Wednesday, November 30, 2005

Used Lemons.

I have been figuring out the the Indian Used Car market recently, not because I'm looking to buy a car (Bombay, Car - you gotta be joking) but more out of curiousity. I had recently gotten around to going through a summary of George Akerlof's paper on Used Cars and lemons and after simple Googling revealed that Used Car buyers in developed countries have all sorts of protections from buying lemons. Heck, many of my friends in the States have no issues buying Used Cars, their main problem is trying to find 'Stick Shifts' (Interesting factoid, my cousin who stays in New Jersey told me that insurance rates on 'Stick Shifts' are a significant amount lower than cars with auto tranny's because the thieves don't know how to drive them!).
I remember during my first job with the auto section of an internet portal I had met up with the folks at AutomartIndia. Their business plan was simple - sell cars over the internet - this was 2000 after all and we were scaling the peaks of Dot-Com manna. Of course, selling a product such as a car online (especially in a country with an internet penetration of under one percent, back then) kinda fizzled out - however these guys adapted to this and today run a network of over 75 outlets where they certify and sell used cars. I believe they sold nearly 15,000 of them last year.
But the real success story has been Maruti. Two years ago, Maruti set up Maruti True Value as a way to sell off the cars that people got into exchange for a new car. I believe last year they sold nearly 35,000 cars. These 'certified' cars from these two guys and now even other auto companies have gotten into the act are checked for damage and all time-limited parts are changed. Brilliant.
Yet, they account for under 10 per cent of the total market for used cars in India. Two-thirds of the market is still dominated by sales of cars through 'known acquaintances'. Which means the person most likely to sell you a lemon might be a relative or a colleague. Isn't that a bummer, and given that the legal system in India is slower than molasses you're pretty much screwed if the 2003 Zen you bought from a friend has a misfiring cylinder - thats Rs 30,000 down the drain.
So if you are looking at buying a used car, and don't want to have been used to make Nimbupaani back in the day, I would suggest that you buy a car from these outlets. Heck, if you want to buy a trustworthy used Merc, buy it from a 'certified' guy. In fact, Hyundai, Ford, GM and DaimlerChrysler are gettingh into the act. And if you do buy a Used Car from the friendly guy who sits three cubicles down or your third cousin twice removed read these tips.
Talking about cars, if you are in Bombay - Autocar India and Castrol are organising a Supercar Mela at the Nehru Centre. The show is being kicked off by the one and only Indian to have bought his way into F1 and will feature a lot of very expensive metal. Not the Bugatti Veyron, but a lot of expensive metal. And yes, back back or not, there I times I wish I was Jeremy Clarkson.
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shyam said...

Ah, you were with autos thingie, which was being lined up for a revival around the time I'd left. Had given them a product brief which was umm.. quite radical and too useful for their tastes, while they wanted it done in their regular low-effort way and by then I'd left, so you get to see what you see now, PR rehashes and works of imagination :)

thalassa_mikra said...

K, I'm a bit puzzled by your cousin's "stick shift" observation. My boyfriend and I both drive "stick shift" cars, and have changed three insurance providers in the last three years. The "stick shift" thing was never taken into consideration in calculating rates.

But in no country in the world is it as easy to buy a used car as the US. My boyfriend tells me that buying a used car or bike in Greece is a painful, arduous process.

K said...

Interestingly, My cousin just bought a Jag and while it took 10 days extra to get delivery of a 'stick shift' he claims to be paying 25% less insurance that what he would have for an 'auto'.
Maybe in California things are different - as they usually are!

4WD said...

If i were in the US of A, here is what i would get. ">

1968 dodge charger:)

this apart, nice post on online games, i have my own take on my blog.

Lemon Seller said...

Read Confessions of a Car Salesman

Lemon Seller

shrik said... the one and only Indian to have bought his way into F1..

Surely you didn't mean that like it sounded, or did you?!

I mean, he might have gotten his only F1 points from a farcical race, but he's still pretty good..

K said...

Shrik : Ask him himself how he got the drive last year. He is not a bad driver, but I believe with Alonso, Kimi and now Nico all younger than our man, he has lost his chance to make a big mark. Fair enough, he had a shitty car, but I still don't think he is F1 calibre.