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Old 9th October 2014, 10:00   #1
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Default Used Car Market swinging the petrol way?

The best VFM buys in the used car market were petrol sedans. In a couple of years they would depreciate half the cost, especially brands like Ford, Fiat etc.. Even if it were Maruti or Honda, a diesel sedan would've found a buyer 10 times faster, and a used diesel car would've found more value, than a used petrol. The 'negotiating factor' while selling a diesel was with the seller, and while selling a petrol was with the buyer.

However, with the price difference between the fuels, becoming lesser and lesser, is the Used Car Market Swinging the Petrol Way?

Even when you consider a diesel car.. Earlier, any used diesel car this side of 5 lacks would've easily found a buyer. Yesterday, I casually enquired the price of the Manza in a couple of showrooms, and the response was "Sir, we no longer take Tata diesel vehicles" . And he wanted contacts of any used Petrol SX4, Dezire, Honda City etc.. This clearly shows a sharp rise in used petrol cars.

More importantly, people are no longer just blindly buying cars just because its a diesel. Earlier, cars like Accent Diesel, even the UNO diesel was fetching a premium considering its its age and quality. Now, these cars are no longer sought out as cheap, fuel efficient buys (I still think they are pretty economical, when you consider cost per kilometer, only for fuel) .

I think the current used car market is starting to make a little sense. As good cars, irrespective of fuel, are starting to find value. Even though its bad news for us enthusiasts who always look for steals on a T-jet, a Civic or the TSi, I sincerely hope these cars get the value that they deserve and not be bashed in the used car market.
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Old 9th October 2014, 10:23   #2
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Default re: Used Car Market swinging the petrol way?

Interesting observation but it was bound to happen sooner than later once the diesel price rise came into picture. Used car market goes hand in hand with new car market because of the people who shop in the used car market 95 pc of them would go for a new car if it was available or affordable to them at that price point. Once diesel prices went up and petrol prices went down this shift in algorithm was bound to happen and it may not necessarily boil down to the sudden dawn of realisation about how good petrol cars essentially are. If petrol prices go up way more than diesel, we will probably see the way things were previously.

A petrol used car usually makes sense almost always. A diesel one would've usually clocked a huge mileage considering that is essentially the reason why the first owner would've bought the car for and secondly maintenance costs incurred for a diesel engine increases proportionately with time. But then of you're looking for a car with high running per.month a petrol used car wouldn't make much sense would it? Nevertheless it's a welcome change but not entirely unexpected.

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Old 9th October 2014, 14:33   #3
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Default re: Used Car Market swinging the petrol way?

This was bound to happen sooner rather than later. The pre-owned car market happens to be pretty dynamic, albeit with a small lag. It was only a matter of time before the reduction in fuel price difference began to reflect in the used car market. The new car market began to shift even as the price difference was narrowing.

Petrol cars generally make more sense when going the pre-owned way. Despite this recent change, petrols will still continue to be very good buys in the used car market.

In due course of time, there may be another welcome change due to the narrowing difference between the two fuels' prices. And that is, new diesel cars may not carry the exorbitant premiums they currently do over their equivalent petrols! While diesel engines do cost more to manufacture over their equivalent petrols, it simply cannot be to the tune of the current difference in the prices of the two (1.00 ~ 1.75 lac rupees, ex-showroom, for the sub-2 million rupee segments). This is clearly a case of car manufacturers taking advantage of the fuel price difference to rake in huge profits on diesel cars.

As they say, subsidies quickly distort the market and slowly (but surely) destroy the economy! True free market pricing of fuels will benefit everyone individually and the country as a whole.

It's time to completely get rid of government controls on fuel prices and rein in the PSU OMC cartel that currently fixes petrol prices by collusion. It's equally important to get rid of the ridiculous pricing policy on kerosene (and domestic LPG) and adopt other methods to help the most needy. Once kerosene is priced according to free market principles, we will be able to buy unadulterated petrol and diesel, breathe cleaner air, get better FE and make our engines last longer!

Last edited by RSR : 9th October 2014 at 14:41.
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Old 9th October 2014, 14:53   #4
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Default Re: Used Car Market swinging the petrol way?

Well, I've personally experiences this. I drive a (mechanically) well maintained 2006 Hyundai Accent 1.5P. Never thought of selling the car because ONE I own it outright (so no EMIs), love it and it still drives like new so see no reason to sell it and TWO, resale quotes would induce or red mist, depending on my mood.

But I've recently had people in my acquaintances inquire about my intentions to sell, and though no numbers have been mentioned, I know those people value a good car and will pay a fair value. One of them happens to be my ex-technician at Hyundai A.S.S. who insists I sell the car to him if I ever plan to let it go.

It does feel nice seeing a good car get the respect it deserves, compared to what was happening a couple of years ago when good used petrol cars were quoted ridiculous prices just because the alternative fuel was significantly cheaper due to manipulated pricing.

Last edited by Chetan_Rao : 9th October 2014 at 14:56.
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Old 10th October 2014, 06:42   #5
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Default Re: Used Car Market swinging the petrol way?

I ve been using Diesel powered vehicles for around ten years now.
Saying that, there was a time when it really did result in massive savings on the monthly budget. It helped a lot when I was driving a lot on trips out of town, to various parts of South India and of course, because I had to be very careful of my expenditure.
Now, especially over this last year or so, my driving trips have come down very much and I am barely able to clock 700kms per month. This, added to the fact that the price differential between Petrol and Diesel have narrowed so as to be almost negligible, causes me to wonder whether I will ever be able to recoup my investment in my current vehicle, through the normal means of extracting the value through driving miles and taking advantage of the price difference in the two fuels.
Frankly, the fuel type doesn't matter at all any more and I guess that going forward, I will certainly consider buying a small petrol SUV variant, provided of course, that it comes with a high FE promise.
I am now just simply enjoying my small Diesel SUV because of its marvellous engineering and wonderful features. I also do certainly LOVE the torque, thrust and power that its beautiful little 2 litre VW Turbo Diesel gives me!
By the same yardstick, (low monthly running), I changed my Dad's vehicle into a nice petrol one early this year. Its lovely, smooth and comfortable. If I have a small regret, it is that the engine is underpowered and runs out of juice on the highway, especially when overtaking. That is the only time I miss the torque, thrust and chugging power of the earlier Turbo Diesel car that my folks had.
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Old 11th October 2014, 18:22   #6
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Default Re: Used Car Market swinging the petrol way?

The price difference between petrol & diesel fuel is not as profound as it was a couple of years ago. Customers are also aware that diesel prices will continue to be hiked in small doses which will reduce the gap between the two fuels even further.
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Old 11th October 2014, 19:12   #7
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Default Re: Used Car Market swinging the petrol way?

Price differential between Petrol and Diesel powered variants of vehicles are now getting lesser by the day. For Ecosport it is only marginally above a lakh and I am getting confused in finalizing the variant. My confusion is definitely because of the subject matter of this thread and am eagerly glued in here.
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Old 11th October 2014, 20:24   #8
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Default Re: Used Car Market swinging the petrol way?

Since all used cars were purchased as brand new by someone else, lets look at the new car buyers as of a couple of years ago:

1. Petrol car buyer with typically less than 10k-12k km per year usage.
2. Petrol car buyer who drive more but cannot compromise on AT and hence forced to use petrol. (A small fraction)
3. Petrol car buyer who buy a CNG variant and save on fuel cost while compromising on performance.
4. Diesel car buyer with considerable yearly running above 24k km
5. Diesel car buyer with moderate yearly running in the 18k-24k km range
6. Diesel car buyer with low yearly running less than 15k km who went with the trend thinking they'll save more.

Among the 6 categories above, let us look at where each car would be 4 years down the line - prime time for selling the car off:

1. These are the most common examples in used petrol cars: a car with around 40k on ODO. Should be almost as good as new if maintained well. In most cases, these are people who could comfortably afford a car and its maintenance who look to upgrade to another brand new car of a higher segment. Best option for a used car since there is sufficient trouble-free life left for another 4 years for someone with similar usage pattern. At the end of 8 years, it is still at 80k.

2. AT car with 30k on ODO, that is typically returning lower FE than the MT variant. Due to the low FE, most AT options are typically low ODO cars but without enough demand, again due to compromised FE. Due to the low resale value, people tend to keep these for a longer time and hence wouldn't usually come into used car market so soon.

3. Petrol+CNG variants - Typically high ODO readings since the additional cost of CNG and the compromise on performance is something people won't take just for kicks. Since any petrol car can be converted into CNG at a not-so-high additional cost, these higher ODO CNG cars are typically not going to be sought after much and might fetch lower prices compared to their non-CNG counterparts that might have half the ODO reading.

4. These are the most common diesel used cars available: a car with at least 70k on ODO. Due to heavy usage pattern, it might need a lot more attention to the mechanical parts and the only reason to buy one over an equivalent petrol option is in case you have similar usage requirements. That would translate to a car with 130-160k on ODO in another 4 years, which is not going to be trouble-free by any means.

5. These are among the better specimens to go for in case of a used diesel car buy, but since the seller knows the same, it is going to come at a premium.

6. Most of the folks who belong to this category would not usually sell it off so early since they are yet to recover the fuel cost benefit out of the car. So a very limited number would be available in the market.

For someone looking at the used car market, majority he would see would belong to groups 1, 4 or 5 above. Group 4 is typically inviting trouble due to the already high ODO. With smaller gap in fuel costs, the maintenance cost of an 80k+ diesel car surpasses the fuel cost savings from diesel, just like in the past, the petrol prices used to surpass the diesel price and the additional maintenance costs combined. Group 5 is a tricky and careful buy unless you know the genuineness of that ODO reading. It could well be a group 4 car with tampered ODO. Group 1 is relatively risk free. So the current vote goes to used petrol cars with around 10k per year on ODO.

Last edited by zenren : 11th October 2014 at 20:29.
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