[shankaranand]

I see asking prices upto 75% and above for 5 year old cars.. Really!..

In UK/US, typical depreciation is 50% in 3-4 years for exceptionally maintained cars.

why are these so expensive in India??

[Thermodynamics]

Depends on what you are looking at. Super hit models always claim a higher resale value. Plus given the inflation rate in emerging economies are high, new car price increases significantly year on year and so does the resale band width.

When you bring such topics, you should also quote real time examples. If I look in to our classified section, the newest add as I write is this. A five year old Creta, 1.6Crdi Automatic with 36k on the odo is quoted 10.9L which I think can be easily negotiated to less than 10L. A new car equivalent today costs about 19.5L so the depreciation is ~50% which IMO is pretty decent for a popular model.

[RoadMonkey]

Depends on where you're looking. If it's olx, people inflate prices in anticipation of bargaining. Look for used cars on car24. I see decent deals everywhere tbh. I guess it also depends on your State.

It also depends on make and model. I own a VW, I know I'll face EXTREME depreciation if I were to sell it, otoh the depreciation hit on my Maruti was pretty reasonable. A Fortuner/Innova is going to be almost immune to any depreciation, while you can pick up the Yaris at good prices.

[JithinR]

The problem that I face is the absolute lack of experience to judge the depreciated value of cars. Portals like obv and India bluebook seem to be off the mark more often than not.

A few questions:

1. How do you judge the value of a car after 5 to 6 years? Most online depreciation tables run till the 6th year.
2. Do I need to consider the inflation adjusted value of the cars original OTR price when calculating depreciation. I guess that makes sense but then these online portals would be so off the mark that they would become useless.

[mvadg]

Originally Posted by shankaranand

I see asking prices upto 75% and above for 5 year old cars.. Really!..

In UK/US, typical depreciation is 50% in 3-4 years for exceptionally maintained cars.

why are these so expensive in India??

Isn't this the case with all goods in India? Only thing you can get cheap are software engineers

[stallmaster]

Originally Posted by JithinR

Portals like obv and India bluebook seem to be off the mark more often than not.

https://www.zigwheels.com/used-car-valuation

Check this portal too.

[TrackDay]

Maybe the list you are looking at could be the best sellers. They do hold onto to their value pretty well.
https://www.team-bhp.com/forum/india...ale-value.html (Which Indian cars have the best resale value?)

But wait check this one too
https://www.team-bhp.com/forum/india...-subsides.html (Used Car prices after Covid-19 subsides)

Whereas the prices of two wheelers both new as well as used have gone up due to demand and the fear of using public transport.
https://www.team-bhp.com/forum/motor...-lockdown.html (Demand for bikes & scooters is rising faster than expected, post lockdown)

On the other hand super expensive cars do lose their value much more faster I believe compared to their initial sticker price. Depends on what you are looking for. At the end of the day, you get for what you pay. Well maintained Cars in a nice condition with a good history will definitely command a premium. Or maybe some of them could be a transformer trying to hide in plain sight as an overpriced car in a used car lot.

[GrammarNazi]

Originally Posted by shankaranand

I see asking prices upto 75% and above for 5 year old cars.. Really!..

In UK/US, typical depreciation is 50% in 3-4 years for exceptionally maintained cars.

why are these so expensive in India??

• People who are not serious about selling their car within a time-frame simply post ads to search for the highest bidder. This creates an illusion of high prices that serious sellers mistake as market prices. Thereby artificially jacking up the price.

• Car prices too have infact been going up 6-7% year-on-year. (This increment is apart from auto-makers who launch cars on introductory prices).

• There is a cartel of used-car-dealers leveraging on the inconvenience to sell ones car privately, while exchange/finance incentivises people to sell to dealers.

• IMO There is genuinely a lack of education/maturity with many sellers/buyers and they are refuse to keep their mind open to other peoples rationale. Many are simply cold about it & don't even justify anything. Sometimes understandable, since individual sellers are hounded by dealers (& even individuals) constantly demeaning their car.

[tilt]

Originally Posted by Thermodynamics

*SNIP*

A five year old Creta, 1.6Crdi Automatic with 36k on the odo is quoted 10.9L which I think can be easily negotiated to less than 10L. A new car equivalent today costs about 19.5L so the depreciation is ~50% which IMO is pretty decent for a popular model.

I may be mistaken, but I believe that you're looking at depreciation the wrong way.

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.

So, if the seller paid 12 lakhs for the car when he bought it new, then 10.9 is not 50%.

Cheers

[Gurgaon_lyon]

Short answer:: demand and supply

Long answer: to be honest, in my opinion, it is not as high it should be. Considering we are a supposed to be a low Labour cost market.

Remember most people in West sell their cars because :
1) it would be expensive to maintain an old Banger than pay EMI of new car.
2) your average new car prices are less than half of annual salary of average Joe.

So IMHO in India used car prices are lower than they should be.

because:

1) labour is cheap but skilled labour is not and dishonesty is rampant so it's not as cheap to maintain a used cars as it should be.
2) due to bad infrastructure and poor maintenance car life is much shorter. In Western markets a 100k mile(160k km) car is old but okyish buy. Whereas, in India few cars survive respectfully beyond that milage (Unless they carry a Toyota badge).

So I disagree with the statement that used cars are expensive in India. If you want I can give you my 6 years old Santa Fe for 33% of buying price

[jetsetgo08]

Originally Posted by Thermodynamics

A five year old Creta, 1.6Crdi Automatic with 36k on the odo is quoted 10.9L which I think can be easily negotiated to less than 10L. A new car equivalent today costs about 19.5L so the depreciation is ~50% which IMO is pretty decent for a popular model.

Pardon, a correction here. The same car when sold to a dealer won't fetch a Rupee beyond 8L as the dealer would calculate depreciation on the purchase price, which would have been 16L tops in 2015. In fact some dealers, would further undervalue, as the depreciation is calculated on the ex-showroom price.

However, it is more of a demand and supply and as you said above, the inflation which has kept the prices high. Also, not to forget that post BS6 implementation cars have steathily become expensive by a good Rs.50k-1L with not many features additions.

[KiloAlpha]

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.
...

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.

[JoshMachine]

Originally Posted by shankaranand

I see asking prices upto 75% and above for 5 year old cars.. Really!..
In UK/US, typical depreciation is 50% in 3-4 years for exceptionally maintained cars.
why are these so expensive in India??

In my view, there is no absolute 'across the board' %age view in terms of car depreciation for India or for that matter, any other country. It greatly differs across car models.
There are multiple factors and the biggest among them I feel, is probably lack of claiming benefits on depreciation at individual income tax level coupled with absence of regulation in the used car market.

Re-posting this diagram from an old thread for some perspective, though:-



Source (How fast does the value of a new car depreciate over a few years?)

Originally Posted by Thermodynamics

A five year old Creta, 1.6Crdi Automatic with 36k on the odo is quoted 10.9L which I think can be easily negotiated to less than 10L. A new car equivalent today costs about 19.5L so the depreciation is ~50% which IMO is pretty decent for a popular model.

That isn't the right /technical way to calculate depreciation for a car. Your example shows the relative valuation (increase, mostly) over a period of time and not the depreciation. 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.
IMHO, the right way to calculate depreciation for a car would be to find out the original price of that same car when purchased newly, few years ago.

[greenhorn]

Another factor is that inflation in India is steep. Car prices have gone up significantly in the recent past, which creates strong demand for used cars, which end up holding their value because it's still a lot cheaper than buying new.

[pgsagar]

Yes, used car prices are crazy in India. Some guys ask 95 per cent of O.R. price after 4 years and 50k Kms. What universe do they live in? Heck, I wouldn't consider a penny above 60 per cent to be worth for such cars. Again, assuming they are in pristine condition.

IMO, the worst places to buy used are Bangalore followed by Hyderabad. The best places to buy used are Delhi, Mumbai and Kolkata, in that order. And, one should stay miles away from successful models, such as Innova, Creta etc. The asking prices for such cars sound absurd. Better to buy its less successful but equally reliable rivals.