Cars are some of the fastest depreciating assets you can buy. And waiting for the new year can bring even lower value to your used car, read on to know why.
The rate of depreciation of a new car is much higher compared to a used car. Being an inherently depreciating asset, a new car loses almost 15% of its value the moment you buy it and drive it out of the showroom. The year on year depreciation for a new car is between 10-15%, depending on the make and model. A new car can depreciate almost 60% during the first five years of ownership and it can be even higher in case of premium and luxury cars. Year of registration, the make and model’s popularity, kilometres on the odometer and the overall condition of the car are important factors in a used car’s resale value.
When someone is looking to buy or sell a used car, it doesn’t matter with the date of purchasing, be it early or late in the calendar year. The resale value in terms of a car’s age remains the same, irrespective of the month it was registered and every passing year can add to the depreciation. For example, if a vehicle is registered in August 2020, it will still be regarded as a year old .come 1st January 2021. This adds an extra 10% depreciation value to initial resale value, which is why it’s preferable to sell a used car before the year ends as you can avoid the extra depreciation.
Vehicles sold in India currently have received significant upgrades in features and safety compared to vehicles sold only a couple of years ago. Evolving consumer preference towards a technology-led driving experience has seen most vehicles now coming with better safety ratings, touchscreen infotainment system, connected car tech, Android Auto and Apple car play, panoramic sunroof, alloy wheels, heated seats, and more. These features were seen only in premium vehicles only a few years ago, but with tech becoming cheaper as it scales production, most of these features have found their way to vehicles priced around Rs 6 – 15 Lakh (ex-showroom).
Newer automakers like MG and Kia have seen a very positive start in the Indian auto market with the Kia Sonet breaking the record for highest units sold in the first month of sale. Furthermore, all-new models like the Hyundai i20 and the Mahindra Thar has led to a lot of people upgrading to the new ones. Auto manufacturers have already revealed plenty of new cars that are coming in 2021, which means even more choices to the new car owner and more pre-owned cars will hit the used car market. This will impact the resale value of your old car there’s already been an increase of almost 25% in pre-owned car sales of popular models like the Maruti Swift, Baleno, Hyundai i10 and Honda City according to reports. As 2020 comes to an end, even more used cars are expected to go on sale which may reduce your cars resale value come 2021.