How do cars depreciate in India

Updated: Nov 9 2013, 08:47am hrs
Car buyers in India continue to have a circumspect approach towards purchasing a new vehicle, and the expectation for low ownership costs remains high. No car owners in the right mind want their vehicles to run into unexpected problems that, in turn, will lead to unexpected expenses on repairs.

However, going by our findings in our JD Asia Pacifics 2013 Vehicle Dependability Study, car buyers have to mentally brace themselves for opening their wallets as car owners in our study are reporting an increase in the incidence of repairs. And note, this is not a one-off trend. Long-term vehicle dependability has declined for the third consecutive year.

The study finds that 43% owners with 30- to 42-month-old vehicles experience unexpected repairs on their vehicle, which is an increase of 4% from 2012. In addition, the percentage of owners who have taken their vehicle for repairs at an authorised service centre three or more times has doubled from 2012.

The problems car owners face can be broadly classified into four categories:

Materials issue: These relate to the durability of materials, i.e. the ability of body parts to resist soiling, fading or depression on light force. Overall, a car that has consistency and quality of feel on touch tends to have fewer material-related issues.

Build quality issue: These relate to finishing issues like uneven gaps in the car that might give rise to buzzes, squeaks and rattling noise. This is caused by loose fitments of car body parts that, in turn, can also lead to sound and water insulation problems.

Usage related issues: These are problems that arise over time as the car ages. Problems like uneven wear and tear, deterioration in certain operating functions, components that become damaged and problems occurring due to excessive use, all fall into this category.

Design failure: These occur when various features are difficult to understand by the owner. For example, any feature that requires a lot of effort to operate or a component that is too difficult to reach, all constitute design failure issues.

A closer look at the problems reported by the car owners surveyed reveals that vehicles in India deteriorate most on material-related aspects as the maximum number of problems reported by these owners fall under this category. As displayed in the accompanying chart, almost half of the problems reported by car owners in India in 2013 are related to materials.

Mohit Arora

The author is executive director, JD Power Asia Pacific. Views are personal