Planning to buy a car? Festive season is best time or wait till new year

Those who switch regularly should wait until the new year

Customers have an added reason to cheer this festive season, as all leading carmakers — including Maruti, Honda, Tata, Toyota — are offering discounts of up to Rs 2.5 lakh. One question prospective buyers need to answer is whether they should buy now or wait till the new year.

Why buy now: The advantage is that you may get a lower price. Discounts tend to be the best at this time of the year. Shashank Srivastava, executive director (marketing & sales), Maruti Suzuki India, says, “The entry segment has witnessed a surge in demand this year. We are now offering festival edition variants of Alto, Celerio, and WagonR.” And many of these models are being offered with discounts (see table). 

If you wait till January, you will miss out on these offers. Adhil Shetty, chief executive officer, Bankbazaar, says, “There will be fewer offers in January than in November. The majority of auto brands also tend to hike prices by January, which, when combined with the drop in discounts and bonuses, will lead to a higher price.” Shetty is referring to the exchange bonus on old cars, which tends to be the best during the festive season. Shetty adds, “Attractive finance and insurance schemes are also available now.”

Why wait until January: If you buy in January, the discounts may not be as attractive. But the date of registration on the car will the new year. You stand a chance of getting a higher resale price for it with that.

If you buy now, your car will carry this year’s registration date. An additional year will get added to the age of your car, and that will depress its resale price.

Let’s explain with an example. (We are assuming that the two cars being discussed are exactly similar). Assume that A buys a car now. With the discounts he gets, it costs him Rs 4,75,000. He sells it after six years. Assuming there is a 37 per cent loss of value in six years, he gets a resale value of Rs 2,99,250.

B waits until January to buy the same car. The discounts are not as good, so he gets it for Rs 5,00,000. If he sells it on the same date as A, his car will be five years old. Assume that the erosion in value over this period is 30 per cent, he gets a price of Rs 3,50,000. While the specific numbers may vary from one case to another, these are the factors that will determine the resale price. 

Amit Kumar, head, OLX Autos India, says, “There’s no doubt that resale value is an important parameter. But the age of the car is not the only parameter that affects the resale value.” Other factors like the number of miles it has run, its brand image, maintenance cost, after-sales service, also have a bearing.

Websites of many sellers of used vehicles will allow you to get an estimate of the resale value for your car model. Use them to run the numbers. Broadly speaking, if you plan to own a car for the long term, you should avail of the festive discounts. But if you plan to sell it early — within three-four years — buying in January may be better.