India's 'dead' car auctions: Where you can get a Porsche for $7,000

  • 5 February 2016
  • From the section India
A flood-damaged 2015 Jaguar at the car yard Image copyright NATHAN G
Image caption M Prem Kumar picked up this flood-damaged 2015 Jaguar for $25,000 at the yard

In the middle of a sprawling yard lined with used cars, Jambu Kumar is hunting for a Mercedes Benz sedan.

The 29-year-old did not own a car until six years ago. His father, a pawnbroker, drove a scooter all his life. In 2009, Mr Kumar, who runs a small automobile spare parts business, bought a Skoda, becoming the first person in his family to own a car.

When Mr Kumar heard from friends that cars damaged in last year's deadly floods in the southern city of Chennai (Madras) were being auctioned, he drove down to the yard.

The car enthusiast is looking to pick up the Mercedes he has always dreamt of owning, and never had the money to buy. He has a budget of a million rupees ($14,677; £10197).

"My wife said if you go the auction, you must return with a Merc. So I am looking for a bargain. If he was alive, my father would have been proud of me," says Mr Kumar.

Spurring dreams

All around Mr Kumar and his fellow bidders - a gaggle of used car dealers, buyers and car rental operators - hundreds of cars are parked, end to end. There are hatchbacks, sedans and the much sought after luxury cars like Jaguars, BMWs and Audis.

Many of the vehicles are still caked in dry mud, and their interiors are mildewed and frayed. Two months ago, a soup of sewage and rainwater filled their insides as Chennai drowned in the worst floods it had witnessed in a century. Many of the vehicles swam aimlessly in the muddy water and died at odd angles; others simply floated and gave up in garages.

Under the unforgiving sun in Chennai's non-existent winter, this graveyard of cars is spurring many dreams and aspirations.

Jyotiram Chougle, who owns an automobile repair workshop in the western city of Pune, some 1000km (621 miles) away, is a courier of such dreams.

When three of his customers heard about the auction, they put Mr Chougle on a plane to Chennai. They had read in the papers that a flood-hit 2012 Porsche Cayenne had gone for an eye-popping 500,000 rupees ($7344; £5071) in one auction.

"I am hunting for luxury cars for my clients - Jaguar, Range Rover, Porsche are their preferred choices," he says.

Image copyright AFP
Image caption Some 40,000 cars were damaged during the December floods in Chennai
Image copyright NATHAN G
Image caption Flood-damaged cars are being auctioned in sprawling yards
Image copyright NATHAN G
Image caption Many of the cars are still caked in mud
Image copyright NATHAN G
Image caption Jambu Kumar, a first generation car owner, wants to buy a Mercedes sedan

There's no Porsche available at the yard this morning, so Mr Chougle takes pictures of a Jaguar and an Audi and sends them to his clients on WhatsApp.

"I am a bit confused. I have never been to this city. I have never been to an auction. But I have to get the cars for my clients"

By one estimate, some 40,000 vehicles were damaged by the floods. Around 40% of them are what insurers call total-insurance loss, according to Abhishek Gautam of automobile portal cardekho. It also means, he says, that it is "too expensive to repair these cars at company-owned workshops".

Insurance companies, hit by an avalanche of claims, have towed away the dead cars to resell them through a clutch of firms like Mr Gautam's. Reports say automobile insurance will form the bulk of more than 50,000 claims worth nearly $740m (£480m) arising out of the deluge.

Mr Gautam says his company has received cars on behalf of 18 insurance companies and is looking to sell more than 1,500 flood-damaged vehicles. The firm has already auctioned 700 cars in the past 40 days across three yards they have rented in the city. More than 700 dealers from across India have signed up to bid.

Aspiration surge

At the auctions held by his firm, a 2014 Mercedes-Benz S-class went for as much as 4.4 million rupees, less than half its market price. At the other end, a hatchback went for as low as 20,000 rupees.

"It is all about aspiration," says Mr Gautam. "Some buyers here are getting the deals of their lives." He loves telling the story of a bleary-eyed construction company manager who arrived at the yard one morning in his pyjamas and and got so excited that he ended up buying an Audi at a third of its market price.

The auctioneers insist that water mainly destroys an inundated car's electrical and electronic systems and not much else; the majority of the vehicles don't bear any signs of physical damage.

They say spending anything between 70,000 rupees and 200,000 rupees ($1,028-$3,000) will help replace and fix the electronic system and electrical circuitry. The majority of the dead cars, they believe, can be brought back to life in India's thriving cheap car workshops.

But automobile expert Hormazd Sorabjee is not very sure.

Image copyright NATHAN G
Image caption A number of automobile portals are holding auctions of flood-damaged cars
Image copyright NATHAN G
Image caption Flood water has mainly damaged the electrical and electronic systems of the car
Image copyright NATHAN G
Image caption The interiors of many cars have suffered extensive damage

"Water is a car's worst enemy. You have to change a lot of things. Just fixing the electronics and electrical systems may not be enough," says Mr Sorabjee, who is the editor of Autocar India magazine.

"Water damage can reduce the life of mechanical components of cars, like drive shafts, bearing and suspension components, not to mention the havoc it wreaks on electrical systems."

'Risky gamble'

"I would say buying a flood-damaged car is a risky gamble".

But tell that to M Prem Kumar, a prolific buyer at the salvage yard, and he smiles.

Armed with 15 mechanics and 50 electricians, Mr Kumar, 29, is picking up dead cars by the dozen.

He makes a living selling cars confiscated from loan defaulters. These days, he's changed gears and is hoping to make a killing by buying dead cars, repairing them and selling them to used car dealers.

He has already bought more than 50 flood-damaged cars in the past month, piled them up for repairs in a rented three-acre yard and and claims to have sold 20 of them already.

Mr Kumar shows me the 2015 Jaguar he scooped up at the auction for 1.7 million rupees. A steal, he says, at a sixth of the original price. He's also bought a 2011 Mercedes for 780,000 rupees which, if alive, would sell in the market for 3.8 million rupees. He bought a 2014 Jaguar diesel for 1.5 million rupees.

Image copyright NATHAN G
Image caption Abhishek Gautam says buyers are 'chasing their dreams'
Image copyright NATHAN G
Image caption But automobile experts say buying dead cars is a 'risky gamble'

"I have been in this business since I was 16. I know what I am doing," he says.

The auction is beginning now. There are more than 70 cars up for grabs.

Rising above the din, stock market investor Arun tells me he is looking for a deal to make some money.

"The stock market is volatile, and business is dull so I came here to buy a few cars, repair them at the local workshop, sell them and make some money, try out my luck," he says. He has already picked up a 2011 Volkswagen Polo for 235,000 rupees, less than half the market price.

Across the yard, Naseem, who runs a small rental company, is looking for a bargain basement price for a Toyota SUV to add to his modest fleet at a third of a new car's price.

And what if the car doesn't work after repairs?

"Life is a gamble. Sometimes you win, sometimes you lose. This auction is no similar."

Dreams die hard at the yard.