Parameters that determine a car's resale value

Friday 11 October 2013, 12:42 PM by

Over the past few years, the demand for used cars in India has increased drastically. There are a number of reasons that are responsible for facilitating growth of the used car market. A high percentage of people, especially the ones who are new drivers, prefer buying a used car in order to sharpen their skills. There are other customers, who do not have the capacity to afford a new vehicle but still need a car. Lastly, there is a section of buyers who love purchasing new cars and keep doing so at regular intervals. In order to buy a new model, such customer sell the existing one, thereby, automatically, contributing to the supply in the used car market. In the present scenario, most people prefer selling off their old vehicles rather than keeping them forever, something that used to happen years ago. As a result of all this, anyone purchasing a car these days, naturally, takes its resale value into consideration.

It is really tough to estimate the resale value of a vehicle at the time of purchase. However, there are certain parameters, which, if considered, can determine the value of a car at any given point of time. Broadly categorising, factors like brand name, age of car, fuel type, colour and kilometres driven are all that one needs to calculate the approximate value of a pre-owned car. Some of these factors are more important than others and often end up being the determining ones.

The first and foremost thing that a prospective buyer of a pre-owned car looks into while making a decision is the name of the manufacturer. It is really hard for a brand to build a trusted relationship with its customers in India as they are highly demanding. Indian buyers have a tendency of being biased towards brands, irrespective of the kind of vehicle produced by them. This is one of the many reasons why Maruti Suzuki is such a successful brand in India. Not only does the firm produce vehicles that are affordable and fuel-efficient, its vehicles have pretty high resale value. Thereby, the name of the manufacturer has an important role to play in estimating how much a pre-owned car would be sold for.

Age of a car is an important determinant of its resale value as it directly affects the thinking of a prospective buyer. Anyone who is going for a pre-owned would want to purchase a the model that is not too old. This is because, newer a model is, the better it is in terms of technology and performance. Thereby, it is always prescribed to go for a pre-owned car that is, ideally, two or three years old. Notably, the maintenance levels of the owner heavily influence the condition of a car. There are many people who maintain their cars really well and consequently, increasing the longevity of vehicles. Therefore, it is absolutely plausible that are five year old car is in better condition than a model that is just years old. The colour of a car also has a sizeable role to play in determining its resale value. Colours like white, black and silver, according to statistics, have a high resale value.

However, there are two things that end up being much more significant than others in determining the resale value of a car, namely distance travelled and fuel type. The dynamics of the Indian auto market keep changing but one constant phenomenon is the rising of fuel prices. Diesel-driven vehicles, statistically speaking, have a higher resale value than petrol cars. The biggest reason for this is the mileage provided by diesel cars, which is distinctly more than that of petrol vehicles. Also, cars powered by diesel engines serve better in the long run, thereby having a high resale value.

The last and the most important factor that helps in estimating the value of a second hand car is distance travelled. Determining the resale price of a car is directly dependant on the condition of its engine, which, in turn, directly affects its performance. Usually, a car that is put on sale after being driven for long distances has a lesser resale value. As a result, anyone planning to purchase a pre-owned vehicle always prefers to go for a car that has not travelled too many kilometres.

Broadly put, these factors, more or less, sum up what all a person looks into while determining the resale value of a car. Now, there are several permutations and combinations of these parameters, which have the capability of altering the value of a car. For instance, it would always be preferable to buy a petrol vehicle, provided the number of kilometres travelled is less. Thereby, it is really important for a person to carefully look into all factors before coming to any sort of conclusion.

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