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Post-Covid 2021: Is it a good time to buy a new car in India

I was looking to upgrade from my 10-year-old Hyundai i20. However, after doing my research, I came across several points & decided to not make a purchase.

BHPian xway recently shared this with other enthusiasts.

Hello,

I tried searching for a similar thread. Came across many threads on the Best Time to Buy a Car but nothing on the current, post-covid situation which I do not feel is the right time to buy a car.

My car is now 10 years old, and I drive a humble i20 which still fulfils all that I need from a car and runs as good as new.

The itch to upgrade to a new vehicle or rather FOMO made me keep an eye on new launches and procure a new car for myself.

But on doing a practical review, I see so many points that I now think that it's absolutely the wrong time to buy a new vehicle. The opinion is my own based on research and time spent on various matters.

I am listing the points below for everyone to share their thoughts on.

High Car Prices

Believe it or not, I bought my i20 at 5.5 lacs OTR 10 years ago. Now, I doubled my budget to 11 lacs, and lo and behold - at double the budget I am getting the same car/segment with even lesser features.

I am shocked to see that now, cut sedans, premium hatchbacks, scaled-down SUVs are all costing north of a million rupees. I do not know if that is justified or the auto industry milking the consumers by artificial shortages. Not to mention the government imposing road taxes and other charges by making hay during the current times. Whatever, but the prices definitely do not allow me to upgrade even at 2X my budget.

Huge Fuel Prices

Be it petrol or diesel, the prices now are borderline insane. The taxes make up a whopping 200% of the base fuel cost, the government puts it as 66% or total cost to show it as less, but it comes out to 70 Rs./litre on 40 Rs of petrol cost. You can calculate for yourself for diesel. In 2014, the tax per litre of fuel was 3 Rs/litre to now 70 Rs/litre, that's a 2300% increase in taxes alone, not to mention the base price increased to double, too.

Fuel Options/Tech

We are running on fossil fuels and the majority of automobiles are totally running on petrol, diesel and some on CNG. With the push towards other fuels like hydrogen, electric, methane and others, we do not know what would be a likely scenario in the coming years.

Every day the policies are changing that too without any deep thoughts, and in the same way, possibly can be withdrawn after all the hullabaloo. Most importantly, the methane addition to petrol, which current cars do not support. It seems like there is a huge push towards that. We have already heard cases of brand new cars stalling due to the new mix.

Poor Buying Experience

People have thronged to showrooms to buy cars as though there is no tomorrow. If you visit a showroom, chances are you will be asked to cough up a booking amount without even seeing a car and then too you will be in the queue. Forget the premium experience of being welcomed, shown around, treated like a king that used to be the norm some years back. Now, it's like they are doing a favor by granting us the privilege of buying a car. You are thrust upon to pay higher insurance premiums, other charges, buying accessories just so that you can be granted a car from your lordships. Test drives for your chosen model - you will be seen like you are from another planet just for asking this. It's either take it or leave it.

Insane Delivery Times

In spite of paying upfront, bearing the tantrums of the car dealerships, there is no guarantee to get your elusive car. The delivery times are running into months and sometimes years that too without any firm commitment. With reasons like chip shortages and other alibis, they are getting away with anything they desire leaving us in a lurch. There is no price lock also even if you book the car, making it totally useless to book the car.

Policy Changes

The new scrapping policy has already been declared in a rush, fuel mixing with methane is also being rushed, electric-powered cars are being debated. With no clarity and mature technology or infrastructure in any of these yet. The ruling government's approach is to do things just for the sake and market it as a masterstroke against pollution, fuel imports and whatever basically comes to their mind. No firm and concrete guidelines are spelt out as yet. I do not think even the policymakers themselves are aware of what needs to be done and how. With such uncertainty, is this the right time to buy a new vehicle?

Economic Uncertainty

Covid had caught us unaware in both the first wave and the second wave. Now with many countries witnessing the third, there is a big economic uncertainty. How will the country fare? Will there be a 3rd wave? How will the economy behave? Will there be jobs/employment opportunities?

There are many questions with no apparent answers, which brings me back to the main question, is it a good time to put your money that too in such condition in buying a new vehicle?

All said and done, for me, these all are enough deterrents and now, I have stopped thinking about a new vehicle completely. There have been many temptations like the XUV 700, Magnite, Astor, Creta but still, I am going to hold on.

Please share your thoughts and reasons, if you bought a vehicle recently or planning for one.

Here's what GTO had to say about the matter:

It's a total seller's market out there as demand is outstripping supply across the board, for the first time since the 1990s. Stiff prices, long waiting periods, lesser discounts, limited choice of colours or variants... not a good time to be out shopping. The worse part is, even among used cars, it's the same. High prices + good cars sell on the same day.

Final blow is from the fact that 2020 was the last year of some truly awesome engines (Maruti's 1.5L Diesel) & cars (Hexa), while 2021 saw BS6 diesels showing their ugly side via DPF issues.

If I was in the market for a new car, I'd cancel the plan and wait for another year or two for supplies to stabilise. By that time, some of my favourites (XUV700, Thar, Kushaq) would have sorted their initial niggles too.

Here's what BHPian ValarMorghulis had to say about the matter:

Wait until you really, really want a new car. Even in a couple of years, there will be a huge change in the car scenario with EVs coming in and new tech pouring in. Plus, the chip shortage will ease as well.

PS: I bought a new Hyundai Verna SX+ in November 2019. So far, I've run it 3000 Kms while it is parked in Bengaluru & I'm in my native place Nainital.

Here's what BHPian ninjatalli had to say about the matter:

Just accounting for inflation (calculator), 5.5L in 2011 is equivalent to ~11L today, so no surprises on that. Your car might have got lesser features basis how Hyundai is currently pricing the various models, but other factors have gone up, too - government taxes, safety features, emission regulations and so on - which wasn't impacting you or Hyundai back in 2011.

Long story short, i20 is still a fantastic car (and probably one of the best VFM cars from the Hyundai stable in addition to the Santro) in today's world - you should just retain it till you really, really need a new car.

Here's what BHPian d3mon had to say about the matter:

It's just inflation plus some basic safety and convenience features that have increased the car prices. 10 years at 7% inflation is enough to double the price of any product.

The factors that you mentioned are here to stay - you can choose not to upgrade, but things are only going to get worse from here on in terms of purchase/running costs. I personally think that EVs are a short term solution for running costs as the Govt will tax them heavily both on sale and for charging as soon as the masses start adopting it. So I wouldn't hold my breath for the EV revolution saving significant costs for the end customers in the future.

Two options as I see it - keep enjoying your present car, or get a couple of years old pre-owned one for 30 per cent off.

Here's what BHPian logicalidiot had to say about the matter:

Couldn't agree more on the cost of cars these days. After accounting for inflation, increase in the cost of raw materials and other aspects, the cost of the same car/equivalent model is at least 50% higher these days. Not to forget the insurance cost, which is also increasing simultaneously - even if you have NCB, you pay more or less the same renewal cost due to an increase in insurance costs every year.

We own a VW Polo bought 10 years back similar to yours. Having clocked 1 lakh+ kilometre, my dad has a small itch to change the car and he would probably do it if he receives the push needed from the family. But I feel it is not worth it for the reasons listed below.

  • High priced cars mean you don't really get an upgrade unless you're willing to pay at least 2x the price of your earlier car.
  • Insurance costs are high.
  • EV could be the next big thing if you could wait.
  • Uncertain vehicle scrappage policy. If indeed the cars are to be scrapped within 15 years, then one needs to think again before spending money on expensive cars.
  • Lack of good choices?
  • Increase in fuel prices makes EVs a better choice but we haven't yet reached the point where EVs are mass adopted. This could change in the next 5-10 years, which makes you think again - is it a good time to buy a new car?

Here's what BHPian VW2010 had to say about the matter:

The first car purchase has no logic. It's just the eagerness to own one that drives us to plonk money on whatever is hot in the market at our price point. The second car is usually the logical upgrade to a slightly premium car. Logical car purchase starts at car no 3. This upgrade will mostly be a used car, clearly solving a specific requirement and not falling for bells and whistles.

IMHO, there is no right or wrong time to buy a car. If you can afford it and are not throwing your lunch money to satisfy the ownership ego, you should buy and enjoy these little things.

Here's what BHPian IshaanIan had to say about the matter:

I think you forgot to add one more point against buying a new car.

Judging someone based on their material acquisitions is dwindling out of fashion; if your car runs well, keep it and use it. There is nothing radically new and worth upgrading to.

Here's what BHPian 84.monsoon had to say about the matter:

In Finance, we generally speak of the rule of 72, to figure out when your money gets doubled. For example, if the annual interest/rate of return is 5%, it will take 72÷5 = 14.4 years to double your money. We know that the inflation rate for industrial goods in India has been around 6% over the last decade or so. The average interest rate for bonds has been around 7%. This means if you were a conservative investor in 2011, and put your money in a safe investment vehicle such as a bond fund, your money would have doubled by now. On the other hand, if you were more risk-averse and used bank FDs primarily, your interest rate would have been about 5.5 to 6%. In that case, your money would have increased in value by about 80%. Yet again, if you had a slightly higher risk appetite and put half of your money in the stock market and the rest in an FD, you have made an average annual return of at least 8 to 9%, if not higher. In this case, your money would have more than doubled by now.

So, therefore, it is no surprise that car prices have also doubled in the same period. In fact, I think there are some cars which you can buy at prices much less than double the price prevailing 9 to 10 years ago. A good example could be a mid variant Honda City MT. If I remember correctly, a City V MT model cost about 7.5 lakhs in 2011, and today, literally the same engine and transmission, with some tweaks plus a larger body and more features, is available in the latest generation. Even the lowest variant of the new-gen City is better equipped than the mid variant of 2011. And it costs about 11 lakhs ex-showroom. So the inflation on the Honda City, which is the closest comparable car in a 10-year horizon, has been less than 50%.

So all in all, I think this is not a bad time to buy a car. Car prices have definitely increased, however, in relation to inflation and rate of return on investment, it has not increased all that much. Also, you get an amazing variety of cars that were not available 10 years ago, much safer and more fuel-efficient. You get more power and fuel efficiency, thanks to the arrival of the turbo-petrol engine-equipped cars. There are new segments that you can shop in, such as the compact SUVs, which did not exist 10 years ago. There are mainstream electric car options that did not exist back then. We do see the exit of some wonderful cars such as the Ford Fiesta etc, however, this is compensated by the arrival of new players such as Kia. So all in all, it’s a great time to go out and buy a new car, if you’re prepared to wait a few months to get the right car that you like. Considering car ownership as a long-term affair, a few months wait is not a big deal in my opinion.

Here's what BHPian Vid6639 had to say about the matter:

It indeed is the worst time to buy a car today. I have been in discussion with many people asking me what car to buy and the options are so limited when it comes to new and even used.

Used

  • Fellow moderator Ajmat was looking for a used fun-to-drive car to replace the Jetta. We saw a few cars but the asking price was ridiculous or the car did not impress. Moreover, the cars would get sold instantly for obscene prices. All he wanted was a fun-to-drive petrol European sedan. We couldn't find a decent, well priced F30 330i. The one 3GT 330i we found had a disinterested seller.

New

  • Someone asked me for a nice 12L petrol AT SUV. Guess what. There are no good options. Only Kiger and Magnite, which I am not 100% confident with the fit/finish. The Marutis are all 4-speed AT ancient boxes. Tata and Mahindra is all AMT. No more Ecosport means there is a void here now. Kia Sonet is 14+ on road.
  • Many are asking for a 40L premium SUV. With the Kodiaq and Endeavour gone, there are no more options to suggest. The X1 is no longer available with the fat discounts bringing it close to 40L like before.
  • Sedans are in short supply except for the flimsy-built City and cramped Verna, there's nothing. Toyota Corolla Altis demise and the Octavia going past 30 lakhs means you are out of options if your budget is sub 30L.
  • Want a nice SUV for under 30L with good build quality and a little more premium than the Creta/Seltos. Sorry, there's nothing anymore available. Compass has gone up in price, Tucson is due for a model change.

I was looking at the BMW price list from October and in Bangalore, every single BMW model including the 2 series GC is above 50L on road. You cannot buy a BMW for less than half a crore.

While we do have a few nice cars especially turbo petrols, we have lost a lot of brilliant cars like the Jetta, Kodiaq, Compass 4x4 MT, Endeavour, Ecosport, Corolla etc.

Check out BHPian comments for more insights and information.

 
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