The Story so far :

I have an Alto (Maruti Suzuki) - 800 CC (Petrol) - 2005 (April) Model - 24000 Kms on the ODO.
Cost of the car in 2005 - 2.8 lakhs (In Rupees)
Milleage : 16Kms / Ltr
Estimate Selling Price : Rs 1.4 lakhs
I infer the Monthly Driving to be : 24000 / 40 = 600 Kms / Month

I love to change becoz I think I need to go for a more powerful car which is more stable and has a good build quality..

New Palio 1.6 Sport, Mileage : 11 Kms / Ltr
Cost : 5L in Indian Rupees (On the road)
If I sell my Alto I would need 3.6 L as Loan

Fuel Savings or Expenses :
Petrol in Bangalore - India : Rs 58 / Ltr
Alto cost per km : (Rs 58 / 16) : Rs 3.625 / KMPL
Palio Cost per km : (Rs 58 / 11) : Rs 5.27 / KMPL
Difference : Rs 1.65 ( Higher Side)
Monthly Expenses : Alto (Rs 3.62 * 600 = Rs2172) Palio (Rs 5.27*600=Rs 3162), So I would run under loss of Rs 2172 - Rs 3162 = Rs 990 Monthly.

3 Year Loan Plan:

Loan : 3Yrs @ 13% - Rs 11500 / Month (EMI)
Effective EMI = Rs 11000+Rs 990 (Fuel Expenses) = Rs 11990

After 3Yrs my Current Alto would fetch me approx = Rs 80,000
The new Palio would fetch me around = Rs 300,000 (Considering in India Fiat has a very low resale value)
Price difference in resale value is Rs 2,20,000 (300,000 - 80,000), by 3 yrs I would have completed my loan amount, which is 3.96 Lakhs. Hence the cost of the new car is Rs 2,20,000 spread over 36 Months or 3yrs = 6111 / Month.

The New Car would give me an AC, Power Steering, Awesome Power To Drive, Extreme Safety, and a good reliable FIAT Car.

Please share your thoughts on the financial side and give me your expanation on what Should I do, either to keep my Alto or buy a new palio.

Appreciate your time...

the first 3 years of owning a car are the most expensive, as you can see by the loss of 50% of your suzuki's value already. buying another new car will mean you lose 50% again in the next 3 years (2.5L on a palio). fuel costs make little difference compared to losses on the value of the car (called depreciation).

i think you should buy a 1 year old palio. you should be able to get one for 4.25L at a dealer or 3.75L privately. it will still be an almost new car with low mileage and dealer warranty, but you wont have to lose the first year depreciation (1st year is always the worst), and you will only need a 2.35L loan. a smaller loan will also mean you pay less charges for borrowing, so you save money there too.

The deprciation of any car or any product is inevitable, and I somehow dont know to buy a 2nd hand car, here in India Fiat Doesnt sell their used cars, it has to be bought privately, and Im very concerned about that..
Today Tata Motors have launched a new car called VISTA, which offers FIAT Engines Petrol - 1.2 with 65 bhp and 1.3 Diesel with 75 bhp. Both these cars are launched at about a difference of 20 - 30 K compared to the Fiat. This launch has put me more in the confusion state.

depreciation may be inevitable in the first few years, but the rate of drepreciation changes over time. the first year sees the biggest loss. by the 5th year you can keep a car for 1 year and not lose any money. i buy cars that are 7-8 years old and make a profit on them after keeping for 1-2 years.


you say you have concerns about buying a used car. you need to remember that a used car woudl need to breakdown many times before your loss would be the same as buying a new car. you would have to be very unlucky to lose more money on a used car than a new car, even if your used car does not have any warranty.


tghe vista is the first car based on tata's brand new platform, and it is tata's first new platform since the original indica, so i think it would be best to wait and see how those cars do in terms of reliability before you consider buying one. there is no point having a brand new car with a warranty if it spends most of its time at the dealer getting fixed. brand new platforms are more likely to have unknown faults during the first couple of years of production, especially the first 6 months.

Thats absolutely correct, I would have to wait for atleast 6months to see how the car performs. I wais inclined only becoz its from the tata stable with a fiat engine

I got a call from my old friend who has has somebody who is selling a Palio Diesel 1.9, which is a Dec 2004 Model, a top end car, and quoting a price of 3.2 Lakhs.

Do let me know ur thoughts on this, I have no idow much he has bought it for as its not in production anymore!!

crn12 said:

I got a call from my old friend who has has somebody who is selling a Palio Diesel 1.9, which is a Dec 2004 Model, a top end car, and quoting a price of 3.2 Lakhs.

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at 4 years old its only worth 2.5L, maybe 2.65L if it is in excellent condition with low mileage and full service history.
brand new it cost 5L in 2004.

Jug, how would you check if the car is worth 2.75 L (Considering the max), is there a check list which could help me here..so that I dont miss out on anything while TD the car and is their anything that I have to ask him probably a list of questions (Ex Tyre replaced when, Battery Replaced or not...) Thanks for your help

PS : The car has done 50 K

50k is nothing, its almost new. as long as the service history is complete then everything required will have been done and you dont need to worry. i would check all the electrics work such as windows and locks and A/C.

to decide the value of the car you need to compare it to other similar cars for sale in your country. for example here is the same model (elx with all the extras) same age (2004) same mileage (48k) for 2.5L in chennai. http://www.carsalesindia.com/viewadvert.jsp?adid=35379

Jug - Are you sure 50 K is nothing and almost new? - Thats very inspiring. I thought 50K on the ODO is almost 50% of the engines life done!!

I have the TD scheduled for tommorrow, I will post my review as soon as Im through with the drive.
:idea: Let me see if he allows me to take some pics, which I can post it here for your observation

crn12 said:

Jug - Are you sure 50 K is nothing and almost new? - Thats very inspiring. I thought 50K on the ODO is almost 50% of the engines life done!!

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no way, a modern engine will easily do 300,000km (185,000mls). i have rarely owned a car with less than 130,000km (80,000mls) and never had a problem.

This guy never turned up to show his car!!, he called up to say he had to cancel and postpone it for someother day...!!

in my opinion no

Alzatar said:

in my opinion no

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at least provide some reasoning