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How to assess the value of a used two-wheeler you are planning to buy?

by Sasidhar Nandigam, Chief Strategy Officer, CredR

As the country slowly unlocks, following the onslaught of the Coronavirus pandemic, you will in all likelihood be more hesitant in going to work in the metro, bus, or any public mode of transportation, owing to safety concerns. You would feel a lot more comfortable and safer driving your own private vehicle at such times. Well, you are not alone. As per a recent report, more than 70 percent of Indians, including possibly your best buddy, Sumesh Ranjan, will try to avoid using a public mode of transportation and will rather opt for a privately owned vehicle, rather a two-wheeler.

So, if Sumesh does feel like buying a second-hand two-wheeler for starters, there will be a lot of questions sticking around his head – which one should he go for and whether it is worth the price that he will be paying for it.

Recently, used two-wheeler demands have witnessed a massive surge of over 200% in online searches in metropolitan cities across the country. If Sumesh is a first time used 2 wheeler buyer, it is natural for him to be skeptical about navigating this pricing maze.

In India, these 200+ million used two-wheelers exist in a largely unorganized market which does not consist of any standard pricing mechanism which makes selecting the right used two-wheeler a tedious task. In such a scenario, how does Sumesh figure out if he is getting the perfect deal on a used two-wheeler or not? Let’s look at a few ways to approach this smartly.

First of all, he should think about the purpose for which he would use the vehicle for, whether it is for his daily commute or whether he would like to use it recreationally, once in a while. In all likelihood, Sumesh would begin his search for the perfect used two-wheeler with a search on the internet. Soon enough, he will be flooded with advertisements in every category he can possibly imagine. Once he knows what he is looking for, it is important for Sumesh to decide what category he wishes to purchase from – this will largely depend on his budget.

According to the general rule of thumb – the newer the vehicle, the better condition it is likely to be in. This in turn also impacts the overall cost of the vehicle.

Simple math can be done to assess the price of the used two-wheeler: Calculate price reference using the year of manufacturing. In the 1st year, a two-wheeler sees a depreciation of 30-40% on the original price. 

So let’s say, if Sumesh finds a 2018 Honda Activa in the market, he can make a quick calculation, i.e.: 68,000 (ex-showroom price) * 0.7 = 47,600 (benchmark price). If the vehicle is in great shape, has not been ridden much, and has overall all parts functioning, this will be a good price to pay. This will overall help him gauge the price of the vehicle. However, there are several other factors that will come into play here.

A physical inspection of the vehicle will help Sumesh better understand what he should be wary of. If he does not have many ideas about two-wheelers, it is always a good idea to take along someone who knows about them inside out. Also, there is no harm in having a second opinion.

While doing the physical inspection, he should have a hawk-eye for mechanical flaws – brakes, oil spillage, rust, scratch marks, mileage, kilometers run, and accidental damages amongst others. The flaws will help him negotiate the price. He must be sure whether he will be okay with the flaws or not, if any. On the other hand, if repair works have been conducted upon the vehicle to enhance its performance, it can also increase the price.

One of the best ideas is to take a test ride so that Sumesh can physically feel if the vehicle which he is going to buy is comfortable enough for him or not.

Once the physical inspection of the vehicle is done with, he should check for the necessary paperwork including RC (Registration Certificate), NOC (No Objection Certificate) and PUC (Pollution Control Certificate) and service book. Any of the missing paperwork would severely reduce the overall price of the vehicle and can help Sumesh in the bargain.

Overall, buying a second-hand vehicle is a good deal as he will be saving a substantial amount of money; test all its aspects- mechanical check, paperwork check. 

Once Sumesh finds his dream vehicle, it is important to be reasonable while negotiating the deal. If he feels that the deal is costly- he can walk away but he should remember how well the bike has been taken care of when he decides to haggle. A seller generally puts in years worth of dedication and money to keep the bike maintained and may ask for a little more, and a few times it is worth shelling out a few extra bucks for that peace of mind.

Contributed by –  Sasidhar Nandigam, Chief Strategy Officer, CredRAbout Sasidhar – A professional with over 10 years of experience working for Venture Capital/ Private Equity Funds and Start-ups in strategy, fundraising, and growth roles. An ISB pass out, his core expertise lies in consumer internet companies, and has been instrumental in scaling companies such as BigBasket, FreshMenu, and CredR. He is a regular speaker at various events on entrepreneurship. He lives in Bangalore and is a proud father of two.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Wheelsguru.)