We are into the second half of 2019 and the festive season is about to kick start within a couple of months. From October onwards till the end of December, festivity fever will remain on and like other sectors; the auto industry is also looking forward to increasing its sales during these celebration times.
Growth in Indian Automotive Sector
In the Indian automobile market, the passenger vehicle (PV) segment is the one under which hatchbacks, SUVs, sedans, etc., are classified. In the last two decades, the PV segment has witnessed tremendous growth both in terms of a number of players and level of competition. Many of us might remember that around 1995, only a handful of players were operation in the Indian market including Maruti and Fiat with Hyundai joining the league later in 1998 with Santro. If you compare those old days with the present time, you will find a contrasting difference between both situations. Today the number of brands available in the Indian market is around 30-40 and with this large number of players, the intensity of competition has also multiplied. In order to stay ahead in the market, all companies are coming up with new models equipped with the latest technology and modern gadgets, thereby reducing the value of existing models quite significantly.
**Reduced Life cycle **
What increased competition has also done is to reduce the lifetime of a car. A car that was good for at least 10-12 years in the past now hardly survive for 5-6 years. This reduced lifetime of a car has serious implication for the existing owners – If you don’t sell your car at the right time, you might not be able to sell it at all. Even if you are able to find an interested buyer, you won’t be able to get a good deal because the market offers newer, less old options to the prospective buyers.
New Launches and Value of Existing Cars
One of the strategies that carmakers usually adopt to attract new customers is the launch of new models of their cars in the market. For buyers who are planning to purchase new cars, these new launches are positive as it increases the choice and also gives them a certain degree of bargaining power. However, for the existing owners, the launch of the new models is not good news. This is because the new models' launch will have a negative impact on the price of the existing cars. The same logic applies to the launch of the facelift version though the drop in case of a facelift is slightly less than in case of an altogether new model. Still, both conditions are not encouraging but then these situations are increasingly becoming common these days. Contrary to the previous trends when facelifts used to come at least 3 or 4 years after the launch of the model, today you will find this time interval has come down between 8-12 months. It won’t be hard to witness the launch of the facelift version of the model that has been launched in the market just a year or six months back. Not only the new/facelift versions come with enhanced aesthetics but also manufacturers equip them with the latest equipment and features to make them more attractive for prospective buyers. This means not only your model misses out on the looks department but also lacks the next-generation features that the customers are quite interested in. In such a scenario, keeping your model for long will ultimately make it outdated and decrease its value in the eyes of prospective buyers. Therefore, it is a far more intelligent decision to drive your car for a couple of years and then sell it for a good price rather than keeping it for long.
Impact of Model Year
Another important factor that has an impact on the value is the model year, i.e., the year in which your car is registered. For example, if you have purchased the car in 2019, its value is going to depreciate by 30% (approximately) as we move into 2020. That’s not to say that other important factors such as kilometers driven, condition of exteriors and interiors, engine, gearbox, and suspension system, etc., don’t have an impact on the value of the car. All these parameters impact the car’s value though the change of year takes a considerable toll on the value compared to other factors.
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Also Read:- How to Determine the Right Time to Sell your Car