When a person goes to purchase a brand new car, the resale value of the vehicle is not something that crosses his or her mind. However, when the time comes to switch to a better ride, the resale value of the car becomes the number one priority especially as depreciation varies from car to car. A car that depreciates like a falling stone usually doesn’t have a huge demand in the second-hand market and the owner ends up taking a big hit when the time comes to upgrade. Similarly, a car that depreciates less over the same period of time usually has a whole lot of admirers looking to buy a used version and are therefore easier to sell and fetch a whole lot more money.
So how exactly is the resale value of your affected? Let’s take a look at three major contributing factors that can determine whether your car will sink or hit the jackpot in the second-hand car market.
- Availability (demand-supply ratio)The biggest reason for a car to do well or flop in the second-hand market is the simple demand-supply ratio, which affects cars in the same way it affects everything else in the world. Let’s take the Tata Hexa as an example. While it may not be the king of sales figures in its segment, the demand for second-hand Hexas is quite high and current owners are mostly refusing to part with the large SUV, giving it the best resale value in its segment. Conversely, if the demand for a vehicle is quite low in the second-hand market due to a lack of potential buyers, the resale value of the car drops significantly.
- Face-lifts and newer generation cars
Whenever a newer version of any item including cars comes out, the public pushes up demand for the new version, leaving the previous variant in the dust. With buyers focused on the new, the value of the second-hand car depreciates faster due to a lack of enough interest in said vehicle. The previous versions of the Ford EcoSport and the Maruti Dzire have dropped significantly in value since the arrival of the newer versions.
- Waiting period on new models While it is may be somewhat surprising for some readers, the waiting period for a new car can significantly increase the price of a second-hand version of the same car if it comes to the market. Buyers prefer not to wait for popular vehicles and are willing to pay a big premium over the regular asking price to get their preferred car even if it has had a previous owner or is not of the same generation. In the following list, we take a look at the cars with the best resale value, or the lowest depreciation, in their respective segments. This list has been compiled with the help of our friends at Mr Car, one of the leading privately owned chains of pre-owned car outlets in Delhi, Gurgaon and Mumbai.
- Entry level hatchbacks
The fierce world of the entry-level hatchbacks is a highly contesed one in both the new and pre-owned segment. The Renault Kwid has the best resale value in this segment thanks to the youth and first-time car owners who are willing to opt for a used Kwid instead of a new car, in order to save money. This demand results in the Kwid commanding the best resale value in a segment that also features the likes of the Maruti Alto twins.
The Maruti Swift still rules the roost in the mid-size hatchback segment. Despite the arrival of a brand new Swift, the demand for the Swift still remains sky high in the used car market, thanks to the long waiting periods for the new car.
The Maruti Baleno is the king of the second-hand market in the premium hatchback segment despite only arriving two years ago. This is once again due to the high demand for new Balenos, which results in a long waiting period. In a bid to avoid the wait, customers are willing to opt for a car with a previous owner thus keeping the demand and resale value high.
- Compact sedans
The Compact segment market may see have the Dzire in its ranks but the Amaze from Honda sedan gives the Maruti vehicle a good fight in the used car market. The Amaze’s class-leading comfort levels ensure that buyers prefer it to the Dzire in the pre-owned market.
- C segment sedans
The Honda City leads the C-Segment sedan market with regards to resale value. Consumers don’t mind paying extra cash for what they perceive to be a more premium offering. The City’s relative reliability and Honda’s strong after-sales support setup ensures that second-hand car buyers have an easy time maintaining their cars in the long run.
- D segment sedans
Toyota cars are known for the legendary reliability and the Altis is a perfect example of this. Thanks to their reliable nature and rear seats which can easily lull you to sleep in comfort, the demand for the Altis remains high, driving up the price of used cars to the very top of the segment.
- Sub 4 meter SUVs
The sub-4-metre SUV segment is dominated by the Maruti Suzuki Vitara Brezza especially in the second-hand market. Until recently, the Ford EcoSport was going toe to toe with the Brezza, but the introduction of the second-gen Ford SUV has seen its value plummet rapidly, while its Maruti rival still remains a favourite with those looking for good resale value in the used car market.
- Mid-size SUVs
The mid-sized SUV segment has only one king in the used car market – the Hyundai Creta. With its mix of feature packed and comfortable interiors and frugal yet powerful engines, this SUV from the Korean carmaker attracts a whole lot of interest ensuring it enjoys a high resale value in the second-hand car market.
- Full sized SUVs
The full-sized SUV segment is one that turned out to be rather surprising. The reason for the surprise is the Tata Hexa which beat off competition from the Mahindra XUV500. A high demand for the Hexa coupled with the unavailability of used vehicles, mainly due to the fact that owners are happy with the SUV and therefore unwilling to sell mean that the Hexa takes the crown in terms of resale value in the full sized SUV segment.
The Toyota Innova has remained steadfast at the top of the MPV segment despite a new version arriving last year. The Innova has one of the lowest rates of depreciation in the Indian car market and with its legendary reliability, consumers are willing to pay a premium for a second-hand car even if it has been run for around 4-6 years.
- Premium SUVs
The Premium SUV segment is yet another section of the car market where Japanese carmaker Toyota reigns supreme. The vehicle of choice for second-hand car buyers in this segment remains the Toyota Fortuner, thanks to its premium looks and low running cost, which makes it perfect for those willing to spend Rs. 15-20 lakh for a used SUV. The new Ford Endeavour though is now gaining quite a following in this segment.