Resale Value - The Silent Killer
Mileage kya hai ?
EMI kithana ?
Discount he ?
Probably the only questions that you hear when selling cars. No one ever hears about the biggest motoring cost – Depreciation! Your mid size car might cost Rs 1000000 in fuel costs alone but could lose more that that in depreciation alone. As we never see the cash flow out, we never bother until resale time when we find that our beloved pride and joy is worth peanuts. Why do we buy new?
Status, virginal bliss, the smell of a new car, tax reasons…and in my case - the secondhand car that I want is overpriced or has dodgy credentials What drives depreciation ? Company Reputation – Fiat, Sipani, Daewoo – need we say enough – the lack of back up and spares as well as defaulting on payments means no one wants your car Pricing and Supply Strategy – Honda never discounts and restricts supply to actual orders (in the City, they have been caught out a bit). Dealer stocks are limited – this reflects in strong resale values. Ditto – Toyota. Only applicable if you have a good product placement to begin with Discount and Price Maintenance – A colleague bought a Lancer for 9 lakhs in 2003 and got only 5.4 lakhs after barely 2 years - why – HM have reduced the price of the car thus destroying the value of the car. A Honda City would have fetched at least 1 lakh more. Cielo’s values were massacared when they reduced prices by 30% . A story goes around that people with 3-6 month old Cielo’s handed them back to the finance companies and took a hit as it was cheaper. Culprits – HM, Ford, Opel (not Chevy), Hyundai (Sonata and Elantra) Repositioners – as above but when they decide to introduce new variants to attract people from segments below – Hyundai Accent, Ford Ikon, Maruti Esteem, Baleno. Existing owners get hammered Overpriced – Skoda Superb, Baleno (originally), Mondeo, Pajero High Maintenance Costs – Opels and Fords – after the three year itch, comes the big hit. My boss’s Corsa had repairs of Rs 30000 coming up after 40000 km. Similarly another colleagues 36000 km Ikon EXi had a Rs 11000 service – too many leaks/ seals/ dashboard failure. Mondeo and Vectra ditto. Mercedes also but other factors control their prices. Tata Safari Orphans – unwanted even if they are good cars – Fusion, Mondeo, Vectra, Forester, Superb, Octy 2.0 Dogs – cars that should never have existed – Escort 1.3, Accent 1.4 diesel, Tata Estates. Low end versions - people want the best - witness the Swift, Esteem Vxi, etc Taxiable – Qualis, Tavera, Esteems, Indica’s , Accents are always in demand as they can become taxi’s so there is demand
Car Size – less money you pay, the less you lose Ease of selling – try selling a Rover Montego or an Escort or an Astra No of owners- one owner per 12000km acceptable, anything more is suspect Accessories – these lose value fast – a low spec car specced up externally never holds its value compared a high end variant. Control – Mercedes and Honda buy back a lot of cars and hence can control resale prices Christmas Trees – The fancy rare car you buy is worth nothing later as the market for it is low and maintenance costs are high – My neighbours BMW 740 was for sale at Rs 37lakhs – no takers - why ? People would prefer a new E class for less hassle and people in this segment want latest so your fancy car sinks out of favour in no time. Ditto old Lexus’s – there was a 1994 one on ebay for 12lakhs – no takers. S-classes new at Rs 60 lakhs available for Rs 30+ lakhs after 4 years Driver/ Owner driven – enough said
Lady driven – makes no difference – they are as human as men
Service History – adds upto 5% onto value What is the best way to buy?
Buy a one-two year old car and sell at five if you like changing cars
I prefer new, so I stand to lose
True – but minimise by keeping car for as long as possible to amortise deprecation. In terms of extra’s, add things that you can take off or reduce add-ons. Condition is key – I got Rs 20000 above market price for my mothers Santro as it was in good shape. Buy – small or popular The Fusion has got Rs 1 lakh off – makes a great bargain
Excuse me – parts are expensive, no one exactly wants it even if you know it is a good car. Go for it – if you keep it for 10 years and keep it well Which cars keep their value
City’s, Corolla’s, Innova’s high end, Swift, Santro, Wagon R, Accord’s, Octy diesels Used bargains for those in the know
Forester if any around, Vectra, Mondeo – but approach cautiously, Elantra Petrol - unloved, boring but reasonable at the right price.
Highway, high mileage cars (especially if you will be a low user) - these cars will have run at the right temperature and less waer and tear - 10000km on a highway = 3000 in town - only incremental expense are tyres and wheel bearings
Anything else?
The place of origin is important - Less desirable - Coastal areas means potential discount for corrosion. Delhi cars = brutality. Mumbai = values are..um diluted.
Desirable = Bangalore but that advantage is eroding, peripheral metro areas, Mysore, Chandigarh. Coimbatore - highly desirable, Hyderabad is also good value - dry climate, decent roads
Last edited by Aditya : 23rd June 2022 at 19:27.
Reason: Typo
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