Used Car Buying Tips

Buying a used car is more complicated than buying a new one. There are concerns about what may be breaking or already been fi xed. Another concern with buying a used car is the warranty. Over half of the used cars today are being sold "as is". Buying an "as is" car is very risky once you hand over that money and sign your name on the dotted line, that car is your problem no matter what happens. Not all aspects of buying a used car are bad. Used cars can be the smartest way to go sometimes. If you are living on limited means, a used car is a great idea if bought outright. If you are not going to finance the used car, you will only have to get liability insurance which is much cheaper than full coverage which is required when financing any car. Another bonus is that a used car won't have fees attached to the price like a new car would. When buying a new car, the dealership adds fees like cleaning and shipping to the price. A used car, even when bought from a lot, will not have most of these fees. If you are in the market to buy a used car and need some extra cash, try E-LOAN for a car loan. By following the following simple steps, you can cut the risk of buying a car that will fall apart and become a black hole for your money. Buying a used car obviously carries a certain degree of risk. After all, with a new car you get peace of mind no one has driven the vehicle carelessly or failed to have it maintained on a regular basis. If something does go wrong, the car is under warranty at least for a period of time. These safeties are not usually included in the purchase of a used car. But used-car buying need not be as fraught with anxiety and terror as some may think. Knowing where and how to buy a used car as well as which cars to buy can alleviate most of the tension consumers feel about this process. If you are willing to spend time doing thorough research, you will soon be driving the car of your dreams, secure in the knowledge that you paid a fair price for your set of wheels.

Choosing a Used Car

How much could you afford? Before you begin your search for a good deal on a used car, spend time considering many of the same factors that would apply to a new car purchase: how you will use the vehicle; how long you plan to keep it and your budget including insurance, operation, maintenance and repair costs. What Car should you buy? Decide what car suits your lifestyle and image the best. Since you will probably own and use the same car for many more years, you need to anticipate future needs and lifestyle changes. Today you could easily consider buying a mid-sized car as these cars are available at great bargains. Narrowing down your dream list is a bit more difficult for used cars than new cars because there are so many more used vehicles. Talk to friends or acquaintances who drive cars that appeal to you; word of mouth is often one of the best ways to gather information about reliability or quirks of certain models. How Old is 'old'? If budget is top priority then you should pick a smaller, newer car rather than a large, older car. A larger car will have higher running costs - fuel, maintenance, tyres and spares will need more money. Your best bet is to look for something almost new a car two years old or younger. You could get a good deal because there are many car owners who don't want to be seen in 'yesterday's model' - they want to be seen driving only the latest cars. Buying a middle-aged car (3-5 years old) that has been treated well by its owner could be a great buy. Cars that have logged 14,000-18,000km a year are prime buys. Cars flogged badly by chauffeurs or heavily used ones are trouble. Analog odometer readings can be rolled back, or "clocked." This fraud is practiced by thousands of fly-by-night, independent used-car sellers nationwide. The effect is obvious: a high-mileage car is turned into a low-mileage car to increase the car's value. A car with low mileage, but with a lot of wear on the driver's seat or the brake and accelerator may indicate tampering with the odometer. How Much Should You Spend? It's easy to overspend your budget on a new car or truck. Here's how to avoid getting in over your head.

Do some Research
You know how much you want to spend on a vehicle, but do you know how realistic that "deal" really is? Get the valuation of the car done from a bank's valuator or just submit the car's details on CarWale.com and we shall provide you with the approximate value of the vehicle. Give yourself enough time to examine the car thoroughly. Do not purchase it at night, in the rain, or if you are too cold, too wet or too busy to study your choice. Always take the car for a test drive. Always have a mechanic check the car, particularly the underside.

Take a Test-Drive
The test-drive is, of course, an essential part of the process. Test-drive the car on different types of roads. Make sure the engine starts right away, and there are no unusual noises or vibrations. Look out for a shaky steering, it could mean front-end trouble. Test the brakes for signs of pulling. A car with low mileage should not have a brake pedal that looks worn out. If the car has a manual transmission, push the gearshift through various gears to see how it performs. If the car has steering without power assistance, city driving and parallel parking can be difficult, so try and test drive the car under many conditions.

Examine the Exterior

Look for signs of an accident, such as dents or new paint or chrome. Make sure the hood shuts properly. Check the body for rust or fill. Look under the car. Check for cracks in the frame, rusting or welding. Check the condition of the muffler, tailpipe and exhaust components. Look for signs of fluids leaking from the car, including oil, brake or transmission fluid. Push down the corners of the car to check the shock absorbers. If the car bounces up and down several times, the shocks are worn. Open the trunk. Check for a jack and the condition of the spare tire. Check for rust under the mats. Look at the tires closely for any signs of uneven wear.

Examine the Interior

Lift the hood and check the condition of the belts and hoses. Check the battery to see if it is cracked. Pull out the dipstick to see the oil level, and whether it's dirty. Check the parts and accessories, such as lights, horn, mirrors, seatbelts, radio, heater and windows. Make sure they all work. Have a friend check the outside lights for you. Make sure doors open and close easily, and that handles and locks work well. Check the dimmer switch, headlights and windshield washer. You should also check the odometer. It is against the law to change the odometer reading, and if you think someone has tampered with it, avoid the car.

Check the liens

When buying a used car, consumers should protect themselves by ensuring there are no outstanding liens against the car (for example: an unpaid loan). If there is still an outstanding lien, the car could be repossessed - even if you paid full price to the seller.

A Stolen Car
Always check the serial number on the Vehicle Registration card. Make sure it corresponds to the number on the car. Make sure the person who is selling the car actually owns it, and is not trying to sell a leased vehicle.

Making an Offer
If you decide to buy, you can make an offer either verbally or in writing. If there are conditions to your offer, write them down. For example, if you want your mechanic to inspect the car before the sale is final (and you have not already had the car examined), make the mechanic's approval a condition of the sale. If you need to borrow money to make the purchase, make your offer subject to getting credit at a reasonable rate. The seller may ask for a deposit. Make sure you state in your offer that the deposit will be refunded if the mechanic does not approve the car, or if you do not get the financing. As part of the offer, suggest the seller grant a 30-day warranty. The warranty should say that the seller will take the car back should any major problems arise with the engine or other parts of the car. This type of warranty will not cover accidents while the car is in your possession.

Avoiding Scams
As most of us know, used-car buying is a business that has traditionally created a bad name for itself. But while consumers and ethical auto dealers have benefited greatly from the internet, so too have crooked buyers and sellers. As such, you need to be aware of potential scams. Here are some of the most common ones directed toward buyers and sellers online: Certified Check Scams - This scam is often perpetrated on sellers of used cars over the internet through classified ads and auctions. A buyer indicates that he wants to buy the car and pay with a cashier's check. At the last minute, the buyer creates a reason why he needs to write the check for more money and have the seller wire him the difference. The check turns out to be a fake, but it is often discovered long after the seller has wired the money.

In addition, the seller is responsible for covering the money for the fake check. To avoid check scams, call the issuing bank before you accept the check and wait for the check to clear before you transfer the car into the buyer's name. The best way to avoid most scams is to make sure you never transfer ownership of your vehicle until you have the cash in your hand. That means, you either get cash from the buyer or wait for the cashier's check to clear. Avoid buyers who will never meet you or never wish you to see the vehicle in person (overseas). Avoid taking personal checks and allowing buyers to pay the car off over time. If buying, always verify the seller actually has/owns the item for sale and meet them face-to-face to view the vehicle. If you follow these few precautions, your buying and selling experience should go smoothly.

Dealer Tricks
If you are buying car from a dealer you must consider the dealers tricks. Most people dread going to buy a new car for one simple reason: the salesmen. I'm not saying all salesmen are out to get you, but we've seen our fair share of deceptive salesmen who use tricks or play on words to get that sale and make that commission. Nowadays, most car dealerships are trying to become "customer friendly". To help you find a good dealership and weed through the bad, we've compiled a list of dealer tricks and how to avoid them. If you ever find yourself in any of these situations, don't be afraid to leave the dealership. You can also let the salesperson know that you are leaving because of their trick and that you will not be back to that dealership to buy your new car. Word of mouth is one of the strongest forms of advertising and dealerships know this. Once you weed out the dealerships with poor customer service and poor sales tactics and find one you like and trust, you will be a loyal customer to that dealership and maybe even that particular salesman. Make sure you browse through our list to familiarize yourself with these tricks before you go to a dealership. Don't get caught unaware. Although we've only listed the tricks we've seen first hand, there are many more tricks that dealerships/salesman will try to play on unsuspecting customers. If you have encountered any new ones we have not listed and would like to share them with others and expose all the tricks we can, please email them to us atcontact@carwale.com.

Closing the Deal

When you reach an agreement on the purchase price of a used car, you may be tempted to think you're home free. In fact, there are several crucial steps that need to be done correctly, or all your hard work up to this point could be for naught.

Change in Ownership
Always ask the seller for the cars registration papers. These documents are required to transfer ownership of the vehicle. The certificate also provides the purchaser a chance to confirm vehicle ownership.

In Nutshell

Examine the car's repair record, maintenance costs, safety and mileage ratings in consumer magazines or online. Make sure all oral promises are written into the Buyer's Guide. You have the right to see a copy of the dealer's warranty before you make your purchase. Warranties are included in the price of the product; service contracts cost extra and are sold separately. Ask for the car's maintenance record from the owner, dealer, or repair shop. Test drive the car on hills, highways, and in stop-and-go traffic. Have the car inspected by a mechanic you hire. Find out as much as you can about the dealer from local consumer protection officials. If you buy a car "as is," you'll have to pay for anything that goes wrong after the sale. The Used Car rule generally doesn't apply to private sales.

All of us must have come across long rows of cars with for sale placards in our respective cities. Every city Ive been to has its own used-car district (or districts). I, for once, made the mistake of falling for that Accord 3.0 V6 going for the price of a Ford Figo Titanium. There was just no comparison. It was like choosing between a duplex and a brand new but tight one hall-kitchen. Of course, just as you wont get a duplex in the heart of the city, you will have to live with a few scratches on the outside and scuffed leather on the inside. Who cares if its used, as long as its luxury and performance, my heart shouted, sending my mind into numbness. Well, this is the kind of emotion the used car business in the country has been tuning into. At first glance, it looks like an industrial shredder that shreds even Tata Motors rulebook on value-for-money into tiny bits. But thats not the only thing it shreds. With such an inviting picture on the face of it, it is easy to fall prey to this giant shredder if youre not too careful about your steps as I was about to discover. Im quite assured Im not the only one strolling around the used car market. When theres everything available right from Maruti 800s to a low mileage BMW M5s and Bentley Continental GTs, I know there are many buyers as well. And relatively high number of casualties too! I had already taken the plunge and I thought I should try and decipher the parallel industry, which looks all glitter but is as unorganized as a gang from a UP village. Most of the things you are going to read are a firsthand account. Make up your mind The most important thing to do first is to decide. With an ocean of choice around, this can be the most difficult part. I can tell you that my tongue rolled out like a Hollywood red carpet when I saw the what a steal the Accord V6 was, but as soon as my mind got to do some math, it rolled back in and my heartbeat started soaring at the thought of 4kmpl the car would return. It was like a slow suicide strategy. Cheap horsepower aint necessarily cheap to run, was my first lesson. When zeroing in on a car, it is always important to jot down all your requirements and prioritise them, as youll need heavens choicest blessings to come across the perfect package here. In my case, I needed a three box sedan, preferable a C+ or D-segment car, reasonably specced (at least with leather upholstery) and a powerful motor. Brand and image were important too. What also governed the purchase was the price. Yes, I wanted it as inexpensive as it got. At the end of the screening, my choice was reduced to Honda Civic and Skoda Octavia vRS. The research Youll figure, it is much more comforting to step in to the market when you know what you want. It saves you from wasting time on unnecessary distractions and concentrate only on the available cars from your list. Once the car and budget is fixed, you need to get down to some ground work. Finding cars can take time and is an exhaustive process. The easiest way is to make use of online resources. Search tools on various websites enable you to shortlist cars depending on their make, model year, mileage, engine, trim level, locations and what not. Trust me, it is a lot easier doing this from from the comfort of your home or office than visiting used car dealerships. Once youre done with this, you will need to start calling people and fixing appointments to check out the car. Checking out the car This is the point where most people are taken for a ride, and not just literally. Checking out the car demands a certain amount of skill, so if you are not too sure about things take someone who knows the innards of a car along. Fix a time in broad daylight as it is easier to inspect the car. Shiny bodywork might mean a well-kept car but can also translate to replacement panels after a serious accident. Pop that hood and go under the skin. The mounting panels behind the bumpers, where headlamps and grille are mounted are a good place to start as they are bound to get damaged in the event of a serious front collision. Also check the radiator mountings. Most people (and service centres) prefer straightening the mounts rather than replacing them and signs of damage can be easily seen. Check for corrosion and rusty bolts. They might cause serious trouble in the future. If you can, check the underbody for serious damage and skid marks. Needless to say, check the bodywork all around, especially the door sills and also check to see if the doors shut without any obstructions. Check the tyres since replacing a set can be expensive. Open the boot and check the spare wheel. It sometimes shows signs of abuse. Also stand behind the car and check if the front and rear tracks are aligned in the same line. If they are offset, this is a sign of serious chassis damage. Always insist on the owners manual and service history of the car. Check the registration papers and the number of owners. Also check the validity of insurance and if any claims have been made. Renewal of insurance can cost you a decent sum. Once youre inside, check if all electricals are working, right from the light switches, audio system and cabin lights to all power window switches and power mirror controls. Also check if the central locking works perfectly. Check seat adjustments, especially if they are electric. These niggling issues can be expensive fixes. The test drive Then comes the test drive part. This should be fairly simple if you can gauge if everything is working just fine. Dont expect it to work like clockwork. Consider yourself lucky if it does, but you can expect a few signs of distress from a used car. It is important to see if the clutch is progressive (and not jerky), gears slot positively and engine revs freely right till the redline. Keep your eyes open for sudden hiccups while accelerating and slowing down and jerky power delivery. Smooth performance is an assurance of some decent amount of life left in the engine. Check brakes, they should be progressive and bite should be decent. Ask the owner if (and when) he got the brake pads replaced. It is always advisable to get the car checked thoroughly by a trained mechanic, given you have that kind of time in your hands and the owner of the car is willing. Things might get a harder if you have to contend with a dealer rather than the actual owner and all you are left with is self-assessment of the car. The dealer usually portrays that his is the best used car ever and you wouldnt get a car like in the whole universe. One blind step here and youll find yourself caught in the shredder blades. My advice - trust no one, except your own eyes. The finances While you are doing all of this, do not neglect the most important part the finances. If youre smart enough, youll already have either the cash ready or a ready strategy to get the funds organised quickly. I wasnt, and ended up losing a near mint condition Octavia vRS as someone with ready cash drove it home even before I could arrange for the token amount. I learnt the hard way that time, tide and deals wait for none. It is always good to immediately put down a token advance, if you think the car is worth buying. Coming back to the finances, all major banks offer finance on used cars but the rate of interest is pretty high, soaring up to 20 per cent in some cases. This means the car will effectively cost you double its value if you take up a five year loan. Check with your bank for deals based on your employment status and relationship with the bank. Sometimes it is also advisable to go in for a personal loan as the rate of interest works out to be cheaper. Also, some banks dont offer used car loans for cars that have had more than two owners. A personal loan might be helpful here if you have zeroed on such a car. There is a lot of paperwork involved so keep important documents like copies of your identity proof (passport, driving license, voters ID), address proof, PAN card, bank statements and photographs handy. Another way to handle this is through a DSA (direct selling agent) for bank loans. Your car dealer might be one in all probability and will cut down your running around time by a fair margin. Double and triple check the rate of interest, EMI amount and tenure of the loan before signing on the dotted line. Then there are a few other hidden costs involved. The dealers usually put in arbitrary costs over things like transfer of ownership, insurance, processing fee (for both the bank and the dealer) and handling charges. While they will emphasize all charges are mandatory, you can always bargain on some.I dont know how you will take to it, but buying a used car is big exercise, much more exhausting than buying a first hand car and those hours spent in the sun might also lead you to lose a few extra pounds. Nevertheless, if you think its worth the effort, go for it, I say. Remember the cheap duplex might mean a lot of extras than the tight one BHK. This not only includes more features at your disposal but also fat maintenance and fuel bills compared to a new small car. A new car comes with an almost free maintenance plan for a couple of years at least, mind you. The other way to look at it, is you will have the car in your parking that you cannot afford new right now. Go on, take the plunge but dont fall in to the shredder. As for me, my loan applications still stuck at the bank. I guess the longer it stays, there the better. I dont mind waiting for the price of the BMW 3-series coming down a bit more, eh?

New car models are landing onto our shores by the dozen, widening the choice spectrum for those who want to go for a used car. We discusses the opportunities the secondary market offers, especially in the light of the expected new launches in 2011

The new car market in India grew at a maddening rate of more than 30 percent in 2010. However, the used car market, which is still largely unorganized and less talked about, grew at an even faster pace. Although no official figures are available, rough estimates suggest that the calendar year 2010 witnessed a growth of more than 40% for the Indian used car market. And that growth is quite natural. Not all the people buying cars are buying them new. Those on a budget and with a long wishlist cannot quite drive home a new car. The used car market gives such customers the option to buy the car they need, at the price they can afford.

So does the flurry of new launches in the on-fire Indian new market affect the used car market in any way? Well, according to the industry experts, it does. According to Umang Kumar, cofounder, Gaadi.com, one of the leading used car buying-selling portals in the county, whenever a new model is launched, or an existing model is significantly upgraded, the prices of the model in the used car market go down marginally. There is, however, a flip slip to the story as well. According to Umang, with any increase in the price of an existing model, the prices of the model in the used car market also go up.

Commenting on the challenges faces by the used car industry, Umang say, there is trust deficit in the used car market, as th ere is no way to find out whether you are getting a good car or a lemon. Also, the demand for used cars is much higher than the supply. On our own portal, there are 4 buying queries for every 1 sale query.

He attributes this deficit to the high growth in the Indian new car market. In most developed markets, the used car to new car transaction ratio is 3:1, however, in India it is close to 1:1. What drives this fact is that any point of time the supply of vehicles is a function of the past sales. A few years ago, the sales of new cars were much lower than the current demand of used cars, as we are growing at a rate of 30%.

Clearly, there is an opportunity in the used car market to get a better bang for your buck. Heres what you need to know for an informed buying decision.

Should I buy a used car now, or should I wait?

Typically, if the car model that you are interested in is going to be replaced by an entirely new, or substantially face lift ed version in the same year, you have a good reason to stop and wait. However, if a replacement or an upgrade is not on the cards, the market price of the car of your choice is not expected to change much through the year. Here is a list of the mains tream cars which are slated for replacement/upgrade in the year 2011.

Maruti Suzuki Swift, Tata Nano, Chevrolet Spark, Swift Dzire, VW Jetta, VW Passat, Honda Civic, Chevrolet Aveo, Ford Fiesta

What is the best way to go about buying a car - agents, personal contacts or branded used car marts?

There isnt quite a better way to buy a used car than getting it from someone you know closely. The usage patterns of the car would be much clearer to you, and the chances of you being conned will be lesser. Another advantage comes from the fact that the hefty commissions that you (and the seller) have to pay to agents are removed from the transaction. This means a better deal for the seller as well as you.

Branded used car dealers usually perform a systematic check of all key aspects of a cars performance, and offer the car with a warranty. However, this luxury comes for a premium, and you have to typically pay anything from Rs 20,000 to 50,000 extra for the added assurance.

Getting a used car through an agent is advisable only when you know the man in question personally, and have solid grounds to believe that the car you are buying is reliable and properly priced.

What are the advantages of buying a used car?

Purchasing a second hand car, if chosen carefully, brings along many benefits. To start with, you get a bigger, better and mo re feature packed car for the same money that you would have spared for a smaller car with lesser features. You can buy a good condition used diesel car for the price of a petrol engine va riant. Also, a used car doesnt depreciate as quickly as a new car, as a car loses the maximum amount of its value in the first two years.

Apart from saving on the cost of the car, you start saving money on the insurance premium of the car from day one, as the value of your car is not as high as a new one. Also, for any given budget, buying a used car gives you more choice, as the prices for every used car model vary depending on mileage and year of manufacture. Unlike new cars, the price of a used car is n ot fixed; you can choose anything, from a small car to a diesel sedan for a budget of, say, 3 lakh rupees.

What are the disadvantages of buying a used car?

While the advantages of buying a new car are many, there are some risks and disadvantages as well. First and foremost, almost every seller would try to hide the faults with his vehicle to get a better price. Although there are quality checks to counter that in the organized car market, there isnt really a foolproof way to ascertain the health of a vehicle. Peace of mind doesnt come easy with used cars.

You wont get any warranty on a used car if you are buying it from an agent or through a personal connection. The warranties offered by branded dealers too are for a much shorter period and less extensive. Used car would also typically require more repairs and maintenance than a new car.

What are the various options I have if I want to go for a used car from a branded chain?

Almost all the carmakers in the country have entered the used car business nowadays. Heres a list of some of the leading used car brands in the country.

Maruti Suzuki TrueValue Hyundai Advantage Tata Motors Assured Honda Auto Terrace Toyota U Trust Mahindra and Mahindra's First Choice Chevrolet OK Carnation

Apart from these mainstream carmakers, even premium carmakers such as Mercedes-Benz and BMW have forayed into used car business and you can buy these luxury cars from company certified outlets. A simple Google search with the names that we have provided above will take you to the respective home pages of these used car businesses and you could choose from the certified used cars from the available list.

Apart from these branded online stores, do I have any other choices to look for a car from the convenience of my home? The used car market in India is cluttered with companies offering to buy or sell your used car online. There are scores of su ch companies which offer you an option to choose from hundred of cars for any make or model, and list your used car for sale for a nominal fee. Some of the leading online portals in the business are Carwale.com, Gaadi.com, Cardekho.com and Zigwheels.com. Searching for buy/sell used cars online will yield scores of other results as well.

Rising aspirations of the Indian middle class, increasing urbanisation and rising income levels, given the robust performance of the economy, have resulted in a distinct shift in consumer behaviour pattern over the years. Today, the consumer increasingly desires to upgrade from a two-wheeler to a four-wheeler, even if it is a secondhand vehicle. The used-car market in the country is witnessing a structural shift from the unorganised sector (which includes road-side garage mechanics, small brokers and car owners, among others) to the organised sector, with more automobile Original Equipment Manufacturers (OEMs) entering this business. From word-of-mouth references, auto fairs and newspaper classifieds, the second-hand car market is transforming into an organised and professional business. Though still at a nascent stage, with the market being dominated by the unorganised sector, the used car market in India is growing rapidly. The second-hand car market today is as attractive as the market for new vehicles for the OEMs. Increase in disposable incomes, rising affluence of the upper class and a plethora of new models launched in the market every year have led to people changing their cars more frequently than before. This, in turn, has boosted expansion of the used car market in India. What is fuelling growth of the used car market? Rising aspirations among Indian consumers Consumers intending to upgrade from a two-wheeler Rapid rate of launch of new models in the market Improved supply due to declining ownership/replacement cycle of vehicles Increased choice and transparency for the buyers Easier availability of finance Attractive schemes offered by players finance, insurance, servicing, warranty, etc Increased awareness/information due to emergence of online portals.

The second-hand vehicle market is now becoming organised with the entry of several OEMs. Maruti Suzuki Indias pre-owned car business sold 163,240 cars in FY10 with a growth of 33% over previous year. Given its huge market potential, OEMs cannot afford to ignore this booming market, particularly those who have attained substantial size with respect to sales volumes and customer base. Maruti Suzuki, Mahindra & Mahindra and Ford India were among the early entrants in the used-car business. Rising competition in the new vehicle market has forced OEMs to innovate in order to attract buyers. The entry of organised players has brought in greater reliability, quality and increased choice to the customers, which in turn has boosted the demand for pre-owned vehicles. With rising incomes and growing aspirations, demand for preowned luxury cars has also seen a significant increase in the recent past. Along with volume players, manufacturers of luxury cars such as Mercedes-Benz India have already entered this market, while super luxury carmakers BMW India and Audi are studying this market closely. Mercedes-Benz, which entered the Indian used-car business in 2010, expects this new venture to account for 10-15% of its car sales by 2011. The prime reason behind OEMs showing intense interest in this business is to facilitate sale of new vehicles by encouraging exchange of old vehicles. Presence in the used car market enables OEMs to increase market penetration and build customer loyalty. Further, several OEMs have entered the used car business in order to open up alternative revenue stream which in turn

gains greater significance in times of an economic slowdown, when consumers tend to shy away from or postpone making big-ticket purchases such as cars. Apart from having a new avenue of increasing revenues, the higher margins enjoyed in the used car business, as compared to new car sales, is drawing OEMs into this business. OEMs are even dealing in multi-brand exchange of pre-owned vehicles, as it facilitates them not only to retain existing customers, but also to target a much larger customer base and attract new customers. The entry of OEMs has changed the dynamics of the used car market, and has brought in increased transparency in the dealings. Also, the large organised players have eaten into the market shares of smaller players. With the organised sector offering certified used vehicles at competitive rates, along with finance and insurance options, warranties and service guarantees, the tide is expected to gradually turn in favour of this sector. As demand for pre-owned vehicles continues to outstrip supply, OEMs see huge opportunity in this business. Going forward, the current encouraging trend is likely to attract more companies into this fast-growing business.

CHENNAI: India's used car market, which has so far faithfully followed new car sales, is now all set to zoom ahead as a sentiment slowdown hits car sales in autoville. According to industry estimates, the used car market, which is currently around 18 lakh units a year, is expected to clock anywhere between 20% and 25% growth in the next five years, vrooming beyond the 40-lakh mark by 2015. Of this, the organized sector is likely to clock a 35-40% growth.

The good news for the used car business is that it is relatively less affected by the sentiment downturn that is now snuffing out growth in the new car market. India's new car sales, earlier expected to clocked anywhere between 13-15% growth this year, is likely to manage single digits, say industry insiders. But that isn't what used car marketers are expecting for themselves. "Currently the new is to old ratio in India is 1:1.1," says Jagdish Khattar, CEO of Carnation, a multi-brand auto sales and service venture. "So the old car market will grow much faster than the new and within that segment the organized sector will grow the fastest to bring the ratio closer to the 1:2.5-3 new versus old cars. That's the norm in developed markets." Khattar says the used car base is still small enough to clock 20-25% growth where the organized sector should trot up 35-40%. Given that the organized sector's share of the market is still very small around 10-11% that growth doesn't seem too ambitious. Rival multi-brand used-car retail company Mahindra FirstChoice says the current clip in old cars is already breathtakingly ahead of the new. "The organized part of the used car market is already growing at a 30-35% clip of which the certified organized segment is growing the fastest," says Rajeev Dubey, president, group HR and after-market sector which covers Mahindra FirstChoice, Industry experts admit the old car market will be hit much less than the new in the ongoing sentiment slowdown. "In the US, when new car sale slowed down, used car sales picked up," says Dubey. "In India so far the two have moved in tandem but the magnitude of the impact will be less on used cars. There will be some hit on the demand but since people will hold on to their old cars as they put off buying new ones, the supply side will also dry up a bit and two will neutralize each other," he says. Khattar agrees with that view. "Usually people downgrade themselves in a slowdown. In my outlets I have people paying a full advance for a car but we don't have enough sellers," he says. What may further help the used car market is its consumer demography. "The maximum number of used car buyers are first time car buyers," says Khattar. That and another interesting segment luxury car buyers should keep the market buzzing through the slowdown. "A lot of luxury car buyers prefer to make use of the depreciation to pick up a bargain," says Khattar. A 15-month-old Merc or BMW which has done 15,000 km will be available at anywhere between Rs 25-28 lakh, compared to its sticker price of Rs 37-45 lakh.