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Thread: Depreciation...?

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    Default Depreciation...?

    Now I am by no means an economic expert, but why don't cars depreciate in Pakistan as much as they do in other countries...?

    No car is effectively "totalled" here, you could repair your rolled over 2002 Honda Civic "januin untouched" for 2-3 Lacs. I've seen shitty 2005 Hondas been sold for 1.2 Million rupees and I go like LOLWUT!

    Better buy myself a brand spanking new car for 2/3 lacs more and have peace of mind until I run the car into the ground in 5 years if I have to spend that kind of money. Is it consumer psychology that keeps the market looking for better resale? Although the bitter truth is that cars depreciate to scrap in 5 years and there is no concept of resale value abroad (classics/vintage are the exception). You buy a car, step out of the lot and it will sell a lot less than what you bought it for.

    Also I find that most people lie about mileage on their cars. A search of the market place and you will find 2004 model cars with 60,000 KM on the odo. ********!!! Are the local manufactures responsible for artificially inflated used car prices or is it customer sentiment regarding resale value...?


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    the prices of the asset compared to the buying power of the user and the slackness of safety mandates forces this mentality. The 5 yr figure is good on paper but in most countries the age is dependant on the manufacturer e.g. MB literally advertise their cars to be meant for grandchildren. They make long life vehicles. And most countries in EU have an average life of cars set at 10 years. Not so in the USA, its damned stupid in the USA because of expensive labor costs to service and the plethora of cars available easily on financing.

    Now dont compare that to a beat up rusted, 50x welded suzuki fx. That car had a shorter life span than most peoples underwear. It was simply built as cheaply as possible - hence dies as quickly as possible too.
    ZRS - Zulfiqar Racing Systems ..... - professionals at work - at crackwheels.com

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    "Now dont compare that to a beat up rusted, 50x welded suzuki fx. That car had a shorter life span than most peoples underwear. It was simply built as cheaply as possible - hence dies as quickly as possible too." LOL

    Another reason is because of the limited choices we have- Sedan(Yes, I do know Honda City is Sub somethingy);
    Corolla
    City
    Civic
    Liana- R.I.P 2013.
    --------------
    Hatchback- The Suzuki gang and the Dabba gang.

    So, only 3 main manufacturers and 1-2 foreign. Less competition between brands, hence they keep value. You can get a 150,000KM driven BMW 7-series in UK for 3-4 lac which would be a 2001-2003 model. A Mehran will cost approx. the same
    Turbo lag is like foreplay. You know it's coming. And it's gonna be good.

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    Its not about limited choice - if we had mandates for safety that cancels a car road worthiness due to being unsafe to drive - you will find them for scrap metal money.

    Its about people want to "live in lala land" and overlook the welded together rusted POS as a new car. In my encounters in Pakistan most people dont consider a car requires maintenance - and if it does they complain of prices and then try to tack on the repairs price on top of the car. It doesnt work like that.

    Every machine has an EOL - the problem is the acronym is unknown in Pakistan - even in data networks.
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    Well, yeah that is a possibility too. But, I must be dreaming if I see Pakistan introducing MOT tests etc. within this Decade or century. Till then, this will keep going on.

    And if they do introduce MOT, expect many vehicle owners to give bribes and pass the tests hehe.
    Turbo lag is like foreplay. You know it's coming. And it's gonna be good.

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    Quote Originally Posted by Xulfiqar View Post
    the prices of the asset compared to the buying power of the user and the slackness of safety mandates forces this mentality. The 5 yr figure is good on paper but in most countries the age is dependant on the manufacturer
    Though the purchasing power is the main factor here presumably, this also means that the main manufacturers have a monopoly over selling their cars. I am not that old to know but I do think that Nissan and Mitsubishi used to sell their cars in Pakistan?

    How is it that the government hasn't come up with an effective solution to get all cars pass tests once a year for road worthiness? That would regulate the market to some extent...?

    Quote Originally Posted by faiz.aslam.121 View Post
    So, only 3 main manufacturers and 1-2 foreign. Less competition between brands, hence they keep value. You can get a 150,000KM driven BMW 7-series in UK for 3-4 lac which would be a 2001-2003 model. A Mehran will cost approx. the same
    Limited choices and if I am not wrong higher custom duties on cars to prop up shitty local manufacturers who are just peddling machines which are very likely to cause the death of their user.

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    Actually the part about people not doing maintenance on their cars is sad. The problem arises when I; as a prospective used car buyer end up buying a car and have to make all the "scheduled" maintenance on the car which the previous owner should have done to keep it going. Didn't change the water pump at 80? It is the new owners headache when the head gasket blows. People do not even regularly align their tyres for crying out loud, how much is it, a 500 rupee job?

    This is probably due to the CD-70 mentality here in Pakistan. People driving mopeds like they are Hayabusas do not even consider changing the drive-train at the recommended interval, only to have it snap at high-speed, injuring them and others in the process.

    What I do feel is that if the MOT tests are implemented; they should be contracted off to a private entity by the government (sort of the like the Clean Lahore initiative). That approach does have its negative aspects but it would be better not have some sleazy government official managing the stuff, I hope it would be a more transparent approach to the problem.

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    Quote Originally Posted by imran2006g View Post
    Though the purchasing power is the main factor here presumably, this also means that the main manufacturers have a monopoly over selling their cars. I am not that old to know but I do think that Nissan and Mitsubishi used to sell their cars in Pakistan?

    How is it that the government hasn't come up with an effective solution to get all cars pass tests once a year for road worthiness? That would regulate the market to some extent...?



    Limited choices and if I am not wrong higher custom duties on cars to prop up shitty local manufacturers who are just peddling machines which are very likely to cause the death of their user.
    Mitsi and Nissan/Datsun were imported by private party local investors as CBU just like every other brand was. The demise was the lack of support. e.g. people whole heartidly believe that the shops in plaza karachi are the final word in spare parts for a car. Those shops dont even have proper stock inventory and try to peddle the same item under different shops at different prices.

    Its plain nuts - then comes the factor of "keeping fast running items" only from copy cat brands because they are unable to get a true genuine parts sales license as no one will pay premium over retail.

    There can not be a safety mandate in Pakistan because there is no law and check at all. People will drive the wrong way to avoid a 400 meter run to the next intersection, cops stand by like beggars with open hands to recieve the Rs 50 they want from each car without trying to enforce this basic law.

    ergo forget about road worthiness.

    btw - there is a road worthiness test - I have seen its document in Karachi - its actually just handed to you when you take your car to civic centre for chassis and engine no. verification. My father told me that at one time there was an actual person who would look at the car before handing that paper.

    Nowadays its just a piece of paper to fill the file.
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    There is another problem with this depreciation bit.

    Cars are priced against the USD and we all know that if we can cut the expense of USD import we can benefit. In this case we have 3 local assemblers who originally were set up to export cars - Not one single spare part is even exported. No part in any Toyota, Honda or Suzuki catalog is from Pakistan.

    Ever wonder what happened to that.

    When an entire peoples mentality is to lust after "untouch, jenyan, kancha, lash pash, aakheer, lashkara etc" car - no matter if there is no after sales support (JDM, EU, UK imports) - you cannot expect miracles. We as a collective are like squirrels and will fall for shiny stuff.

    People even want to "override ABS, air bag control modules - asking where to buy a used air bag etc. - You think such people will tackle depreciating cars? They dont even want to move with time - they are still stuck in the same 200 year old termite infested buildings.
    ZRS - Zulfiqar Racing Systems ..... - professionals at work - at crackwheels.com

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