Buy a New Car or a Used Car?

Riya is now settled in her job and wants independence in terms of personal mobility. While the option of Cab Aggregrators look feasible enough; she wants to own a machine that she can term as a ‘safer’ mode. Also after years of hard work, who wouldn’t want to flaunt their success? – Owning a car is still seen as a ‘status symbol’.

Now that Riya has decided that she ought to buy a car; a million dollar question revolves around her mind – whether to buy a brand new car or opt for an used one? We at Auto Punditz would want to answer that – A used car purchase would be more sensible. Let us see the reasons why –

  • New Car Depreciation: The moment you drive your new car off the lot, it will depreciate by as much as 11 percent of its value. Every car undergoes depreciation but a used car has an upper hand for the same when compared to a new car. It depreciates at a slower rate when compared to a brand new car. Have a look at the Depreciation Chart for better understanding:

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As seen above, Depreciation of a vehicle is at its peak during the first three years of purchase. But when you are buying a used car, you will obviously purchase it at a price which has already gone under major depreciation.

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  • Price of the Used Car: Buying a used car will not only be a much cheaper affair, but would also allow one to explore the higher segments. Ex: A friend of mine recently bought a top end Scorpio AT (2010 model with 52kms  on the odo) at a price of Rs.7 Lakh – while he couldn’t have sneaked a top end NEW Maruti Swift Diesel at the same price! Also note that the Top End NEW Scorpio would currently cost over Rs.15 Lakh.
  • Better Condition & Reliability: With time, today’s generation cars sustain for a longer period of time. The improved technology has enhanced the durability factor of the vehicles and thus the age of these machines has increased. Hence, buying a used car is much tension-free decision now.
  • Organised Sellers: Earlier the market was dominated by Brokers and lacked trust-worthiness. However, many OEMs and Organised players have jumped into the bandwagon of selling ‘CERTIFIED’ Used Cars. The experience promised is same as buying a new car and the same is backed with easy serviceability.
  • Cheaper Insurance: No matter the age of your car, insurance will be a concern. Rates will almost always be lower for used cars than new cars, but regardless, keeping coverage costs low is a good savings strategy.

Otherwise, The factors which will incline you towards New Car are:

  • It’s NEW, duh! – A new car hasn’t been in any accidents, hasn’t been mistreated by unknown evildoers, doesn’t smell funny, has seen no wear or tear, and comes with a clean history that includes only being driven off the line, onto a transporter, and then around the dealer’s lot.
  • New Launch – Almost 50% of the Top 10 selling cars today are the ones which have been launched in the past 2 years. Cars have become a fad today and customers are opting for newer models which are better looking and are loaded with latest features. The newer the car, the more modern the geeky tech that’s packed inside. Multimedia and navigation interfaces are constantly evolving and improving, so if you have to have the latest in gadgets (and don’t want to add them yourself post-factory) the selection will be better in the new-car showroom
  • Financing — Banks offer lower financing rates on new vehicles because the vehicles are inherently worth more and have not already been hit by depreciation.
  • Lesser Maintenance cost — Some new cars, mainly those from luxury marques, include free scheduled maintenance for a certain amount of time or mileage. This built-in cost saving should be considered in the final price analysis if applicable.
  • Hassle-free Purchase Experience – Once you’ve chosen a vehicle, or at least the brand you’re interested in, much of the new-car search can be offloaded on the salesperson, who can find the car you ask for. The same search in the used realm requires a lot more legwork on your part—hunting on the internet, visiting multiple private sellers, and driving from used lot to used lot.
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Indian Used Car Sales Statistics (v/s new car sales)

In overall, we believe that the Indian Consumer has aligned towards used car purchases and the segment has grown phenomenally well. As on date, used car sales have overtook new car sales and the same is bound to double by 2020. Hence, if you think buying an used car is smart, than you are right!

Top 10 cars of Nov’16

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Source: ET

*UVs and Vans are excluded from the list. Also Elite i20 figures do not include i20 active sales numbers (1316 units)

  • 6 out of Top 10 belong from the Maruti stable! Maruti is leaving no stone unturned to sustain Alto in the Numero Uno slot.
  • Only 2 Hyundai’s are seen in the Top 10 table. The month did extract the juice of the Korean major – ‘Demon’itaztion impact is clearly seen. Also did it find difficult to push stock to the dealers as year-end is approaching?
  • Grand i10 emerged as the best seller for Hyundai – With the demise of i10; Grand i10 is carrying a lot of stake ahead. However, a model change is expected soon – so will the numbers decline in Dec’16?
  • Tiago proves to be the comeback vehicle for Tata Motors. Tata Motors regain the 3rd position in the OEM Ranking after quite some time. A surprising month for Tata Motors though – rejig in the management earlier and now the ranking.
  • Kwid is for Renault what Tiago is for Tata. The entry level hatchs are back in the game! Alto, Celerio, Kwid and Tiago proves that even in tough times this segment will survive – Not many blackmoney hoarders would buy an entry level hatch 😉

November 2016 Car Sales – Snapshot

Two big highlights of the Nov’s statistics –

  • Maruti exudes clear dominance with over 50% Market Share (52.2% to be precise)
  • Did we see Tata silently climb up the ladder? Tata Motors is now India’s THIRD biggest car OEM!

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Even with ‘Demonitization’ aftermath, India Passenger Car Industry posted a humble growth of 2%. And like always, Maruti led the growth phenomena.

Toyota to change its ‘Fortune’r!

Toyota has officially announced the launch of the ‘next-gen’ Fortuner on 7th Nov 2016. Fortuner has undoubtedly been the most successful flagship model for Toyota and we have huge expectations from the upcoming model. Recently it has been challenged by Ford’s Endeavour and did lose the top slot of the segment to Ford. The lower numbers of Fortuner was also attributed by Toyota’s plan to reduce its own and dealer inventory.

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The next-gen Toyota Fortuner is based on the new the ‘Toyota New Generation Architecture’ (TNGA) platform, which also underpins the new Innova Crysta. Toyota claims that the SUV is lighter and stiffer and promises improved ride quality, handling, and safety. In terms of looks, the new Fortuner comes with a host of design and cosmetic changes – It’s sleeker and looks much agile.

Fortuner has always been a ‘HOT’ seller for Toyota and was no product could ever-emulate its success since the launch. Even Endeavour currently is far behind the volumes that Fortuner had gained in its best times. In 2013, Fortuner garnered ~1,500 units/month! The volumes for a >Rs.25 Lakhs costing product was humongous and made the competition look lame. The butch looking SUV made a niche for itself and contributed significantly to Toyota’s & Dealer’s overall profitability. Fortuner’s dispatches to dealers started since Aug’09 and has sold over 96k units till date! Let’s look at its sales journey over years –

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With Toyota’s timeless quality and reliability factoring in with the New Fortuner – we expect the upcoming model to help regain its ‘Fortune’ and move the model to the Top Slot in the segment again.

Petrol v/s Diesel Car Sales – Maruti Suzuki

We have been receiving multiple requests to share the Fuel-split Sales Statistics of cars. While we couldn’t compile for the entire industry, we are happy to present the same for Maruti Suzuki (which now contributes near to 50% of overall car sales in India). And yes, the results are surprising! Lets look at the statistics for September 2016 first:

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In Sep’16, 67% of Maruti Suzuki sales was contributed from Petrol variants and remaining 33% from Diesel variants. Offlate, the Indian consumers have inclined towards Petrol models due to marginalizing price difference between the two fuels and the excess price to be paid for Diesel models. But, Sep’16 was an exception or the trend has caught up strong in the Indian market. The last 6 month sales numbers will put better light on the same:

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  • The high Petrol sales for Maruti is also due to the Petrol-Only models in the portfolio (Alto, Wagon R, Gypsy, Omni & Eeco)
  • Apart from the Petrol-only models, these models have extremely high Petrol variants sale : Celerio (94% Petrol) and Baleno (80%)
  • The AMT variants also make a substantial contribution in Petrol models (we do not have any concrete statistics currently)
  • The petrol share is bound to increase with the launch of petrol variants on these models (Brezza, S-Cross)

We believe that the paradigm shift of consumers towards Petrol is going to stay and slowly Diesel cars are losing the competitive advantage.

Indian Automobile Industry – Back in Track?

The first 6 months of the current Financial Year (Apr’16-Sep’16) has been extremely promising for the Indian Passenger Vehicle Industry. PV Sales in India saw a growth of 12.34% vis-a-vis same period last year and posted a volume of 14,94,039 units. Sep’16 especially was encouraging as well – where the sales grew 19.92% and attained the highest volume in over four and half years! Sep’16 car sales stood at 2,78,428 units as against 2,32,170 units in Sep’15. The overall growth was fueled by strong numbers in UV segment and the segment in particular grew by 40.24% in the first half of the fiscal (3,73,504 units compared to 2,66,339 units in the same period of 2015-16). Seeing the trend, we had termed the word ‘UV’ology and find the detailed report here.  Other segment sales grew by meager 5.11% at 10,26,526 units in the April-September period as against 9,76,586 units in the same period of previous fiscal.

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With the current pace, India is poised to cross 30 Lakh units sales this year. It’ll be the first time India will achieve this milestone and is touted to overtake Germany as the world’s fourth largest automotive market! Let us look at the world’s top Passenger Vehicle Markets basis 2015 sales –

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Along with sales numbers, find included the population of the respective markets to highlight the potential India is currently at. We strongly believe that the Indian Auto Industry is at the inflection point of growth and shall see remarkable progress if supported by positive government policies and increase in disposable income of general public.