[GTO]

The "asking price" is of zero relevance here. What matters is the "transaction price", that is the actual selling price.

The last 3 cars I bought:

- One was 40% off for a 1 year 4 month old example with 19000 km

- Another was almost 50% off for a 3 year old with 7400 km on the clock

- The 1st-gen Vtec was 25% off; 1 year old run <4000 km.

Just have to know which model to pick and where to look . Although I will say that increased demand & reduced supply of used cars has led to a 5% increase in prices post-pandemic. VC-funded new startups lapping up used cars hasn't helped either.

[Dr.AD]

Originally Posted by GTO

The "asking price" is of zero relevance here. What matters is the "transaction price", that is the actual selling price.

Exactly! Actual transaction price matters the most. But unfortunately, there is no database of actual transaction prices. All the online portals show the asking price and sometimes give a wrong impression.

One was 40% off for a 1 year 4 month old example with 19000 km.

My experience in Bangalore was almost the same. For a car that was used for about a 1 year with 14,500km on the odo, the price I paid was 40% less than the full OTR price of the same new car that time. Even if I assume that the original owner got a very good discount on the new car, the price I paid would still be less than 70% of the price he paid for the brand new car. And given that he had already spent about Rs. 1.5L on full body PPF from 3M on the car, which I got for effectively free, I think I got a great deal.

So in summary, in spite of the apparent high prices, used cars are still a great deal if you are patient and careful and know how to find the right car.

[thetank]

Demand for pre owned cars have gone up with covid and with start-ups ready to pay more, cost seems be on the higher side. However, there is always an opportunity to get the right car at the right price, if one is patient.

[Thermodynamics]

Originally Posted by tilt

Depreciation should be calculated on the price one paid for that specific car when it was new, and not on the current price of a new example of that car

Originally Posted by JoshMachine

The Creta in question here would have costed anywhere between 15-17 lakhs 5 years ago. Comparing that price to today's cost of 19 lakhs is incorrect, to arrive at possible depreciation.

Thank you fellows for quoting. I surely thought of using the invoice price as depreciation basis, however, comparing a value of 16L in 2016 with 10L of 2021 would be unfair. The best way is to index it or use a present equivalent which I did. Again that's just my approach and I appreciate alternative view points.

Originally Posted by jetsetgo08

The same car when sold to a dealer won't fetch a Rupee beyond 8L

Agreed

[tilt]

Originally Posted by KiloAlpha

You are correct - in theory. This is also correct in practice when it comes to the used car market in developed economies.
Unfortunately, the used car market in India does not work that way. Especially for the hot, in-demand models. Used car dealers will always use the current on-road price as a yardstick to calculate depreciation, as long as it is up to 10-12 years old.

True. I do appreciate that asking price / market value need not be driven by depreciation alone. The only point I was trying to make was that this member seemed to be misinformed about the method of calculation of depreciation and nothing else.

Originally Posted by GTO

The "asking price" is of zero relevance here. What matters is the "transaction price", that is the actual selling price.

The last 3 cars I bought:

- One was 40% off for a 1 year 4 month old example with 19000 km

- Another was almost 50% off for a 3 year old with 7400 km on the clock

- The 1st-gen Vtec was 25% off; 1 year old run <4000 km. *SNIP*

40, 50 and 25 percent of what - asking price or price when the car was new or current new-car price?

Cheers

[PaddleShifter]

Asking prices are high but they dont sell at those prices. Cheap buyers tend to quote around 50% of what a seller has listed a product for, even if the listed price is as per market rate. This makes sellers list at high prices so that market price or something close to it can be secured.

I have sold 3 vehicles in last 5 years.
1. An October 2015 Honda CBR 150R (orange colour), done 600Km for 80k or something in July 2016. An individual seller harassed me by calling me as 3 separate customers from 3 different numbers, trying to reduce price to 50-60k (On road price was around 1.3 lacs in October 2015 when I bought it). I eventually sold it to him for 80k. Listed price was 95,000/- for a 10 months old motorcycle. I should have quoted above market price rather than listing an honest price.

2. A Sept 2016 made Bajaj RS200 listed for 75k was eventually sold for 50k in 2019, this one was bought pre-owned in Sept 2017 for 85k in Jodhpur. First Owner still hand loan of around 80k on this vehicle and I offered him 85k from my learning after selling CBR for such price. I kept that motorcycle for sometime and sold it in October 2019 for 50k to a very “sticky and buggy dealer”. Only one individual seller approached me for this bike in the 9-10 months period that I had it for sale. The dealer was able to sell it within 7 days after buying from me so this shows people are willing to pay high amount to dealers rather than dealing with sellers directly.

3. A 2000 Maruti 800 EX sold in 2020 for 29k. It had done 40k Kms and was in excellent mechanical condition. An individual seller bought it on first visit itself. Did not have good experience dealing with Cars24 representative while selling this car.

Selling a possession (car, motorcycle or even an electronic item such as digital camera for that matter) is a heartbreak when you have to deal with super cheap people online who are just passing time quoting unrealistic prices.


I have had a person tell me to sell my RS200 to him for 40-45k as that was his max. paying capacity.

By that logic, I also want to own a Mercedes CLA or a Land Rover Discovery but shall I visit a seller with 5-10 lacs and demand him to sell one to me coz thats my paying capacity?

[Thermodynamics]

Originally Posted by tilt

this member seemed to be misinformed about the method of calculation of depreciation and nothing else.

Please avoid using words as "misinformed". I have already mentioned that I am fully aware of straight line depreciation which is calculated on the original price. But when it comes to economics, indexation to inflation should be done. For example if I assume a 4% average indexation to inflation for 5 years, 16L in 2016 is equivalent to 19.5 L today. I hope I made the argument clear.

[mvadg]

Originally Posted by PaddleShifter

Asking prices are high but they dont sell at those prices. Cheap buyers tend to quote around 50% of what a seller has listed a product for, even if the listed price is as per market rate. This makes sellers list at high prices so that market price or something close to it can be secured.
...
I have had a person tell me to sell my RS200 to him for 40-45k as that was his max. paying capacity.

By that logic, I also want to own a Mercedes CLA or a Land Rover Discovery but shall I visit a seller with 5-10 lacs and demand him to sell one to me coz thats my paying capacity?

OT, but still relevant: I got the same type of calls asking for a very low price. I had a buyer (I guess he was a pro), who promised me 4k for an old Sony TV claiming he was a student, brought an old lady along who brought out the cash - all in old and tattered 50 rupee notes. While she was busy counting out the notes, he went through every function on the remote and on the TV, and when he was satisfied, she handed over the notes. Realized that there was only Rs 3000 in the bundle, but by then the mannerisms of the couple had changed from buyer to robber, so I just let go. Saw the guy bring his Innova to pick up the old lady and the TV around the corner and they vanished into the night
This is why most people don't want to deal with individuals and prefer a dealer. Nowadays, if possible, we just give away most of our old stuff to our maid (sometimes, if she thinks something is too valuable to take for free, she gives us a better deal than these "buyers").

[Ragavsr]

Originally Posted by mvadg

OT, but still relevant: I got the same type of calls asking for a very low price. I had a buyer (I guess he was a pro), who promised me 4k for an old Sony TV

Well, such cheap buyers who low ball like crazy are common even in real estate these days trying to check the water for distress sales even when the seller is in no mood to reduce the prices below market rate.

Once , when I sold a scooter way back in 2014, (a 2010 model honda aviator run 53k bought for 58k rupees) , the buyer who wanted to buy for 18k went on harping about how used car /bike prices are low in the USA.Told him to get it from there if it was cheap

He ended up purchasing for 21k. He brought two other people to negotiate but I did not reduce a rupee beyond my last quoted final price.

Also never negotiate over phone. I absolutely refuse to negotiate on phone or chat. Keeps the cheap folks away.

[Dr.AD]

Originally Posted by KiloAlpha

Unfortunately, the used car market in India does not work that way. Especially for the hot, in-demand models. Used car dealers will always use the current on-road price as a yardstick to calculate depreciation, as long as it is up to 10-12 years old.

Originally Posted by Thermodynamics

But when it comes to economics, indexation to inflation should be done. For example if I assume a 4% average indexation to inflation for 5 years, 16L in 2016 is equivalent to 19.5 L today.

Good points by both of you and I completely agree. In India, with prices of new cars going up rapidly, the used car market does indeed "look at" the current prices (if not directly use those in calculations) to calculate depreciation. Thus, for cars such as Innova where the new car prices have increased to cross a couple of segments, the used car prices have kept up their high values too.

There are plenty of real life examples of this. A friend of mine had bough a new Innova back in 2008 or so for some Rs. 9L. In 2014, he sold that for Rs. 7L (after driving it for more than 100,000 km). One of the reasons that was possible was because new Innova in 2014 was priced more than Rs. 15L. When the price of new car jumps up by 160% in 6 years, the used car prices stay high too. There was no way one could have asked for 50% depreciation in 2014 on the original price of Rs. 9L which was paid in 2008.

[sandeepmohan]

This must be a recent development.

There is a overall increase in price for used cars in other parts of the world. I suspect some (or all of it) of it being related to the pandemic. Its basically a case of increased demand for used cars. We've covered this before on another thread and part of the increased demand is due to people want a safer means to travel. Public Transport is well and good but not so when it comes to maintaining distance. With the job market being volatile, most don't want to commit to put down a deposit on brand new car and pay for it over the next 3 or 5 years. They can make do with a cheaper used car at a fraction of the cost.

[charanreddy]

Depends on the model / demand. Not one size fits all.

I see 10 yr old Swifts with 1 lakh km going for >50% of original price , while my 8 yr old Chevrolet beat diesel with 1 lakh kms fetched just 20%. The less said about Fortuner and innovas the better.

Also some of the listings on our classifieds are plain ridiculous. Asking price for a 5 yr old VW is roughly 80% of original car value. I mean a 10- 15% over statement is fine but a 40% overstatement is non sense. I doubt if customers even reach out to such ads.

[chinmaypillay]

The used car prices have noticeably increased post covid situation. For clear pointers just check the prices of Civic (Bangalore). Pre covid the prices were reasonable from 1.5L to around 4 (old to new). Now a 14 year old civic asking price is around 4.5!!

This is just one of the examples, the prices have jacked up crazy. Bangalore seems reasonable for me than the prices quoted in Tamil Nadu. People ask for rates as if the vehicle has just rolled off the showroom, quotes are no where sane.

But the best prices I have seen by browsing around are Delhi and Mumbai. Kerala seems to have a reasonable rate too, compared to Karnataka and Tamil Nadu.

[gb97ce6]

The number of used car businesses have skyrocketed in the last few years. I see them in every nook and corner, even in residential areas. The prices they demand are absurd and collectively they have created an inflated market place for all used cars, including the ones sold by private parties to private parties.

[slamnos]

It is not always expensive, apart from the already explained reasons, few of my observations:

1. It depends from geography : Cars in coastal areas tend to corrode / rust faster, hence it is marginally cheaper from non-coastal belt of similar demographics.

2. Attitude towards used cars : There are markets / cities where buying a used car is not considered socially acceptable (Ex : Delhi, Punjab), this tends to bring the resale value down. However down south (Few Examples : Bangalore, KL) consider buying used vehicle more rationally hence the market demands higher value.

3. Customer type : Those individuals / corporates / business owners who have access to loans / can avail depreciation benefit prefer to buy new cars. Those whose nature of business is dealing through cash transactions (black money) prefer to buy sparingly used cars (as they cannot buy new cars with cash only), hence few popular models especially SUVs seem to have higher resale (apart from obvious popularity / reliable reasons)