NFO pegs Toyota, Hyundai high on resale rankings

The 2003, inaugural Used-Car Buyer Study (UCBS) is based on the responses from 4,741 used-car owners covering two-to-six year old vehicles.

The official depreciation index is calculated using only two-year-old vehicles to ensure consistency across all 26 models covered in this study.

The models leading their respective segments on the depreciation index are Maruti 800 (entry compact segment); Hyundai Santro (premium compact segment); Tata Indica Diesel (small car - diesel segment); Hyundai Accent Petrol (entry mid-size segment); Honda City (premium mid-size segment); and Toyota Qualis (sports utility vehicle or SUV segment).

"It is not surprising that the top-ranking models in each segment are also the volume selling models in the market," said Rajeev Lochan, general manager at NFO Automotive.

"India is a value-driven market and best selling cars are those that offer best value in the long-term, which includes the resale value."

The prevailing used-car price of a two-year-old vehicle ranges from Rs 140,000 for an entry compact car to Rs 4,50,000 for a premium midsize car.

These prices are largely reflective of used-cars purchased from individuals and used-car brokers.

The percentage of customers purchasing used cars from new car dealers is still limited in the marketplace.

"The data from our other syndicated studies revealed that new car buyers are also considering used cars when shopping for a new car," adds Lochan.

"At prevailing prices, used cars are an attractive alternative for new car buyers since they will be able to afford a larger vehicle. In addition to creating a business opportunity, a manufacturer sponsored certified used-car program can improve the resale for their vehicles, as current buyers indicate a willingness to pay 5-10 per cent more for higher quality used-cars that come with a warranty."

In addition to the depreciation index, the study analysed used car owner evaluations in key areas of car satisfaction, product durability, after-sales service, cost-of-ownership, and brand image.

"Used-car owners record lower levels of satisfaction compared with new-car buyers, particularly in the area of after-sales service," said Lochan.

"Improvements in aftersales service for used car buyers can minimise the significant loss of service revenue for authorised dealers."

The study also analysed how used-car buyers shopped for their vehicle. The study found that very few buyers pay for an expert to evaluate the vehicles "" most, in fact, rely on their personal mechanics and friends, low reliance on vehicle financing at 20 per cent compared to nearly 65-70 per cent for new car buyers.

Word of mouth, classified advertisements, and brokers are the key sources of deciding brand and price, there is limited role of the Internet and manufacturer-backed sources, the survey found.

It also found that over 60 per cent owners are pre-determined in their used-car model choice, and do not shop around.

Additionally, the age of car (model year) and kilometers on the vehicle are top-most evaluation criteria "" the importance of accident history, ownership transfers, and services, parts availability is relatively lower.