market of pre-owned car combats the market for new one.
Need of used car:
The need of used car is consistently increasing due to following factors.
- Personal mobility
- Choosing private transport during pandemic period
- Rise in income of middle class people
- Preferring used car over new car as they are new to four wheel driving
- Consumer attraction towards new car models leads to frequent replacement.
- Increased productivity results in increased flow of spare parts availability.
- Profit gained by used car dealers is more than new car dealers.
Way of deals:
Used car deals are carried out by individual brokers, authorized dealers, banks, which come under organised sectors. They provide used car with fair price and good quality. Most of the used cars in montclair deals are carried out in digital marketing with attractive promotions and warranty.
Banks provide an online auction platform to sell the auctioned cars digitally. These sectors follow inspection protocol including checking of vehicle information, spare parts quality, service and accident history, MOT certificate.
Akerlof’s lemon model:
The flow of goods in user market is demonstrated by an economist Alkerof Lemon model, which insights the following
- Information can influence the market.
- Seller knows more information about the vehicle than the buyer creates information asymmetry which can collapse the market.
There comes the need of price valuation tool for precise price and detailed information of the vehicle.
Instead of manually calculating the price and depreciation rate there are many online sites, calculates used car price and do inspection directly and provides certification. This certification enables the vehicle user to recover the insurance if total loss event occurs.
Factors affect car valuation:
- Kilometres driven
- Number of owners
- Region of selling
- Mileage covered
- Selling or trading
- Initial price
- Type of fuel
- Depreciation rate
- Interior and exterior condition of car
- Car originality.
It is the factor which affects the car value over period of time. Each part of the vehicle is considered while calculating depreciation rate and the price value of a car depreciates by the moment it is buying and at the end of the first year it is reduced by 20%. Thus used cars avail most affordable platform for middle class people needs where luxury meets economy.