Economic Times
September 02, 2005

Things you need to know about second-hand cars

ANIL a 19 year old upwardly mobile college student in Mumbai is a happy teenager now. His dream finally came true last week when his dad bought him a car. The August 2000 manufactured, white bodied, fully loaded (power steering, brakes, and windows) Maruti Zen has burnt 60,000 kms of rubber and manages roughly 14 km to the liter. The car has a few scratches and needs some servicing for the smooth functioning of the automatic functions. Anil thinks his second hand Maruti Zen at Rs. 1.1 lakh is a real steal.

If you ask any of the auto experts, including the mechanics, most of them would vouch that Anil got a fairly good deal on his car. Many of them would say that the deal is 15-20% cheaper. "Agreed, the deal is a steal. But, the question really is, "Is the second hand car market flour - market flourishing or is there something more that what meets the eyes." There are several people in Mumbai, like Anil waiting to buy second hand cars and are have now suddenly started getting good deals. The above instance is not a single case or scenario. Numerous cars of different companies are suddenly available at 15-30% less than a couple of months back.

The next thing that pops up in the mind is, "So, where's the catch?". Leaving the technical aspects apart, there definitely are a few non-technical glitches. First, you must keep in mind that there has been a sudden change in the dynamics of the second hand car market. For this you need to factor in the rain. The second hand car market has changed, in Mumbai after July 26, the day when the great deluge struck Mumbai. It is due to the heavy rains that the second hand market for cars had dropped by at least 15%.

The outcome of this was that tens of thousands of cars were stranded in the rain for the next couple of days. Many of these cars were submerged in water or were partially drowned in water. These cars were later towed to the nearest service center of the local mechanic. A few mechanics in the suburbs we spoke to, mentioned that almost 9 out of 10 cars on the road had to be towed. According to media reports over three lakh cars were submerged in water. It is these cars that you need to be aware off when buying your second hand car.

Many owners have already gone ahead and repaired their cars, which are currently in working condition. But, that's often a short-term low cost strategy. However, technical glitches that don't meet the eye may yet to be resolved or come out in the open. For instance, water might have entered the engine (or any other part) and got mixed with the oil or fuel. Additional use might aggravate the internal damage in the future. Some of the existing owners are aware of these issues and are fast disposing off their cars at a discounted price.

Further, mechanics point out that the mattresses, seats and covers need to be replaced sometime in the near future. What many car owners have done is just machine dried the seats and covers, which might start smelling after some time. The only alternative, say mechanics, is to change them completely. This costs a bomb. As a second hand car buyer, you need to factor these kind of expense into your costs. Car manufacturing companies were offering a 50% discount on spare parts and have set up mobile servicing centers in Mumbai. But this is only for a short duration.

Next, a complete overhaul of the air conditioners, audio systems and other electronic items would be required. This will increase your costs to that extent. Insurance and depreciation are another concern. All, these issues, when added, may increase your costs in the distant future. So, although you might get the car at a discounted rate and it may be working fine for the time being, there is a chance that future maintenance costs could be high. It might be wiser to adopt a wait and watch approach before you step on the gas.