Clicky

badge

Sunday, August 04, 2013

Buying a newly launched model? Watchout

We want our cars to be unique, we want to show off the latest model. When an automobile manufacturer launches a new model, we want to be the first few to buy it and drive around. But is it advisable to buy a new model soon after its launch?

There're some disadvantages of buying a new model. Review the below

Risk of receiving a defective product- Automobile companies are under immense pressure to launch newer models as early as possible, get more eyeballs and sell more cars. What this means is that time spent on testing the product and perfecting it is often cut short. Take the case of XUV500. Due to its stunning looks and aggressive prices, thousands of customers lined up to buy it after its launch. Bookings had to be stopped and lottery system was introduced to decide who gets to buy one. However, after 2 years, the steam has run out.The initial customers had to live with an imperfect product, having lots of minor nuances and irritating defects (about brakes and so on). While Mahindra never officially admitted them or issued a recall, over a period of time Mahindra made corrections and improvements based on customer feedback and XUV500s produced now are much better than the initial lot. Essentially first set of customers paid 15 lakhs to work as free testers for XUV500, providing company with critical feedback, which in theory company should have found out during testing and fixed it before the launch.

With this perspective, it pays off to wait for 6-12 months after a new model is launched. Wait for feedback from initial customers, let the company take some time and do some improvements/fix issues (Most of the time this is done silently, without any recall or publicity, so as not to upset existing customers). Then buy.

Risk of flop model: All models are launched with lots of hype and fanfare. But within months, the gas may fizzle out. If a model doesn't click and is deemed a failure and you were one of its early customers, then you're vulnarable to below issues
- Reduced resale value, as the model is deemed flop and there'll be hardly any demand
- Non availability of spares- if the car is not popular, workshops do not store enough spares, to avoid he risk of capital locked up. This means, you'll either have to pay more or wait more.

Because of these two, I would recommend not to rush to buy a new launch. Wait for some time, let the initial customers start using it and share their feedback. Review market response and buy it after say an year. You may have to forgo peer recognition of having new wheels, but you'll have a higher chance of defect free product.

5 comments :

M.D.subramanya Machikoppa said...

ಗುಡ್ ಟಿಪ್ಸ್

BRS said...

Completely agree.

In fact I think Veeresh Malik (www.moneylife.in) had suggested that before buying a car, one should inquire about spare parts availability of a 8 or 10 year old model. This will give an indication to the kind of service/support offered by the car manufacturer.

Shrinidhi Hande said...

Thanks MDS and BRS

saurabh mittal said...

again, very sensible thoughts and great advice. while one may be really hung up on buying something whcih is just launching, its always worth to let the product go through some sort of soak-in period.

Shrinidhi Hande said...

Thanks Saurabh