There is a perennial question that dwells on the minds of all who are scouting the market for a pre-owned luxury car-If used luxury cars are a good investment or not. The simple answer is 'Yes'. However, there is always a chance that you could end up with a lemon. Why is it so? Well, effectively riding the depreciation curve will make it a good investment for you. But at the same time, if you end up with the wrong brand or an unscrupulous seller or a car with a dodgy past, even riding the deprecation curve will make for a bad investment.
What is Deprecation?
Depreciation, in accounting terms, is a method used to allocate the cost of the physical asset over its useful life. In the luxury car market, the car is an asset that loses its value. The depreciation curve is never a straight line. If you look into the vehicle market, the depreciation curve for a new luxury vehicle drops the steepest in the first two years since a new vehicle rolls out of a dealership. While the IT officer does allow you to depreciate it at 15% for the first year, in reality, the market value of some high-end models drops it 25% in the resale market in the first year itself, after which it tapers out.
So, a new vehicle will be worth about 80% of what you pay for it within a year and only 55% of the value within the third year. However, the decrease over the next 3 years (year 4 to 6) is only about 18%. This means that a second-hand luxury car depreciates slower than a new one.
Also, most cars models manufactured by German auto giants have a life span of 7 years before the model change. Thus, buying a used vehicle in the 3rd to 6th year of its life span will help you ride the deprecation curve effectively and at the same time use a car model relevant to the latest ones.
Lastly, with manufacturers now offering extended warranty on vehicles for up to 6 years and banks offering loans at almost the same rate of interest as new cars, you can expect no surprises on the maintenance front also while effectively saving a lot of money.
It is a great time to purchase a used luxury car as the market for used vehicles is growing in India. Auto Hangar Advantage is one of the most trusted dealers offering the best used luxury cars in Mumbai & Pune. For more details, contact us at any time.
