Re: Pre-Owned Cars - Finding A Viable Alternative ? Its difficult for me to comment on the Indian specific pre-owned car situation, but let me share my own experience with pre-owned cars in Europe and the USA.
I'm lucky that I have had company cars for as long as I can remember and they are always brand new. In Europe, depending on model and lease company, you get to keep them up to 120-150.000 kilometers.
In my home country the Netherlands, if you have a company car and you also use it for private mileage, you have to pay tax. How its done is they take 25% of the catalogue value including all the options and that amount is added to your income every year. Now, in the Netherlands I used to pay approx 60% income tax.
So here's how it works, say the company car was an Audi A6 of Euro 100.000.
Every year I drove that car 25%, i.e. Euro 25.000 was added to my income and over the additional 25.000 I would pay 60% tax, so the company car, for my private usage, irrespective of my actual mileage would cost me Euro 15.000 per year.
For that sort of money I could buy privately a very nice, very high end, fully loaded top of the range pre-owned car. As I'm a bit of car enthusiast I usually own several cars and some classic cars at any given point in time. So I usually ticked the box on my income tax return form of "no private usage". And yes, the Dutch tax office would and can check if that's true. I'll get my own cars, for my own mileage and leave the company car for the business mileage.
So my cars I buy personally for my private use have always been pre-owned. I look for anything 5-10 years with at least 100-150.000 kilometers on the clock.
The company cars (e.g. Audi, Mercedes, BMW) were fine for the 60-90.000 km per year business trips, they're comfortable, safe, but also quite boring and nothing special really. But second hand I can indulge in just about anything under the sun. Depreciation on cars 5-10 years is astonishing. And as long as they are maintained reasonably well 150.000 km on a modern car is barely run in.
On these sort of pre-owned cars, the depreciation is virtually zilch, it's not worth insuring them fully comprehensive either, you really only need 3rd party coverage and that's dead cheap too. So all the cost is maintenance and fuel more or less.
And for that you get to drive a top of the range Jaguar, Maserati etc.
to give you an example, I bought my 2003 Jaguar XJR in the US for $10-12.000,--. the MRP (and I have the official dealer MRP-plauge) was around $75.000.
I bought it in August 2009, so that car depreciated some $60.000 in six years, that is $10.000 per year! And I bought it with just under 100.000 miles on the clock. Even if I was going to spend $75.000 I would probably prefer to buy several pre-owned cars, rather then one brand new.
Couple of years later, close to 40.000 miles more on the clock it has hardly depreciated further.
So even if you have to spend some money on it (e.g. tires) from a financial point of view it still makes sense. Now, some people are just not comfortable buying a second hand car, because they think its' going to cost them a lot of money maintaining it. My experience is that that is not true, but you do need to know what you are getting yourself into. So I will do a very thorough inspection myself and or have it done by a garage/dealer that I know and or trust. Not a hundred percent guarantee, but at least it will give me some understanding on what I can expect. Sometimes I find things that I can use to negotiate the price down, or find things that make me walk away from the car no matter what the purchase price is.
I have only once in my life bought a new car, a Talbot Samba for my wife. This was many years ago, we just got married, I was still in the merchant navy, away from home six months at a time. She was just new into her new job and needed a car and was very nervous about second hand cars. So we bought a brand new one, albeit a very little one. Unfortunately it was the worst buy ever. Never had so many problems with any car and then about 18 months into it Talbot folded. So we sold it and bough her a very nice pre-owned Volvo 340 and since then she must have owned at least 15 pre-owned cars as well. As my wife gets a little nervous when cars get more then 5 years old and more then 100.000km on the clock, we tend to buy 3-4 year old mid size saloons for her. Ford Focus. As far as I'm concerned 3-4 years with normal usage is really no problem whatsoever, but it might still knock 50% of the retail price and still have some warranty left!
In the end it is a very personal choice where you balance cost, initial outlay, with convenience, extra maintenance (?), status, or you just enjoy a new car, fair enough.
Although not a fact, but only (my) opinion; there is nothing rational about buying cars. Car nerds like us, like to talk about it endlessly, write page after page on forums like these, to convince each other, or ourselves that we are making the best possible choices. But those are only good choices in the eyes of the beholder, which is of course, extremely relevant for each of us, but hardly an exact science. But that is probably (part of) the fun!
Enjoy those cars!
Jeroen |