Assembled luxury vehicles command superior residual values compared to fully imported ones

IndianBlueBook (IBB), the industry-first 'pricing and analytics' platform for new and pre-owned vehicles in India, today released its study "Residual Value Analysis of the Luxury Car Segment in India - 2017."

The study which covers leading luxury car brands include insights on residual value across factors like fuel type, body type and production type.

Key Highlights:

Residual Value Pattern

-OEM's like Mercedes Benz and BMW are able to hold on to their residual values much better as compared to Volvo

-A combination of local manufacturing, superior after sales service network and evolved certified used car programmes is helping Mercedes Benz and BMW command a superior residual value

-While OEM's juggle with a combination of CKD or SKD for the volume drivers and CBU for the lower volume segment, Volvo's strategy of going for the complete CBU route is reflecting on the lower resale value (25% in Year 5) of their cars in India, as compared to the industry average of 35% for CKD luxury vehicles.

Factors Driving Residual Value

-While historically it has been believed that diesel vehicles enjoy a higher preference vis a vis petrol in the luxury segment, a series of actions taken by the National Green Tribunal and Supreme Court have driven down the difference between residual values of diesel and petrol cars

-Similarly, body type reflects no perceptible difference in the residual value of vehicles

-However, the study noticed a sharp difference in residual value curves between CBU and CKD vehicles.

-The general customer perception is that CBU vehicles face the problems of poor availability and higher costs of spare parts. Repairs take longer to complete as well. This perception plays a significant role in driving down residual value of CBU vehicle vis a vis CKD.

Residual Value Curve for Entry Level Segment

Luxury cars are aspiration and pre-owned luxury cars tend to be preferred over new cars when the price segment is similar - So rather than buying a brand new car, customers would jump segments and look for great deals in the used luxury vehicle segment

-Hence models like Mercedes C Class, Audi A3 and BMW 3 series command superior resale value as compared to the overall segment

The Report is part of a series of insights from the IndianBlueBook, which is India's first pricing guide for new and used vehicle valuations in India.

Indianbluebook.com has access to thousands of used car transactions every

month across retail and wholesale channels.

The company mines this data on a continuous basis to provide customers information and insight that would enable them to make prudent car buying and selling decisions.