The automotive sector is one of the industries hit hardest by the on-going COVID-19 pandemic. Even after countries have restarted economies following lockdowns, new car sales just aren't at the same level as before, especially in the Philippines. Sure, some dealerships have reopened, but people aren't flocking to them either.

Consumers can’t be blamed for not buying new cars. Given the economic effect brought about by the pandemic, businesses are closing down or laying off employees to stay afloat, and there's a lot of uncertainty regarding the immediate future. Buying a brand new car has become more difficult given the current financial situation, and many are putting those plans on hold so they can have funds in reserve to power through the economic aftermath.

But now, more than ever, having secure and safe personal mobility in the form of a car is more preferable now. Apart from the convenience, it also lessens the chance of exposure to the contagion. You also don't have to expose yourself for long hours while waiting for a ride too. Commuting right now is riskier than ever, and being cocooned in a personal vehicle would be a safer option.


What we have noticed, however, is that there has been a shift in the preferences of car buyers: many more are paying attention to second hand cars, especially the certified pre-owned programs of car companies and dealerships.

Though “segunda mano” is not everyone’s cup of tea, it's a viable option on a tight budget. Having a car does beat having to use public transport nowadays especially since the Philippines has a long way to go when it comes to public transportation.

This made us wonder, is there a big opportunity in the used car market nowadays as new car sales continue to dip? Buying a used car does have its advantages and disadvantages. Below, we’ll list down a few of them and let you decide whether or not buying used is worth it. We’ll also name a few places where you can buy second hand models.

HOLD Pandemic mobility: Is there an opportunity in second hand cars? image

What are the advantages of looking at second hand cars?

There are some real pros to getting a second-hand vehicle, and some are very attractive to potential car buyers. Here are three major ones.

1. Cheaper to pay for

No doubt since it is a second hand model, it is much more affordable than a brand new unit. Depending on the unit you buy, it might not even break the bank that much. Without having to spend much, you can already have your own personal vehicle. As a result, you can end up saving a lot of money.

To give you an idea of how much you can save, a brand new Toyota Camry 2.5 G has an SRP of Php 1,841,000. Meanwhile, a 2019 model year Camry currently goes for around Php 1,500,000 to 1,600,000 on the used market. Just imagine, that’s just from one year of ownership, and you can thank depreciation for that. Which leads to our second advantage.

2. Depreciation won’t hit the second owner as hard

The moment you roll a new car off the dealership lot and sign your name on the paperwork, its value has already gone down. Why? Because it’s already technically used. Even if you just drive it home, park it, and never use it again, depreciation is working against you as a first owner. There is no exact math to it, but most cars just lose value.

When buying a used car, depreciation affects you less. This is because the bulk of the depreciation happens when the car is new. As a result, sometimes you can get a lot more for less.

3. Cheaper to maintain

Because it is a used vehicle and probably out of warranty, you no longer have to faithfully bring it to the dealership for servicing. This can save you money in the long run as dealerships often charge a premium for most of their services. Instead, you can choose to bring the car to your favorite shop that can do most maintenance services and repairs for a lot less. You no longer need to use the specific manufacturer’s oil and can use more affordable alternatives with the same quality.

HOLD Pandemic mobility: Is there an opportunity in second hand cars? image

The disadvantages of buying second hand

Of course it's not all sunshine and good vibes. There are some real disadvantages to getting a second hand car, and here ar two major ones.

1. Uncertain vehicle condition 

Since it is used, you’re not sure how the previous owner/s drove and maintained the vehicle (assuming they actually did). For some, the car could have been a garage queen regularly pampered and rarely driven. On the flip side, it could have been an everyday workhorse with barely any maintenance put into and run on a budget. Worst case, it could have been wrecked or was flooded at one point in its life. If a car has been flooded or in an accident, most sellers won’t tell you that because they do want to sell the vehicle to you.

The best thing to do is to ask for a test drive. If you want to know how to properly test drive second hand vehicle, you could check out our previous feature here.

2. No warranties

Once you buy the car, that’s pretty much it. The previous seller will more likely to be hands-off with you one the deal is done. Unlike buying a brand new model which has warranties, used cars won’t give you the same peace of mind. If something breaks a week or two after you pick up the used model then you are on your own. You might have to have to find a reputable shop to do repairs too.

Depending on how new the model you purchased is, there could be a chance the warranty is still active, but you'll have to check the fine print if it's non-transferable. Some certified pre-owned vehicles do come with a warranty though, but you'll have to check with the dealership.

Where to go for second hand? 

Once you've decided to take a look at a used car, where do you go? Here are four major avenues to explore.

1. Private/Individual Sellers

You can often find ad listings on the internet, on the newspaper (if you still read newspapers that is), or more recently, on Facebook Marketplace. You might also hear about them simply through word of mouth for those that aren’t too tech savy.

Private sellers often price used cars the cheapest compared sellers to others in the market. This is because they are competing with other private sellers as well. They can’t also offer any warranty or after-sale service since they are just a person. Furthermore, their cars are sold on an as-is basis too. Financially, buying from individual sellers is a one-time payment, meaning cash only. Don't expect individual sellers to offer financing schemes.

Mind you, pricing is relative; any seller can ask for any price he or she wants. And being that they're actually the owner, letting go of their pride and joy that they've maintained isn't going to be easy, or cheap. It's up to the buyer to figure that out.  

2. Used Car Dealers and Lots

The place to find second hand cars are the used car dealerships. More often than not, they have a premium on top of the private sellers since they can somewhat (key word: somewhat) assure buyers of the vehicle’s condition. More importantly, some dealers are even capable of offering financing schemes for their used vehicles which may be more flexible than offering brand new models from automobile dealerships. Some can even offer limited warranty and services provided you bring the car back to them.

3. Banks or Repossessed Vehicle lots

Another place to buy used that is often overlooked by most are the repossessed vehicles. Banks often have a stockyard of repossessed vehicles that are put up for sale in batches. Unlike a used car dealer or a private seller, however, it is not as easy to purchase one. Usually, banks sell these vehicles through bidding on an as-is-where-is basis. So you can’t really just walk up to the bank with cash in hand and drive one home off their repo lot. Depending if others are bidding too, you might get a vehicle for a steal or just watch as the price goes up.

4. Certified Pre-Owned

Finally, you can also look for used cars are the dealerships themselves through various certified pre-owned (CPO) programs. In-house certified used vehicles are nothing new. Luxury brands such as Audi, Mercedes-Benz, and BMW, have been offering CPO vehicles for quite some time now. It also makes a lot of sense in the luxury sector, as the first owner absorbs the brunt of the initial depreciation of the vehicle. 

More recently, mass-market automakers have joined in the CPO trend as well. One of the most recent is Toyota Motor Philippines (TMP) which recently launched its Toyota's Certified Used Vehicle (TCUV) program. According to TMP, people have been asking its dealerships about used cars instead of new cars hence the launch of TCUV.

More often than not, CPO models will likely be the most expensive of the bunch. But, they do give you the best peace of mind. All vehicles will be thoroughly inspected by the dealership before they can be listed for sale. Better yet, they can even offer extended warranties and flexible payment schemes as well. You won’t find very old models too as we doubt dealerships would want a 20-year old car sitting in their used car lot.

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Given the current situation, the rise of the used car market is a strong possibility. People need extra cash in these difficult times and people also need mobility. The pandemic isn't letting up in the country (over 80,000 cases at the time of writing) and that makes it even riskier to even be outside without a car. Just think about it; would you rather be in a car by yourself or be exposed while waiting for a ride? 

If you need to have a brand new car and have the means for it, by all means, go for it. But at the end of the day, if you just want a reliable model that will get you from Point A to B safely and securely, second hand might be a good option too. Though it might not be the newest model with all the latest features and tech, it will be enough for the time being. Given the current financial situation, it might be wise to not have the desire to flex the latest ride.