #9
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

Popular models and Maruti / hyundai does have premium of 7-15% in preowned market . i traded my 64k run Pre-owned getz P for 2.12 lacs + 10K exchange bonus on scorpio with mahindra first choice when was quoted anywhere between 1.5 lacs - 2.3 lacs by pvt buyers and other dealers.

saved lot of hassle and time in processing my order for new car.
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Old 5th January 2012, 14:18   #10
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

It's a trade off between time and (potential) higher money.

I was in the market to sell my Getz 1.3 (2004 model, 2nd owner, 70k kms done). I followed the usual channels - TBHP, Carwale and Gaadi classifieds, talking to brokers and also spreading the word amongst my network.

Result - 2 enquiries in 1 month, none materialized into a deal. Also, consider the time lost.

On the other hand, Tata Motors was offering me 1.3L for the car (my expectation was 1.6-1.75L) and offered me 20k as 'exchange bonus' to make the price total up to my somewhat near my expectation. They were also doing the transfer and related documentation in this price. So I need not even step out of my office for anything.

BTW, I spoke to 4-5 used car dealers and got my car evaluated. I was quoted between 1.2-1.5L for the car. Carwale gave me a slightly higher value but no one in the real world wanted to pay that. Highest that was offered by a broker was 1.6L and he was to take a 2% commission.

So in a nutshell, go for the exchange bonus gimmick if you are in a hurry to dispose your car (maybe to get it adjusted against new car's down-payment). If you have time to wait then an individual sale is always a best option.
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Old 5th January 2012, 14:19   #11
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

I have a doubt at the expense of sounding naive. How do you guys manage to get the exchange bonus by just showing your RC etc? Doesn't it apply only when you sell your vehicle to them while buying a new one? Or for the sake of the sale they just pass it on to you as a cash discount on the OTR price of the car as a regular dealer discount?

Also the exchange bonus discount is born by whom? The company or the dealer? I am assuming it will be the company since its a nationwide campaign.

Quote:
Originally Posted by nishantgandhi View Post
Carwale gave me a slightly higher value but no one in the real world wanted to pay that.
Thats a good deal according to me. BTW has anybody on the Forum ever got the prices indicated by Carwale. I have always found there prices more of a fairytale. The values quoted by dealers and even individuals most of the times are way lesser then what Carwale gives you.

Last edited by drmohitg : 5th January 2012 at 14:23.
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Old 5th January 2012, 14:22   #12
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

Recently , I have valued my 2005 Tata Indica( diesel) in tata showroom and they offered me 1.6 lakhs + plue exchange bonus(20 - 40k depends on the model) and even the other dealers were offering the same amount ( 1.6 -1.75 lakhs) but i hope to sell it indiviually so that it can fetch me around 2 lakhs in bangalore.

off topic: does still Tata giving away exchange bonus in jan also.
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Old 5th January 2012, 14:30   #13
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

Quote:
Originally Posted by soarer View Post
Recently , I have valued my 2005 Tata Indica( diesel) in tata showroom and they offered me 1.6 lakhs + plue exchange bonus(20 - 40k depends on the model) and even the other dealers were offering the same amount ( 1.6 -1.75 lakhs) but i hope to sell it indiviually so that it can fetch me around 2 lakhs in bangalore.

off topic: does still Tata giving away exchange bonus in jan also.
soarer:
If you are being offered 1.6 lakhs for car and 40k for exchange bonus. That would be an effective price of 2 lakhs for your car.

Any reason to not take this option?
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Old 5th January 2012, 15:13   #14
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

When a company flashes ' Discount upto 50 thousand* '
It includes
- 25Ks for exchange bonus
- 10Ks for some stupid audio system or some other accessory
- 15Ks for insurance

Exchange bonus can be effective when
- You want to change your in hurry (time factor)
- You are selling a car which has verygood resale value and value doesn't fluctuate much(like scorpio or swift)
- You want to sell a car which literally has no takers (like Astra or Uno )
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Old 5th January 2012, 15:35   #15
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Default Re: Exchange Bonus: Is it just a marketing gimmick?

I think it makes most sense to go for the exchange bonus when :

- you are hard pressed for time and effort and need money quick
- the vehicle is quite old and unpopular

It wouldn't make sense to go this way if you car model is/was popular and commands a good resale value.
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