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Car shopping: New vs pre-owned

May 25, 2009 16:00 IST

Car shopping: New vs pre-owned



The Indian car market is on a roll. While mature auto markets like the US and Europe grapple with the worst crisis in decades, the Indian auto market is racing ahead with gusto. Car sales figures are in overdrive, but interestingly, a large percentage of that growth is being driven by used cars.

Second-hand cars or pre-owned vehicles have really come into their own in the last few years. Gone are the days when a second-hand car was a sureshot sign that you couldn't afford a new one, or when used-cars were looked down upon as poor cousins of the 'new car'.

Today, the market is flooded with incredible used cars -- not very old, not run much, and almost as good as new. Interestingly, there is no dearth of buyers who are choosing to purchase a used car over a new one.

If you are in the market for a set of wheels, and have not considered this option yet, you could be losing out on a chance to get a great car and save lakhs of rupees. Read on to find out if a used car suits you, and if it does, how you can bag the best deals in the market.

veriCAR is India's first independent used car inspection and certification company. veriCAR uses its expertise to help used car buyers make better purchase decisions, and ultimately enables them to buy the right car, at the right price.

Image: Today, the market is flooded with incredible used cars
Photographs: Uttam Ghosh

Advantages of a new car

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Rakesh Vij, 31, works with a technology company. This year's bonus has just come through, and Rakesh has cobbled together Rs 6 lakh for a spanking new set of wheels. Rakesh currently drives a Hyundai Santro and has decided that a new Hyundai Getz fits his requirements very well. He is aware of the advantages of a new car, but does he realise that they come with a set of disadvantages as well?

Unlimited options and wide choice

You can choose your brand and your model. You can choose what colour you want the body to be. And you can choose the colour of the seat fabric. Some new (and expensive) models give you the option of completely customising every detail on the vehicle, making the car a reflection of 'you'.

That 'new car' feeling

Let's face it, few things come close to the smell of a new car. Everything on a new car is, well, new. And that is what most people dream of owning -- a new car, untouched by anyone else, straight off the assembly line.

Peace of mind

New cars are covered against manufacturing defects and faults by the manufacturer for 12-18 months. Also, since the car has not been used by anyone else in the past, it has no secret history for the buyer to be wary of. The condition and price of a new car are transparent, and that makes the deal slightly less risky as compared to a second-hand car purchase.

Image: Your new car can be a reflection of you

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Disadvantages of a new car

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A new car does come with a down-side...

Depreciation depression

New cars lose value really quickly. This loss of value slows down as the car gets older. That's slightly counter-intuitive, but it's true. Some models are known to lose up to 40 per cent of their value in the first year alone.

Money, money, money

The new car feel comes at a cost. You end up paying for insurance, registration, taxes and accessories -- none of which really have any value when you decide to sell your car a couple of years down the line. Basically, most of these expenses are compulsory expenses that you must incur because it is mandatory by law.

Image: The new car feel comes at a cost

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Advantages of a used car

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Rakesh's colleague, Arun, has put together a similar Rs 6 lakh for his next car. But instead of choosing a new car, Arun has gotten hold of a 2007 Honda City GXi that has done about 18,000 km. He is ready to put down the money and take delivery this weekend. Here's what his situation reads like:

Cheaper to buy

A Honda City for Rs 6 lakh sounds like a steal. And if it's a well-maintained car like the one Arun has chosen, then it is a steal. Used cars are usually significantly cheaper. Plus you will not incur registration and taxation costs. If you decide to buy second-hand, you can get the same car (say a Getz that Rakesh wants) at a far lower price, or you can buy a bigger, better car (say a City, that Arun wants) for the same price.

Cheaper to own

A used-car has already lost a big chunk of its value, and is going to depreciate much slower in the next few years. That has a positive impact on the cost of ownership, and you lose far less over the three years that you will own the car, as compared to a new car.

No additional expenses

When you purchase a used car, you are paying for the car on an as-is-where-is basis. You don't incur any additional expense on accessories like seat-covers, floor mats, fog lamps and a decent music system. In all probability, the first owner has already done all this for you.

You will not incur additional expenses only if the car is well-maintained and is in good condition.

Image: A bigger, better car can be yours for much less

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Disadvantages of a used car

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Before you spring for that pre-owned beauty however keep these issues in mind:

Perceived risk

You don't know how the car has been driven and maintained. You are not aware of its accident history. You are putting a large portion of your hard-earned money on a transaction with a guy you have just met. This can be scary. But if you get the car inspected, checked and verified by a competent, independent authority, you have information on your side. And then you have nothing to fear.

Possible expenses on the car

You might have to incur some expenses on servicing the car, setting things right and repairs if required. The wisest thing to do would be to keep away from a car that comes with baggage, and buy one that has been kept lovingly. Once again, a competent person who knows cars inside out will be able to help you with everything you need to know. Most people take a trusted mechanic along, or a friend who knows a little bit about cars. There are professional services you could choose to help you out with this information.

Limited choice

You will probably not get as much choice and flexibility in customisation as you get with a new car. You might have to make your peace with that white Honda City, even though you would really have liked to have a golden one.

So that's what there is to know about choosing between a new car and a used car. But what about you? Are you more Rakesh than Arun? Or is it the other way round?

In the next article, we will see what sort of car, new or used, suits what sort of person.

Image: A lot depends on how well (or badly) the previous owner used the car

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