Mahesh, The Economic Times
Mumbai, October 19, 2012
“Bring the old and take a new one.” Manufacturers and dealers of white goods and cars come up with exchange offers during the festive season. With Navratri and Diwali around the corner, you are likely to see many such offers in the coming days. For example, car companies are offering Rs 20,000 to Rs 1 lakh as exchange bonus this festive season, depending on the model you choose. Similarly, you could get Rs 2,000 to Rs 8,000 for your old refrigerator depending on its condition.
“In the case of consumer durables and white goods, there is no organised resale market. Given the hassles involved in locating a buyer for your old product and the time and energy it will consume, it makes sense to go with an exchange offer,” says Devangshu Dutta, CEO of Third Eyesight, a consulting firm on retail and consumer durables. However, the rule doesn’t apply to cars.
“If you upgrade your car to the same brand, it makes sense to opt for an exchange offer. However, if you are changing your brand, it may be better to sell the car in the second-hand market and buy a new one,” says Roshun Povaiah of Cartoq, an automobile website.
THE TROUBLE WITH RESALE
There is an active resale market for cars, but there is no such market for white goods or consumer durables. Your neighbourhood scrap dealer won’t offer you more than Rs 1,000-1,500 for a fridge or a washing machine in perfect working condition. You could advertise on some websites, but getting a buyer and the right price depend a lot on your luck.
Even if you are lucky to find a buyer, transportation cost would be another issue. Also, going through the drill may consume a lot of energy. That is why many people prefer to give it away to friends, relatives or domestic helps than selling these dirt cheap.
“In most cases it may make sense to dispose of your old appliance to the dealer itself,” says Devangshu Dutta. However, check with at least two to three dealers to get a fair idea of the resale price before taking the final decision.
CARS ARE DIFFERENT
If you are looking to sell your old car and buy a new one, zero down on the model first. If you are upgrading to the same brand, the manufacturer or dealer may offer you a loyalty bonus. This could be crucial in your decision making.
For example, if you plan to sell your old Maruti Alto and upgrade to another Maruti car, say Maruti Swift, you may get a loyalty for staying with the same manufacturer. The loyalty bonus could vary depending on the model. It is typically around Rs 15,000 to Rs 25,000.
“Chances are when the loyalty bonus is added, the resale amount you are getting could be higher than what you may get by selling your car in the second-hand market. Also, since it’s the same dealer, the total amount is adjusted easily and helps you make a down-payment for your new car,” says Roshun Povaiah.
However, if you plan to shift to another brand, things won’t be the same. For example , if you wish to sell your Maruti car and shift to a Toyota make, you may not get any loyalty bonus.
“In this case it would work better if you independently sell your old car, than giving it to the dealer in an exchange offer,” says Banwari Lal Sharma AVP (marketing), Carwale, Automotive Exchange.
Since cars enjoy an active second-hand market, you do some research to estimate what kind of price you can get for your old car. Manufacturers have their used-car buying arms also.
For example, Maruti True Value, Mahindra First Choice and Hyundai Advantage are some manufacturer secondhand dealers. Added to this, there are websites, local used-car dealers and even garage mechanics who double up as car agents. They too can help sell your car. Get an estimate from a couple of dealers on what they are ready to pay for your car. Compare that with what the new car dealer is ready to pay, and go with whoever is paying you more.