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Old 19th July 2010, 20:17   #1
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Default Second Hand Car Dealers - what value do they bring?

This was inspired by JLN's thread. I thought let me list down what value I expect and whether they deliver

1: Ability to network and get car sold


Yes but is it worth the 4% i.e 2% on either side. Online classified savings will make up for any holding costs incurred.

2: Warranted Product


Rubbish - sold as seen most of the time. You are fobbed off with some excuse unless it is a Authorised Dealer

3: Transfer Costs

These are extra and you pay an inflated rate - oh and they charge you for new plates with their logo on it

4: Make up on holding cost

Rubbish - they joyride at owners expense most of the time. Some actually buy low, sell high and merely add a polish as part of the deal

5: Ensure Transfer

Ha! I have several traffic violations from cars I sold years ago and never transferred

6: Hassle free selling process

Dealing with the lies, the mind games,- When I sold my Sierra, Standard came with a well dressed buyer. Agreed on a price and planned on the sale the next day. They come along and then claim a wholoe load of faults and pressured me into a sale. (am a lot wiser now!). Later realised the well dressed person was merely a front!


In other words - a car dealer comes in

1: As a seller, you don't want the hassle, you don't want strangers popping in at home. You need a minimum price

2: As a buyer, you want a good car in a hurry

Finally - cash is king - if you want to buy - dangle the readies and barriers should melt but go in with your eyes wide open
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Old 19th July 2010, 20:57   #2
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Well I guess the only value they add is for people who can afford only a very low cost car, need to look at and choose from several cars in one place and dont have the time to go after advertisements. And have someone take care of the loan processing too.

I bought a 1999 model Maruti 800 in 2006 for 1 lakh (pics in my garage). I agree the price is on the higher side. But it was in great shape - my friend crashed it majorly and I got it tinkered and stuff but even after that it didn't give me any hassles.

I agree, lemons are more easily available than real deals. We need to do our bit of inspection with our own mechanic-friend, and it is still a gamble. But sometimes it pays.
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Old 19th July 2010, 21:26   #3
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its not that easy to search, classifieds, either print or online donot carry majority of the cars from the market. So if you are looking to buy, then one may need to use their services. However, if you need to sell, do a little advertising and you will get quite a handful of buyers.
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Old 19th July 2010, 21:27   #4
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Well I guess there is a marked difference between regular second hand dealers and those organized ones.
I mean the ones like the Maruti True value, I have three friends who have bought thier car from them and they trust these dealers.
What they help is those who have no idea about cars, these kind of people are scared to get fooled from some roadside second hand car dealer, they swear by Maruti thats why buy from True Value.
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Old 19th July 2010, 22:12   #5
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Well, let's first look at the two broad categories of dealers:
  1. Those that facilitate a sale by making the buyer and seller meet, and charge a fee (usually 1-2% from either party) for the deal. What you might call online classifieds, I would prefer to call Category 1 online dealers; they charge a small fee from the seller (but not the buyer), and their volumes make up for the small price asked for the service.
  2. Those that buy the car outright from the seller, refurbish it in some cases, and then sell on their own. Here, there may be those fly-by-night operators, or big corporate houses like First Choice or True Value.
So what value do they bring? Let's look at category 1 first, which is the type of dealer JLN went to.

These people set a market price for the car, especially for those not too savvy with checking second-hand car prices on the net (Team-BHP, Carwale etc.). Both the seller and buyer gets an indicator of what price he ought to expect, and the dealer often mediates between the two to arrive at an amicable solution (a lot of men hate the person-to-person direct haggling, and are far too testosterone-charged to let their wives do that job! - My wife had to buy/sell the car... WHAT THE ...? ). So that's value addition #1. That service is not provided by the online dealers though.

Value addition #2 that a dealer does is to find the car you want. Let's say I'm looking for a blue Fiat Uno. Now such a thing doesn't really meet the eye too often. So the dealer gets into action. Not only does he scout around in the neighbourhood, he gets onto his local dealer-to-dealer network to find the required car. Once such a car is found, he lets you know. The commission that the buyer and seller pay is shared equally between the two dealers. Please note, all dealers in your city are friendly with all the other dealers, when it comes to buying and selling cars.

The paperwork and trips to the RTO to transfer the car to your name is not for someone who's confined to his office from 8AM to 8PM. For a small additional fee, the dealer does this for you too. That's value addition #3.

Apart from the above, the Category 2 dealer spruces up the car. Now, here lies the catch. It could be value addition if done by an honest dealer, or one of the corporate houses. A clean car is made cleaner (and shinier), and the buyer gets that feel-good factor when choosing his car. OTOH, a small dealer can well buy a crashed car for peanuts, do a half-baked restoration, and sell you a lemon for a high price. However, the extra price that, say, First Choice, asks for a spruced up car (above the market rate that a Category 1 dealer or the websites indicate), may not be worth it for those that know their cars. For a first-time buyer, that extra money is fully worth it, to avoid being saddled with a lemon. That's value addition #4.

Anything else (such as warranty or a couple of free services) that the dealer might offer, is just rubbish. For the seller, it is always wise to hold on to the vehicle delivery receipt for ever, in the faint hope that some day cops will turn up at your door (the PB police once did at mine at DL), accusing you of having killed someone on the road and run away - and you'd better be in a position to prove instantly that the car stopped belonging to you from the date and time written on the delivery receipt by the buyer - along with an attested copy of documentation to prove the buyer's ID.
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Old 20th July 2010, 10:10   #6
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I'll give some facts regarding how big Corporate Dealers work and how roadside dealers work. Two relatives of mine are into the second hand car dealing business. One is the Sales head of Maruti True Value for 4 districts in one state and the other is an upcoming dealer. While speaking to them about how they earn their money it ultimately boild down to one point, i.e. squeeze the max out of the customer.

What True value does in general is pick up cars which have few mechanical parts to be replaced (clutch, brakes, fluids, etc.) more than body or paint related issues. Reason being MGP parts are available at wholesale costs and they can replace with minimum expenditure. Hence they end up giving a car with original replaced parts for say max 10K alongwith a coat of polish and then sell the car at a premium. This also explains why they give a warranty on regular wear and tear parts (which any customer would want) as a sale benefit. Also these cars rarely return to them for parts replace under warranty period.

On the other hand roadside dealers go for cars with decent mechanical condition and horrible body and paint condition. They do get such cars cheap as the first reference point for any purchase is how the car looks. They then send these cars to roadside mechanics to redo the body & paint and also mechanical work for those parts which can be a deterent for the sale. Then they sell it back at a high price. But here the roadside dealers do end up spending a lot on rebuild costs.

2 examples (examples based on Kolkata prices)

In case of True Value:
Car in question 2005 Maruti Swift VXi, body in good condition with hardly any scratches but clutch, brake pads and fluids need replacement.

Cost price of car for True Value - Rs. 2,10,000.
Clutch, brake pads, polish and fluid replacement - Rs. 5,000.
Total Cost - Rs. 2,15,000.
Sale price - Rs. 2,75,000.
Profit - Rs. 60,000.

In case of Roadside Dealer:
Car in question 2005 Maruti Swift VXi, body in bad condition with dents at several places and lots of scratches. Mechanicals in ok condition, only brake pads to be replaced as it makes a hissing noise while braking (something that is noticeable to any lame customer).

Cost price of car for Road side dealer - Rs. 1,90,000.
Brake pads & polish - Rs. 2,000.
Body work and full painting - Rs 20,000.
Total Cost - Rs. 2,12,000.
Sale price - Rs. 2,65,000 (roadside guys cannot ask a sale price close to True Value for obvious reasons)
Profit - Rs. 53,000.

Ultimately the car bought from the roadside dealer needs to be taken to a workshop where it has to be checked and necessary parts need to be replaced.

Also this is where True Value benefits i.e. people are again assured that roadside dealers sell lemons and big corporates sell good cars. Therefore their volumes go up whereas roadside dealers have long stock holding periods.

The above illustration is a fact as confirmed by both my relatives as their standard operating procedures for purchase and sale of cars.

Last edited by NOS Power : 20th July 2010 at 10:12.
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Old 20th July 2010, 11:00   #7
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But in some of the cases, TrueValue guys just lie. When they say that they will not accept any car that has been in an accident, it cannot be believed.

Let me share my experience. Before buying Xeta in 2006, I was searching for a used WagonR in great shape. I took my friend who is a bike mechanic and also has some experience with car buying as his friend owns a travel agency. We went to a TrueValue used car mela in a school ground.

There was one particularly new-looking red WagonR at a price on the higher side, interiors very fresh, engine sounded smooth. I fell flat for it. But my friend asked me to hold on, he drove the car into full sunlight and asked me to look at the rear panel's paint. I couldn't notice the difference at first but after he pointed out, it was clear that the whole backside of the car had been repainted.

The salesman sheepishly admitted that the backside had been repainted because of a rear-ending accident. I am not sure if this can be classified as a "minor" accident and dismissed, because that paint difference will show even more over time, and when I sell the car it will dent my resale value. I mean it is not a scratch, it is like the whole rear end has been dented and repainted.

Ended up buying a new Xeta at the same budget (3 lakhs OTR).
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Old 20th July 2010, 11:09   #8
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The big corporates as well as the road side dealers are equally good in taking the prospective buyer for the ride of his lifetime.

The best thing to do is scan the print/online classifieds and get a good deal. For people who know the basics this should'nt be a big issue, except for the time and energy to scoot around. Its mostly the first time car buyer, tight on the budget and on time ending up with the dealers.
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Old 20th July 2010, 11:16   #9
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I too have a personal experience with True Value that wasn't so good. I bought a 98 model Zen from True Value in Hyderabad. Being a first time customer, I did not check it at all as I trusted the true value name.

The car was in Hyderabad for about 1 year with minimal usage by my parents before I brought it to Bangalore. Whenever it used to rain we found that the carpets inside used to get completely wet. I used to take it to the service station and they used to replace the rubber grommets under the car free of cost. I could not spend more time on it as I was in Hyderabad only for weekends.

After I got it to Bangalore I used it as my daily drive. Then I learnt about Suraksha on T-Bhp and decided to get the car serviced there. Imagine the shock I got when Lokesh showed me that the rear wheel wells were totally open, eaten off by rust and that was the cause of the water coming inside the car!!

I complained to Maruti and they asked me to get the car to Hyderabad so that they can fix it! I got it repaired in Bangalore as the cost of repair was less than the fuel cost I would expend for travelling to Hyderabad.

This made me understand the hard way that whoever the dealer, your checks are of utmost importance whether the car is new or old!
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Old 20th July 2010, 11:20   #10
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Slightly off the track. The ultimate question in the west about reliability of a person is 'Will you buy a used car from him?'. Sums it up nicely.

I very much prefer direct deals with the seller. If needed take a reliable mechanic with you.
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Old 20th July 2010, 11:34   #11
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I always wonder about one thing. Online car portals and classifieds are meant to eliminate the middleman (portal is actually playing middleman). But if you browse the ads on the car portals like Carwale, 99% of the ads are put up by dealers!
Why do people need to sell their cars through brokers? And I wonder if these portals have a different business model for dealing with brokers since they are indirectly discouraging from real owners to subscribe to the service and contribute to the revenue.
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Old 20th July 2010, 11:55   #12
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RESPONSE IN ALL CAPS IN LINE BELOW:

Quote:
Originally Posted by ajmat View Post
This was inspired by JLN's thread. I thought let me list down what value I expect and whether they deliver

1: Ability to network and get car sold

Yes but is it worth the 4% i.e 2% on either side. Online classified savings will make up for any holding costs incurred.AT TIMES EVEN 10%

2: Warranted Product

Rubbish - sold as seen most of the time. You are fobbed off with some excuse unless it is a Authorised Dealer. TOTALLY AGREE, ABSOLUTELY NO SUPPORT WARRANTY.

3: Transfer Costs

These are extra and you pay an inflated rate - oh and they charge you for new plates with their logo on it. THEY DO HELP GET THE NITTY GITTY STUFF DONE - THOUGH THEY TAKE THEIR OWN SWEET TIME FOR IT - LIKE TRANSFERRING THE INSURANCE IF APPLICABLE. - ALL AT A CHARGE

4: Make up on holding cost

Rubbish - they joyride at owners expense most of the time. Some actually buy low, sell high and merely add a polish as part of the deal. AGREE, AS I SAID IF THEY DO BUY THE CAR THEN THEN MAKE AS MUCH AS 10-20% ON IT.

5: Ensure Transfer

Ha! I have several traffic violations from cars I sold years ago and never transferred. YEAH BUT THEY DO IN GENERAL HELP WITH TRANSFER

6: Hassle free selling process

Dealing with the lies, the mind games,- When I sold my Sierra, Standard came with a well dressed buyer. Agreed on a price and planned on the sale the next day. They come along and then claim a wholoe load of faults and pressured me into a sale. (am a lot wiser now!). Later realised the well dressed person was merely a front!

DEPENDS, IF IN A RUSH THERE IS NOT OTHER WAY, WE KNOW IT IS NOT THE BEST DEAL, BUT IT IS THE FASTEST AND MOST CONVENIENT DEAL.

In other words - a car dealer comes in

1: As a seller, you don't want the hassle, you don't want strangers popping in at home. You need a minimum price

2: As a buyer, you want a good car in a hurry

Finally - cash is king - if you want to buy - dangle the readies and barriers should melt but go in with your eyes wide open
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Old 20th July 2010, 12:17   #13
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Quote:
Originally Posted by Guna View Post
I always wonder about one thing. Online car portals and classifieds are meant to eliminate the middleman (portal is actually playing middleman). But if you browse the ads on the car portals like Carwale, 99% of the ads are put up by dealers!
Why do people need to sell their cars through brokers? And I wonder if these portals have a different business model for dealing with brokers since they are indirectly discouraging from real owners to subscribe to the service and contribute to the revenue.
Spot on.
Even when you filter your search by selecting individual sellers, the dealer ads appear.
These guys are smart enough to place ads posing as individuals. But then, you can indentify that easily, if you look at the number of ads placed with the same contact person/number.
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Old 20th July 2010, 12:46   #14
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I am satisfied with my Ikon and Scorpio purchases from my used car dealer (The Car House, Koramangala). They got me the RTO endorsement for the M800 sold by me, as well.

Values these dealers bring, when compared to buying directly from the seller :

1. Multiple choices can be evaluated on the same day, under one roof, without moving from seller to seller, to try out various models and car types. In today's time strapped scenario, this is a big boon for me.

2. Hassle free transfers (no problems in both my deals).

And we get to actually test drive and thoroughly check out the very piece we are going to buy, unlike in a showroom, where we can TD only the TD vehicles, and can hardly test drive the car earmarked for our purchase for any niggles (I do not know if I am wrong here, please correct me )

Last edited by mooza : 20th July 2010 at 12:48.
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Old 21st July 2010, 09:48   #15
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A more appropriate term for the 2% brokerage would be finder's fee. Most of the used car transactions that I've been involved in, the agent merely played the role of "finding" the car. That is, screening the market and short-listing cars on their time (thus, saving yours) and using their network (separates a good dealer from an inefficient one).

The individual broker only brings value in terms of finding the car for you. Large brokers or dealerships, however, have multiple cars in their parking lots. Thus, its a matter of convenience to check out 10 used cars in 60 minutes at the same location.

I've said this before, and will say it again : There is no such thing as a good used car dealer. You can get awesome cars from rogue dealers, and pathetic cars from the reputable ones. Whether you end up with a great car or not depends on the previous owner (and NOT the dealer).
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