The growth in the used car market is directly related to the increasing purchasing power of the middle class, the ability to afford and rising demand for the latest models. Also, it is about “new experience” offered by car makers. This weekend Star Supplement takes a look at the mushrooming growth of pre-owned cars in Mysuru.

Second-hand car market revving up in Mysuru

By Kenneth Shishir

Mysuru’s expanding middle class is chasing the ‘Great Indian Dream’ of owning a car. This desire has given a boost to used car or pre-owned car market. Though an increasing number of residents are opting for used cars, many grapple with questions of trust, reliability and the necessary procedures for transfer of ownership.

The pre-owned car trend is also boosted by the fact that car manufacturers are coming up with new and upgraded versions and people are making a beeline to sell their old cars to buy the swanky ones.

The growth in the used car market is directly related to the increasing purchasing power, the ability to afford and rising demand for the latest variants. Also, it is about “new experience” offered by car makers that is driving people to sell their cars and buy new arrivals. Since the new car market is growing so rapidly, naturally it will reflect on the used car segment.

Though many car showrooms in city have exchange offers, the common grouse is that they quote less for old cars, forcing owners to sell the vehicle themselves. In the absence of organised players, more than 60 percent of all used car sales were earlier C2C (customer-to-customer) among friends and relatives with a ‘Circle of Trust’. The remaining sales were managed by local unorganised dealers.

Most of the first-time car buyers who prefer a second-hand vehicle are better off approaching the original manufacturers as most of whom have a ‘pre-owned’ section. However, with the coming up of organised players, buying a pre-owned car has become more organised and risk free. This has also resulted in pre-owned car showrooms mushrooming across Mysuru.

Reason behind increase in pre-owned car showrooms

Star of Mysore spoke to Bachchan, proprietor of Bandra Cars on Vani Vilas Road in Lakshmipuram. He is into pre-owned car sales since 15 years. He speaks about the reason behind the increase in pre-owned car showrooms, things to be taken care of while buying a pre-owned car.

Excerpts…

SOM: Off late, there has been an increase in pre-owned car showrooms in city. Why?

Bachchan: In the early 2000, there were only two used car showrooms including mine – certified and taxable used car showroom in Mysuru. Now there are more than 300. This is due to unemployment and less investment in this industry. Moreover, many who were earlier working in used car showrooms started their own business. This business is purely on commission basis. Instead of investing about Rs. 2 lakh for a car and earning a profit of Rs. 20,000, they are now earning the commission anywhere between Rs. 8,000 and Rs. 10,000 per car without investing. Also, those looking for a pre-owned car will get to choose from wide variety that suits their budget. These factors have resulted in the increase in pre-owned car showrooms in Mysuru.

SOM: How was the pre-owned car market then and how is it now?

Bachchan: Earlier, the pre-owned car market was dominated by unorganised sector which included roadside garage mechanics, car dealers and small brokers who did not ensure any reliable certification and consumers were often cheated. There used to be brokers who used to adjust the speedometer and retouch the vehicle to hide accident dents. Now with organised players coming up, pre-owned car market has started witnessing a new zeal with consumers happily picking up used cars. These players offer car-related customised services like body wash, oil change, polishing etc. to serve the rising demands of consumers. These services too help them in selling the car fast.

SOM: What are the brands available and which brands of cars are sold the most?

Bachchan: Almost all brands including imported cars are available with hatchbacks, sedans, SUVs of both petrol and diesel versions manufactured by Maruti, Hyundai and Toyota being sold the most. In the month of May, I have sold about 57 cars and a majority of them are Maruti and Hyundai vehicles.

SOM: How do pre-owned car showrooms get cars?

Bachchan: Bandra Cars has about 18 investors who invest in used certified cars. Others bring the cars from owners who intend to sell them when a customer approaches them. This is a less profit but more turnover business.

SOM: Why do many people prefer used cars?

Bachchan: Buying a new car is quite easy these days with easy instalment finance facility offers available in the market. However, the increasing rate of interest is a cause of concern. Another point here is people don’t want to miss an opportunity of buying a pre-owned car at half-the-price of a new car without any hassle of loan and interest. With soaring interest rates, there is a substantial decline in consumers purchasing new cars. Therefore, pre-owned car market is to stay. Another factor is that people who are fond of cars always prefer to have recent models. Therefore, buying new cars can be quite expensive for such car lovers. An appropriate and reasonable alternative is to invest in second-hand cars.

SOM: What are the things that a customer should look for before buying a used car and what facilities will pre-owned car showrooms give?

Bachchan: Before buying a used car, the buyer should first inspect the car (most pre-owned car dealers allow the buyer to bring his mechanic for inspection), verify the documents and check whether the car is free from traffic offences. The buyer can visit the nearest Traffic Police Station and ensure that all fines pertaining to traffic violations are paid. Most pre-owned car showrooms provide free transfer of documents, running insurance, loans and even give exchange offers.

Mistakes to Avoid While Buying Used Cars

Failing to arrange finances before buying a used car

You cannot afford to buy a car without planning on how much you can spend on the car. Whether you are buying a car from a dealership or from a private buyer, having a distinctive idea of the limit of your budget always helps in finding the best car for you to buy. Many people commit this mistake when they plan to buy the car. They don’t plan the exact amount to spend to buy the car.

Selecting a poor plan for monthly payments

It is another common mistake committed by buyers when they buy used cars with a payment plan that is longer in duration, which gives them comfort with small monthly instalments. While the relaxation in monthly payment is good, you end up paying much more than the actual cost of the vehicle once the payment plan ends. It is advised to make the payment plan that feeds you the advantages for the longer term.

Not taking a test drive

It is not just the mistake but a serious blunder made by people in a hurry to buy a used car. Taking a test drive before buying a used car is as important as buying a new car itself. When you test drive a vehicle, you can easily judge the performance and quality of the drive. Taking a test drive can often save you from regretting on a bad choice later. If possible take a car expert while taking a car for a test drive.

Not getting the car checked by your mechanic

It is another mistake that can lead to serious problems. People who do not get a used car thoroughly checked by a trustworthy mechanic usually face serious issues with its performance once they buy it. The seller of a partially damaged car might force you to avoid the car checked by your own mechanic and ask you to get it checked by a mechanic known to him to hide the damages. You must go for the through car check by your mechanic and only then decide whether to buy it or not.

Not reviewing the vehicle history

Not reviewing the vehicle service record is another mistake that should be avoided while buying used cars. The service record of the vehicle tells everything about its maintenance and repair. You can find yourself at ease to decide a specific amount to buy a car once you thoroughly analyse its service record.

Things to check before and after buying a pre-owned car

Check the documents

If you don’t want to be taken for a ride, check the vehicle’s documents thoroughly. Besides, make sure that the seller informs the Regional Transport Office (RTO) where the car was registered about the sale within 14 days of buying the vehicle.

Here’s a list of documents that you should demand from the seller before finalising the deal.

Registration Certificate: This is the most important document which provides vital information about the car you intend to buy, including its chassis number and engine number. If the car is very old or was involved in a major accident, the engine may have been changed, so ensure that the RC has the new number. Also, verify that the acronym DRC does not appear on the certificate since it translates into Duplicate Registration Certificate. If it does, ask the seller for the reason.

Insurance: After buying the car you desire, get the insurance transferred to your name, otherwise it will be a tough to process a claim in case of an accident. While transferring the policy, check if the premium has been paid regularly, the expiry date of the policy and if insurance has ever been claimed. The latter will help you know whether the vehicle was involved in an accident. Also find out if the car has a third-party or comprehensive insurance. If the insurance has expired or is due to be renewed soon, you could bargain with the seller for reducing the price of the vehicle.

Form 32 & 35: You will need these documents if the previous owner had taken a loan to purchase the car. Before buying, ask the seller to give you a copy of the No-Objection Certificate (NOC) from the finance company which will clarify that the entire loan has been paid. If you do not take care of this detail, you could land in trouble. For, after you take possession of the car and the registration certificate is transferred in your name, the lender may ask you — as the new owner — to pay the pending loan.

Service book: You should go through the service history of the vehicle since it will reveal to you the condition of the car. A vehicle that has been serviced on time and through authorised centres will be in a better running condition than one that has been not serviced frequently.

Road tax receipt: This tax is a one-time payment, which should be paid by the first owner of the car when he registers the vehicle. If it has not been paid, the penalty can run into lakhs of rupees over time, and you, as the new owner, will have to bear this financial burden. The tax varies from State to State, so you should ensure that the seller provides you a receipt for the tax paid.

Car purchase invoice: A dealer or a company will provide you a printed bill along with the car. However, this may not be possible if you are purchasing the car from an individual.

Buying from a dealer is less cumbersome as he takes care of the transfer of insurance and RC in the name of the new owner. However, verify that you are purchasing directly from the car owner and that the vehicle has not been transferred in the name of the dealer.

Almost all auto companies have their own pre-owned car outlets just like Maruti Suzuki’s True Value. Buying a pre-owned car from the auto company is probably the safest and easiest option since all the checks and documentation are done thoroughly by the company, which means that it will require minimum overseeing by you.

Not only is the car serviced properly before being sold, but the company will also offer a warranty up to one year and a couple of free servicing. Another advantage is that in case of any issue, you have an assured place to address your grievance.

Most vehicle owners do not transfer ownership: Traffic Police

A majority of owners of both two and four wheelers do not bother to transfer ownership documents after selling the vehicle. It will be a serious problem to them in future, said N.R. Traffic Police Inspector C. Kiran Kumar.

He told Star of Mysore that as per Motor Vehicles Act, it is the responsibility of the owner to transfer the ownership of the vehicle to the buyer. During routine checking of vehicles, traffic Police will file a complaint by looking at the name that is found in the RC Book.

He said that it has become regular problem for them where vehicle owners say that they have received notices though the vehicle does not belong to them.

“We have no option but to seize the vehicle after multiple violations and to catch the real owner. But till then, the owner who has the name in the RC Book would receive notices and he would be held responsible if the vehicle is involved in some major incident,” Kiran Kumar said.

According to the Indian Motor Vehicle (IMV) Act 50, the transfer has to be intimated to the Regional Transport Offices (RTO) within 14 days of the transfer of ownership. Similarly, the Act also instructs the transferee to inform the RTO about the change in vehicle ownership and produce the required documents within 30 days of the transfer.

Speaking about the precautions to be taken while buying a pre-owned car, Kiran Kumar said that the buyer has to check for the insurance of the vehicle they are buying and see to it that it has not expired and get it transferred. Non transfer of insurance will lead to problems in case the vehicle meets with accident resulting in fatalities.

Also, check for hypothecation of the vehicle and if the loan is cleared, see to it that hypothecation is cancelled. The buyer should also check the engine and chassis number of the vehicle and the better way to check a pre-owned car before buying it is to seek a ‘B extract’ report from the RTO as it would have all the details and the buyer can ensure that the vehicle he is buying is not a stolen one.

For pending traffic violation cases, a buyer can take the registration number of the vehicle he is buying to the nearest Traffic Police Station to check for pending traffic violation cases.