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Old 25th June 2006, 10:46   #1
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Default The Used-Car Market Scene

After being in the market to sell a coupe of my cars, I have learnt a few things. The pre-owned cars are much cheaper than we think they are. Most of our perception about the rates of second hand cars are based on the various ads we see in the newspapers. But these rates are ‘what the seller wants’ and not ‘what the seller ultimately gets’, which is in most of the cases at least 20% less than the former.

I have always been a believer of used cars (from a terrific VFM point of view) and this only strengthens the case.Cars depreciate to 50% of their value in 3 years, unless it is a Maruti, Honda or a Toyota, in which case it will take 4 years.

One reason why second hand cars go cheap, is the seller is always in a hurry to sell. People want to sell their old car so that they can use it as a down payment for a new car. And they are not willing to wait, once they take a decision to buy a new car. And car dealers (esp used car dealers) exploit this. They are willing to give a demand draft the next day for your car (and you are so busy in the office you will think where will I have the time to sell it off, even if I am getting 15-20k less, it’s ok). These dealers make big bucks, their margins ranging from 15% to 40% (for low-value cars ex. Buy at 50k and sell at 70k)

I can understand that people are apprehensive of buying used cars. We all take good care of our cars. But why do we feel that the person trying to sell his car, has not taken good care? I can understand that once you decide to sell your car, and then if it develops a problem you tend to do a cheaper ‘quick fix’ instead of a better long term solution. But that is expected. I would advise anyone buying a used car for 2.5L (3 year old car) to keep aside 30K for maintenance in the first year. But that is still a lot cheaper than paying 5 L for a new car.

Imagine how the used car market would look in 5 years time. You can get a range of Corollas and Octavias from 3L onwards. Imagine what will happen to the lesser mortal cars.

M
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Old 28th June 2006, 05:07   #2
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The pre-owned cars are much cheaper than we think they are. Most of our perception about the rates of second hand cars are based on the various ads we see in the newspapers. But these rates are ‘what the seller wants’ and not ‘what the seller ultimately gets’, which is in most of the cases at least 20% less than the former.
Very true.

Some people are still sceptical about the used cars since they are of the opinion that they may be trashed by the previous owners. This is partially true and at the same time, false.

I've always wondered why people who uses the car very rarely should go for brand new ones since the only use of such cars is to lie as status symbols in the car porches.

Quote:
You can get a range of Corollas and Octavias from 3L onwards. Imagine what will happen to the lesser mortal cars.
But searching for used cars is still a difficult chore except in the case of Maruti, where they are having True value dealers. And we can never trust most of the 2nd hand dealers.

But I think it's a wise decision to go for 2nd hand cars nowadays taking into consideration all the factors that you've mentioned.
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Old 28th June 2006, 11:07   #3
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Quote:
Originally Posted by Minardi
You can get a range of Corollas and Octavias from 3L onwards. Imagine what will happen to the lesser mortal cars.M
skoda for 3L.. could please tell me where as i would like to buy 1 at that price. last i checked i was quoted 6L by 1 dealer,then again i could be wrong
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Old 28th June 2006, 11:55   #4
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Originally Posted by ancer
skoda for 3L.. could please tell me where as i would like to buy 1 at that price. last i checked i was quoted 6L by 1 dealer,then again i could be wrong
he mentioned 5 years from now boss!! and talking about the corolla you might just find one of those old import pieces for around 4 lakhs even today!!

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Old 28th June 2006, 12:29   #5
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how well said by minardi, well some how this is true to a great extent , because i saw it with my own eyes for my esteem. i sold it to maruti true value for 2.05 lacs . it had some problems as the car had done 90,000 km , all they did was change its bumpers front and back at they had cracks. waxed and polished the car, changed the seat covers , new set of wheel covers and seat covers. thats it . the car looked all new on the outside. and if they did check the engines and service the car. thats it. i dont think that a job of more than 10k , infact much more less. the car was sold in fornt of my eyes when i had gone to take the deliverly of my swift for 2.5 lacs. look at the kind of margin these people get . the esteem was a 2001 model of march and i sold it in 2006 feb .
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Old 28th June 2006, 13:50   #6
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With so many new cars coming out in the market every year, the used car price has to go down!
A well maintained 2-3-year used car is nearly as good as new car. So, if you get a good model it is advisable to buy that without much prejudice.
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Old 28th June 2006, 14:04   #7
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Minardi is true to a large extent about the general phycology of the buyers and sellers. I sold my Zen one day before I was flying off to US for 1,40,000 to a dealer. After I returned back, i saw the car parked in my office building. When i enquired about the price, he paid 1,70,000 for that car. A good deal for the dealer.

If you are funding 100% from your cash reserves or somebody is funding you for a very cheap interest rates, then going for a well maintained used car is a good option. But if you are going for finance, with the higher interest rates for the used cars the difference of total car cost may not be significant between used car and new car.
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Old 28th June 2006, 14:29   #8
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hey satish i guess with the hike in the interest rates of the new car finance and old car finance staying unchanged the difference has become less. so a good second hand car even at finance option wont be a bad deal.
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Old 28th June 2006, 19:06   #9
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It is a wise option to consider buying a car directly from the previous owner, without involving dealers. The deal is all the more reliable if you happen to know the previous owner yourself or through a friend.

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Old 28th June 2006, 20:28   #10
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well the dealer is a good part to play as he takes the pain of getting the car transferred and stuff. because no one really like visiting the rto office again and again.
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Old 29th June 2006, 13:08   #11
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Quote:
Originally Posted by manson
he mentioned 5 years from now boss!! and talking about the corolla you might just find one of those old import pieces for around 4 lakhs even today!!

manson.
my mistake din't see the 5 years,i guess my vision is bad after driving over all those bumps on the way to work
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Old 3rd July 2006, 19:17   #12
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There is always a potential risk in buying a second hand car, which more people are skeptical about it unless and otherwise their budget is a constraint. There are few cases, where our own Team-Bhp member itself got cheated in second hand purchases

Patience and knowledge on cars needs to be there to get a good deal. Yeah if you strike a good deal really it makes lot of sense going for a second hand car. But always a BRAND NEW is BRAND NEW
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