Current 2Nd Hand Car Market & Future

[Luckyj]

Hi Guys,

Need your valuable ideas & expertise on the current 2nd hand car market and predictable future.

Compare to an year ago, there is a big drop in most of the vehicle models. 2002/03 Allions are going below 3 M and even 2006/07 anniversary models are going in the range of 3.5 - 3.7 M range, where as an year ago it was well beyond 4 M.

Hybrids are invading like crazy and streets are flooded with models like Aqua, Fit, Vezel, Prius, Axio Hybrid and seems more & more getting registered and more orders been placed.

I heard but don't know its validity, that Japanese auto makers are going to discontinue manufacturing of non-hybrid cars from 2015/16.

So considering all these, what will happen to 2nd hand car market in near future? will it keep on falling in this pace? Will it be wise to ride with the wave, when it comes purchasing a new car....as Hybrids and Electrical cars seems to be the future?

[tcfern1]

It will go down further with the proposed tax reduction

[Rumesh88]

Very valid question but I'm afraid now it is anybody's guess. Now take tcfern1's statement above, I am sure if you happened to ask the same question from him a month back the answer would have been the other way round. If those in the automobile trade sensed a bearish trend i pricing why did they go for such volume orders?

[Crosswind]

Hi Guys,

Need your valuable ideas & expertise on the current 2nd hand car market and predictable future.

Compare to an year ago, there is a big drop in most of the vehicle models. 2002/03 Allions are going below 3 M and even 2006/07 anniversary models are going in the range of 3.5 - 3.7 M range, where as an year ago it was well beyond 4 M.

Hybrids are invading like crazy and streets are flooded with models like Aqua, Fit, Vezel, Prius, Axio Hybrid and seems more & more getting registered and more orders been placed.

I heard but don't know its validity, that Japanese auto makers are going to discontinue manufacturing of non-hybrid cars from 2015/16.

So considering all these, what will happen to 2nd hand car market in near future? will it keep on falling in this pace? Will it be wise to ride with the wave, when it comes purchasing a new car....as Hybrids and Electrical cars seems to be the future?

Ayyo Salli.

All this is because gon harak like you bought cars, thinking they are investments.

Now that prices are becoming stable at their true value (as they should be), people like you go on a tantrum about losing money.

The second hand vehicle market has never been a capital market. People needed to understand that. Unfortunately still they don't realize this. That's why they compare prices of cars then and now.

The intrinsic value of a 2002/03 Allion should be in the range of 2Mill, whereas the market price has been way higher than that, thanks to all the idiots who bought allions thinking they are making an investment. Sooner or later, the prices will stabilize near the intrinsic value of the car.

Good luck.

Edited October 15, 2014 by Crosswind

[tcfern1]

It may be due to the declining yen rate

[tcfern1]

It may be due to the declining yen rate that vehicle dealers have ordered high volumes of cars but not because of the tax reduction

[Rumesh88]

It may be due to the declining yen rate that vehicle dealers have ordered high volumes of cars but not because of the tax reduction

Do you know that the actual Japanese auction prices went up at the beginning of last month because of the declining Yen boosting the demand from other countries? Check the PKR value against Yen for the last two months.

Edited October 15, 2014 by Rumesh88

[Luckyj]

I agree. 2nd hand car market is full of exaggerations. Most people quote 10-12 years old 121s with above 3 M & its completely laughable.

I also think vehicle should not be an investment. But this is something Sri Lankan car market deeply submerged with.

so is it better to go for a new hybrid rather than spending on an overpriced 2nd hand car?

[B2Spirit]

With the election taxes might drop as some people forecast but it is anybody's guess @ the moment.

But even if that happens they wont last much long after the election i guess, at best it would last for a 3 month window between now and election.

So nothing will happen to the 2nd hand market in the short term.

If tax policy and exchange rate stays stable hopefully we might see common sense prevailing in the market where there is realistic depreciation.

Edited October 15, 2014 by B2Spirit

[Crosswind]

I also think vehicle should not be an investment. But this is something Sri Lankan car market deeply submerged with.

If 20 million retards think the second hand car market is a capital market, that doesn't mean you should.

Millions of retards in this country thought giving money to Pramuka Bank, Joe Sim, Golden Key, Sakvithi Ranasinghe, Danduwam Mudalali, Seagull Software, Goldquest, Lanka Global Lifestyle and many other shady businesses is an investment. You are probably too young to know who Joe Sim is, but time and again our ppl have lost their money because they thought they were 'investing' in something or the other.

The second hand car market is not any different from these. Anything that deteriorates is not an asset. This bubble was artifically created by people due to an externality (the silly tax policies by the government) and it has gone bust, the way it should have.

The only thing this country is deeply submerged with, are retards.

[DMendis]

I agree. 2nd hand car market is full of exaggerations. Most people quote 10-12 years old 121s with above 3 M & its completely laughable.

I also think vehicle should not be an investment. But this is something Sri Lankan car market deeply submerged with.

so is it better to go for a new hybrid rather than spending on an overpriced 2nd hand car?

Yeah, 121 are advertised 3 M range, dont understand why people buy it for that price.

If you just take a look at adverts you see a drop in allions (260) as well. Now they are going under 3.8 M for 2009. Its good that the 2nd hand market drop and stabilize in a real value margin. Cos we pay much more than the real value of the vehicle.

[Dafunkdi]

What happened in this country through out the last few years was absurd. This must be the only country where a vehicle can be used & disposed at a profit.

Now that things are changing, which is in a way good I feel very bad for all who paid thundering prices especially for something like Mitsubishi Monteros & Montero sport, The Kia Sportage & Sorento & Toyota Allion & Premio because they were the worst hit.

The government needs to do something to reduce the no- of vehicles coming in as if you notice that there is a significant increase in traffic levels at all times in a& around colombo. Since our infrastructure cant support such an increase something should be done.

If we consider the economic downturn (Even though ITN says its development & cash rich) prices may drop due to decline in purchasing power that goes on to reduce demand. Same effect is there with property. I hope that will drop too since right now land & buildings are not affordable.

If the current economic & other related factors from around the world continues, definitely prices should drop. Therefore vehicles are not a hefty investment anymore.

[xXx]

I don't think local bought cars intentionally as an investment. Since car prices always had an upward trend lot of folks spent lot more than they could afford on a car thinking if they ever run to any financial issues they can sell the car without incurring a loss. Somewhat similar to what happened in the US housing market that led to the financial meltdown.

The government needs to do something to reduce the no- of vehicles coming in as if you notice that there is a significant increase in traffic levels at all times in a& around colombo. Since our infrastructure cant support such an increase something should be done.

I don't think stemming the influx of imports is the answer. Unless you prefer only a selected/privileged group of individuals to be car owners. Plus I'm sure if the government does go ahead with such a program within no time we all will be bitching about how expensive and difficult it is to buy an new car.

What needs to happen obviously is to upgrade the infrastructure and/or boost the quality of public transport services.

[kush]

Anybody knows where I can get down a crystal ball, willing to exchange it to a used Corolla 141

[Watchman]

These "2nd hand car price" threads have never been of any use, until now. This thread had some really good posts with actual economical and intellectual depth! Kudos on that guys and not making this all about "X grade is expensive because it has climate control, G grade has tachometer P grade has push button"

[Luckyj]

High inflow of new vehicles has caused availability of competitive pricing for buyers. Besides there are many attractive leasing options available for new vehicles [especially for Hybrids], so it seems more & more people want to go for the new stuff. Thus people want to sell their 2nd hand vehicles ASAP to get cash and go for the new with balance from leasing. Probably this can be a reason for the drop in 2nd market with high supply of used vehicles.

I think there is a dilemma, whether tax on new vehicles will be increased or decreased from the budget. If it decreased, drop in 2nd hand market may happen in a more faster pace.

[Magnum]

What happened in this country through out the last few years was absurd. This must be the only country where a vehicle can be used & disposed at a profit.

Now that things are changing, which is in a way good I feel very bad for all who paid thundering prices especially for something like Mitsubishi Monteros & Montero sport, The Kia Sportage & Sorento & Toyota Allion & Premio because they were the worst hit.

The government needs to do something to reduce the no- of vehicles coming in as if you notice that there is a significant increase in traffic levels at all times in a& around colombo. Since our infrastructure cant support such an increase something should be done.

If we consider the economic downturn (Even though ITN says its development & cash rich) prices may drop due to decline in purchasing power that goes on to reduce demand. Same effect is there with property. I hope that will drop too since right now land & buildings are not affordable.

If the current economic & other related factors from around the world continues, definitely prices should drop. Therefore vehicles are not a hefty investment anymore.

I don't think local bought cars intentionally as an investment. Since car prices always had an upward trend lot of folks spent lot more than they could afford on a car thinking if they ever run to any financial issues they can sell the car without incurring a loss. Somewhat similar to what happened in the US housing market that led to the financial meltdown.

I don't think stemming the influx of imports is the answer. Unless you prefer only a selected/privileged group of individuals to be car owners. Plus I'm sure if the government does go ahead with such a program within no time we all will be bitching about how expensive and difficult it is to buy an new car.

What needs to happen obviously is to upgrade the infrastructure and/or boost the quality of public transport services.

The key is to improve the infrastructure, i recently went to the northern part of the country and you rarely see a vehicle on certain roads

[Supra_Natural]

It really is refreshing to see a reasoned, intelligent debate on a popular automotive topic on AL after a long while!

My 2c on the matter is that Importers saw a massive opportunity with the interest rate drop and the Hybrid mania and thus brought in massive amounts of Vezels and the like. Now they are pushing low rate leases, free servicing packages, "Sterling" warranty's and any crap it takes to move the metal.

The average Perera will always jump at a new car if it can be made accessible (which all this promotion is doing) but of course they need to sell their existing Allion/Axio first which results in them flooding the market and driving values down, their grand plans of using their appliances for a couple of years and then making their money back on them (or even more) have been pulverized by the very same importers who sold them the Axios and Allions in 2010/11 saying that they would definitely increase in value.

[The Don]

I think the other reason for the upwards trend of the car market was due to a deppreciating rupee, which increased cost of import, and in this country there is a trend of prices of newer cars dragging the prices of older cars up (cars actually behaving like an investable comodity). But the rupee has now stabilised so that aspect is nullified.

The rupee depreciation issue was caused by quantitative easing by the central bank amongst other things. But while car prices went up, sadly every other imported comodity also went up.

I also noticed a drastic reduction in lease interest rates. They now seem to go around 14% which is a historic low rate. Sadly savings interest rates have also plumeted well under 10%. Only a few years ago savings interest rates for 3 month deposits were over 10% with comercial banks.

[Dinukap4]

I think the other reason for the upwards trend of the car market was due to a deppreciating rupee, which increased cost of import, and in this country there is a trend of prices of newer cars dragging the prices of older cars up (cars actually behaving like an investable comodity). But the rupee has now stabilised so that aspect is nullified.

The rupee depreciation issue was caused by quantitative easing by the central bank amongst other things. But while car prices went up, sadly every other imported comodity also went up.

I also noticed a drastic reduction in lease interest rates. They now seem to go around 14% which is a historic low rate. Sadly savings interest rates have also plumeted well under 10%. Only a few years ago savings interest rates for 3 month deposits were over 10% with comercial banks.

Fixed deposit interest rates have gone down to 5-6 % .

[Supra_Natural]

I think the other reason for the upwards trend of the car market was due to a deppreciating rupee, which increased cost of import, and in this country there is a trend of prices of newer cars dragging the prices of older cars up (cars actually behaving like an investable comodity). But the rupee has now stabilised so that aspect is nullified.

The rupee depreciation issue was caused by quantitative easing by the central bank amongst other things. But while car prices went up, sadly every other imported comodity also went up.

I also noticed a drastic reduction in lease interest rates. They now seem to go around 14% which is a historic low rate. Sadly savings interest rates have also plumeted well under 10%. Only a few years ago savings interest rates for 3 month deposits were over 10% with comercial banks.

Fixed deposit interest rates have gone down to 5-6 % .

Lease interest rates are hovering around the 10-11% mark now actually...

[B2Spirit]

Govt is hell bent on getting the Fixed Interest Rate for loans under 10%.

Floating interest rates are already under 10% in some banks.

They are pushing banks hard to get this done.

So i think rate reduction is not yet over.

[Luckyj]

As most of you predicted, budget proposal was to reduce vehicle import tax

[Seeker LK]

As most of you predicted, budget proposal was to reduce vehicle import tax

Guess it is around 25%.

[The Don]

Guess it is around 25%.

As I have mentioned in another topic you have to understand the difference between percentage points and percentage.

Sadly a lot of journalists have misled the public as well on this. The actual reduction of tax is around 14.5% at best for the most generous reduction.

[KingSasanka]

Thanks @ The Don.

( http://forum.autolanka.com/topic/16427-how-would-the-market-react-to-the-new-budget-proposals/#entry268193 ).