Cars have come a long way from being tools to travel from A to B to being a lifestyle quotient. Thus, the ownership experience has also witnessed a sizeable change which further creates varied demands and expectations from one’s vehicle. But now in this complex world, the ownership of a car is being questioned. Finance experts will say: do you really need a car? And while in urban metros, because you can catch a ride from your phone, this may seem the practical thing to do. Don’t own a car, use a taxi, for just about everything.
However, mobility isn’t that easy where you shed the cost of ownership and taxi everywhere. It’s equally complex having multiple needs at multiple times in the day. In fact, the onset of pandemic taught the world an important lesson: you can’t take away personal transport. Ever. The demand for cars went up, especially pre-owned cars. But we’re not concluding just as yet. We’ll break this down so you can judge for yourself, do you really need a car? And if yes, which one, new or pre-owned?
So how do you decide? You know what’s the biggest factor? Utility. Your utility decides everything. It’s the first domino in the game. Easier said than done, you can decide your utility based on these quick four points:
- Distance: An average user would use their car for 10,000 km in a year or 1,000 km in a month or 30 km in a day. Don’t take out your calculators to check the math. These are ballpark figures to see where you fit. Based on your routine, whether daily driver, weekend user or hardly using in a year, if your distance is close to these figures, then yes, you need a car. If the distance you cover isn’t remotely close to this reference, you’re probably okay without a car but you can choose to own for the flexibility of having one.
- Fuel: This is a hot topic at the moment. Convention dictates that more you travel you lean towards diesel / CNG. Again, if you’re travelling less than the benchmark mentioned above, you’re fine with a Petrol car. Diesel / CNG cars would be better with drivers who on a single drive go above 80-100 km and quite frequently. Since you get more kilometres for that same unit of fuel, it’s ideal for long journeys. But in city traffic conditions your mileage is more or less the same for petrol, diesel & CNG. If price is the only determining factor, then diesel or CNG take a better position but the upfront cost of ownership is higher.
- Size: If you’re mostly driving solo with family jumping in occasionally, you’ll be fine with a hatchback or sedan if you need the extra bootspace. If your commute usually involves roadtrips with family or travelling across cities for work, you’d need something bigger, a family MPV or maybe an SUV. The role of compact SUV is gaining prominence in this confusion, as it bridges the gaps of a hatchback & sedan, providing good seating position, enhanced space but compact size and yet good driving feel with the economics of a hatchback / sedan.
- Gearbox: Straight up, manual drive gives you more control over your mileage and engine power. So, if you’re nit-picky about these things, manual drive it is. But if you’re traveling long distances frequently or limited distance but for a longer duration owing to traffic, an automatic gearbox will give you comfort like no other. It’s that simple. Effect of the gearbox on the cost of the car, maintenance, breakdowns etc. have not much bearing for an average user. Having said that automatic gearboxes will only improve from here on as it becomes the popular choice for drivers across all spectrums. Not the words a petrolhead wanted to read but it’s reality.
Now, based on these four points, you can determine your utility with a reasonable understanding of what goes into owning a car. You’d think we’ve left out “Price”. What a terrible oversight! No, price will be our factor in determining the total cost of ownership. Price alone should not dictate what car you should own. And based on the utility factors, we broadly classify the user types as following:
- Less Than Average User: Your usage is low and an outside chance you may be better off without a car. Maybe you’re only learning to drive or need one for ‘just in case’ type situations. So, you’d want to own one for your and your family’s convenience, you definitely should be opting for a pre-owned car. Instead of spending the 5-6 lakhs of your savings on an entry level new car, you can spend about 2-3 lakhs for a moderately driven 7–8-year-old pre-owned hatchback / compact sedan from the organized sector. It’ll help you get a car with some safety nets like quality, warranty etc. and the shelf-life of such cars is easily 4-5 years with regular maintenance.
- Average User: Your usage is at par with the 10,000 km per year distance travelled. At this point, you’ll be convinced to buy a new car. But that’s not necessarily the case. You may consider buying a compact sedan or a compact SUV ranging between 8-12 lakhs but you may want to save some of that upfront cost and buy a pre-owned car for about 5-7 lakhs. It’ll help you get a chance to upgrade to some premium sedan / compact SUV at an offset and you may choose to upgrade to an even better pre-owned sooner than you planned to upgrade your envisaged new car.
- Regular User: Your usage is quite above the 10,000 km / year mark and you may need a car almost daily. You may even have multiple users of the same car in your house. So, you should be looking to invest in a new car and take some loan or tax rebates if your job / business permits you to do so. If by chance you’re restricted with a budget, you may opt for a 2–3-year- old pre-owned car of the same make & model you had in your mind. It won’t help you save more than 2-3 lakhs but it’ll give you some space in terms of better brands and models other than the ones you were originally considering.
- Heavy Duty User: You are at top of the car pyramid and you guzzle through your car every 2-3 years maybe. Your utility, be it personal or commercial, you need the complete warranty and extended warranty program of your OEM and there’s simply no room for compromise. Hence, you are better off with a new car so that you can max out that machine within your timeline and there are no ownership hassles before you choose to let go off the car. Only in the case where an ultra-low driven, less than a year-old car becomes available with all the bells and whistles (these kinds of cars do show up on the market) should you buy a pre-owned car.
In summary, this article is intended to help you settle on a choice of new or a pre-owned car but not just based on price but on utility. It helps you get more control on the thought process and enables you to make that plunge practically and not based on market trends, opinions of others or unsolicited advice. You alone need to decide your utility factor and land on a choice of your car.
If you ever need, a more comprehensive understanding or simply need to chat with us about this dilemma, you can write to us at tellmeshrey@pitbox.in. We’ll talk.
Tell Me Shrey @ Pitbox Motors.
