Dr Zac’s Theory of Resale Economic Relativity – A Comparison

Honda Civic Honda Vezel

Time and again, many discussions about which cars to own in Pakistan come to a deadlock at one statement by certain people “ RESALE “ … a term which refers to the ability of a product to hold up to its original maximum price at the time of selling in used condition. Resale school of thought argues one must stay away from JDM’s as they depreciate almost twice than PKDM’s at the time of selling. However, I for one believe that the equation is not as simple as this; you just cannot judge the outcome of VALUE LOSS purely on this single factor. Yes, without doubt, money is hard earned for salaried class like us and to perhaps majority and no one would want to bear unreasonable monetary losses over their vehicle, yet one would want ultimate satisfaction and maximum value for the money he/she spends of this hard earned income.

Now, let’s analyze certain other factors which one looks for when going for a vehicle. To some, these factors matter more than others, yet no one can deny their presence and importance. I would list these factors as follows;

  1. Manufacturing Quality
  2. Technology/Features
  3. Fuel savings
  4. Value for money

I sold my so called RESALE MARKET car (Civic 9th gen PKDM), and switched to JDM Hybrid (Vezel 2014 Hybrid) with all my savings so needless to say that VALUE LOSS does matter to me.. But as I said earlier, according to me and in my humble opinion, resale alone cannot be an accurate predictor of a car’s true value. So I analyzed everything in detail and listed the factors and came out with an equation which I’ve named Theory of Resale Economic Relativity. Here are the factors followed by equation:

Each Factor is marked from 0-5 …

Equation     V = R + F

Value (of vehicle) = Resale + Related factors

Grading of factors based on these:

Resale (5 minimum monetary depreciation, 4 solid market car, 3 reasonable resale, 2 Will incur significant loss, 1 Huge resale loss, 0 almost impossible to sell)

Availability of Parts (5 available everywhere in various qualities, 4 very good availability, 3 availability in larger cities, 2 have to search real hard, 1 might have to import, 0 even difficult to find globally)

Manufacturing Quality (5 Excellent top notch world class, 4 Only the best in the world beats it, 3 good quality but can be improved, 2 below average, 1 poor, 0 pathetic)

Features/Technology (5 Latest tech and most advanced features on planet earth, 4 top tier stuff, 3 relatively latest, 2 could be updated, 1 boring and old, 0 stone age)

Fuel Benefits (5 Maximum possible fuel savings at the moment, 4 excellent fuel economy, 3 decent economy, 2 heavy on fuel, 1 drinking fuel, 0 needs a petrol pump to run it)

Value for money (5 excellent, 4 great, 3 divided opinion, 2 bad, 1 poor, 0 never go for it)

I put Civic 9th gen PKDM and Vezel Hybrid 2014 through it and results were very interesting

Honda Civic Honda Vezel


 

Honda CivicCivic 9th gen PKDM

Resale 4

Availability of parts 5

Manufacturing quality 3

Features/Technology 3

Fuel benefits 2

Value for Money 3

Total score 20

 

 

 


Vezel 2014 Hybrid

Resale 3

Availability of parts 1

Manufacturing quality 4

Features/Technology 4

Fuel Benefits 5

Value for money 4

Total score 21

 

 

Of course it’s just something I’ve come up with personally and not based on any scientific formula but based on major factors in our market, yet at the same time I think they have a global appeal as well and one might be able to use this equation universally… Some of you might like it; others might disapprove but I’ll be using this equation for my future buys as well.

Dr. Zeeshan Ashraf

Public health professional, automobiles & cricket fanatic. Loves travelling and poetry!!

  • Khurram Altaf

    Spot on.

    The top 3 cars in Pakistan with best resale are the ones with the worst quality and least features. Mehran, Cultus, Baseline Corolla.

    I suggest a simpler formula – Resale (R) in Pakistan is inversely proportional to Quality (Q)

    In other words R ∝1/Q

  • AHK

    Dr Zac you forgot to mention “resale” won’t save ones life in an accident, God forbid. E.g buying a mehran with 0 safety features for resale depicts that mentality.

  • Hadi Hassan

    Resale is overstated in Vezel, it should be 1 or nil. Also add “Maintenance Cost” in your Related Factors definition.

  • rashid

    Stands true for our market. Also, where ever you purchase i think “resale” is always higher in case of locally manufactured stuff. Be it vehicles, which in our case really are really low on quality compared to imports.

  • Baber

    This is a good way to put numbers behind what has been opinions. A bit of survey for the numbers and we can have a good enough proposition. But, Vezel will be a lot of car for that money and pretty soon, Audi A3 with a 1.2 or 1.4 TFSI engine would render the Civic and Altis absolutely irrelevant. Even at current price of 3.8 million. How about you also do a similar response to the A3 and Civic?

  • wasiq

    lexus ct is much better!

  • Adnan Hafeez

    Japanese vehicles also actually saves you money in repair because have better and long lasting parts. They maintain pleasureable drive for longer but avaiability of parts is big concern still and that is the only thing that is actually driving the resale element here. somehow ppl feel more relaxed in cars with easy parts availability. Even vitz is maintaining its resale due to easy parts availability

  • Fazal Ahmed

    so very true

  • Zeeshan Ashraf

    Agreed, availability of parts is a hindrance to many, yet i like your point of saving repair and maintenance costs because of the durability and quality of parts used in JDM’s ..

  • Zeeshan Ashraf

    When making the final call, lexus ct was the last one standing with vezel. Had it not been under powered (heavier body and stiffer suspension with same 1.8 prius engine) and poor ground clearance for our roads, i might have gone for it .. but def Respect your choice 🙂

  • Zeeshan Ashraf

    Yes, i think this equation can be applied to A3 and for that matter, universally 🙂 and Audi is a great option in this price bracket no doubt about that .. but of course, a smaller engine variant might be needed to push civic and altis out of our market ..

  • Zeeshan Ashraf

    With all due respect, i don’t think this car is anywhere near impossible to resell but def respect your opinion .. and maintenance/running cost, durability of parts used etc all these elements I’ve categorized in Value for Money section .. Also, even if in pure monetary terms, if it depreciates double the amount of civic over the same time period, it’ll make up for that in fuel savings and quality 🙂

  • Zeeshan Ashraf

    Spot on janab, Safety comes at number one in features/technology section, no 2 opinions about it .. And yes, unfortunately, saving money is a bigger concern for majority than saving lives .. coz its not just you who’s at risk on the road, the people around you are equally vulnerable .. May Allah keep us all safe .. Ameen

  • Zeeshan Ashraf

    So true unfortunately, If it weren’t for quality, i would’ve never sold my 9th gen PKDM civic after just using it for 24000 km’s …

  • fahad ul hasan

    Doctor sb, truly respect your choice and what a theory sir jee 🙂

  • Zeeshan Ashraf

    Thanks Sir 🙂

  • Awes Ahmed Khan

    I think Audi is a class apart, it stands with Acura and Lexus. With an open market VW Passat / Jetta will be excellent value for money and will give these the true competition

  • Hadi Hassan

    If you have categorized maintenance in value for money section then i am afraid you have misstated this category too. I do respect your choice but this is biased. Find fair value of your vehicle (not net book value/depreciated value) and then compare.

  • Zeeshan Ashraf

    That’s the ultimate aim, to create an open and wider market by exposing the monopoly of local giants. Yet, at the same time, to compete, we have to urge them to improve their quality and prices for consumers..

  • Zeeshan Ashraf

    Well “value for money” would def encompass running costs(maintenance), quality of materials used, and overall package you get for the amount you pay.. Maybe i could’ve elaborated it better i agree.. And i do respect your opinion too fully and am always up for constructive criticism, yet Prius success in Pakistan is a great indicator where Vezel might be heading in terms of market establishment in coming months .. Lets see 🙂

  • Hadi Hassan

    Best of Luck:)
    What matters is your satisfaction whether it’s Vezel, Civic or Mehran…comparison doesn’t matter. Enjoy your new ride 🙂

  • Zeeshan Ashraf

    Thanks and completely agreed, its all about peace of mind 🙂

  • aliqadri

    Dr. Sb – What made you doing comparison of saloon car with Crossover ??? Why not between civic and corolla Altis for example ?

  • Guest

    If you’ve time please do some comparison of Mehran & City as well. 🙂

  • Zeeshan Ashraf

    Sir, it was never meant to be comparison between sedan and crossover .. it’s just my take on Resale Psychology and monopoly of local giants .. if anything it’s a comparison between PKDM and JDM 🙂

  • aliqadri

    Dr Sb “monopoly of local giants” can’t be eliminated with current Auto-Policies as well as import duty structure applicable in Pakistan. – JDM no doubt is far better in quality and ride-comfort – but Total Cost of Ownership (Buying price + maintenance + loss in resale) led normal buyer to prefer PKDM eventually. – I hope things may change in favour of Pakistani consumer rather than manufacturer. or at-least it should be win-win for both

  • Zeeshan Ashraf

    Agreed ..

  • Zumurrud Farhin

    Please calculate the score for Suzuki Wagon-R..

  • Zeeshan Ashraf

    If we compare our local one with imported, Jdm will def come out on top in almost every department .. provided it’s a grade car 🙂

  • MUNIB

    Following this formula here is my score for my Honda Life 2007 (JDM).

    And it Looks like its a good score:

    Resale 2
    Availability of parts 2
    Manufacturing quality 4
    Features/Technology 4
    Fuel benefits 3
    Value for Money 3

    Total score = 18

  • Zeeshan Ashraf

    Good scoring, features and technology would be 3 in my opinion .. still it’ll be better than PKDM counterparts of the same category 🙂

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