Since the prices of second-hand mid-luxury cars started dipping much earlier, dealers of cars like Ford Escort and Cielo were first off the block with such schemes. These dealers buy old cars, offer finance on a new car, refurbish these old cars and sell them further.

But with Hyundai Santro and Daewoo Matiz around the corner, prices of second-hand Maruti 800 and Zen are also plummeting at a much faster pace. For instance, after MUL launched the Zen VX model, the second-hand prices of Zen fell by around Rs 30,000.

``Dealers have to generate business somehow. And this is one good way of doing it in times of recession,'' says Kanchan Malik,Assistant General Manager, Marketing, Bagga Link (Private) Limited.

Bagga Links started selling old Maruti cars around three weeks ago. According to him, an increasing number of Maruti dealers are getting into this business. ``Especially after MUL has given us the green signal. But it is only second-hand Maruti cars that we can sell,'' adds Malik. So far, Maruti dealers have been simply buying old cars and selling them to brokers.

``Earlier we used to hire second-hand car brokers to evaluate the selling price of old cars and they sold them further. But then, we thought we could sell these old cars and benefit from these deals, rather than letting the benefit pass on to the broker,'' says Malik. But Bagga Links has managed to sell only around five or six refurbished cars while 50-60 old cars are lined up for sale.

Autolinks, authorised dealers for Daewoo's Cielo, started this exercise two months ago. ``It is a trend that has to catch on,'' says Deepak Virmani, Director, Autolinks. Both Autolinks andHarpreet Ford, dealers for Ford Escort, offer a six-month warranty on the engine and the transmission system of these second-hand cars.

Used mid-luxury cars are selling at lucrative rates. ``The moment a Cielo drives off the showroom, its value dips by Rs 80,000,'' says Sumit Bali, Associate Vice President, Kotak Mahindra Primus Limited (KMPL).

KMPL has been organising car valuation and exchange programmes for the last three months. At these car melas, consumers can sell off their old cars and pick a new car -- a Cielo, Opel Astra, Zen or an Esteem.

Dealers also get an opportunity to offer test drives at the venue of such melas. Moreover, KMPL has innovative schemes -- like zero-interest schemes -- for consumers who are selling their old cars to buy new ones.

``The prices of Ford Escort 1.3-litre petrol version begins from Rs 3.5 lakh, up to Rs 4 lakh. The diesel version sells anywhere between Rs 5.5 lakh to Rs 5.75 lakh, while a new car comes for around Rs 7.65 lakh,'' says Ashok Sachdev of HarpreetFord, dealers of Ford Escort.

KMPL has also started undertaking such deals on a spot basis. ``We hire authorised valuation agents who have been accredited by insurance agencies,'' says Bali. According to him, the scheme interests sellers of used cars who find it too cumbersome to attend to phone calls on a Sunday. And then, they are assured that they would not get into any legal hassles. Often the seller gets tricked when the buyer does not transfer the vehicle in his or her name to use it for illegal use.

``And the buyer gets a warranty, and minor dents and repair work are taken care of by our agent,'' adds Bali. What is critical in this business is to predict the correct price of old cars. ``In the West, 40 to 50 per cent of business for dealers comes from selling used cars,'' informs Bali. But the prices of second-hand cars are more readily available there as well.

So far, no Maruti dealer offers a warranty on refurbished old cars. But Malik feels that the day is not far behind. ``Earlier, we used tohave a three-four month waiting period for cars. Today, no Maruti dealer has any pending customer. So where do dealers generate that extra business from?'' asks Malik.

And once Hyundai Santro, Daewoo Matiz, Fiat Palio and Tata's Indica hit the roads, Maruti dealers could probably land up in the same soup as the players in the mid-luxury segment.