Depreciation and its Effect
There is one phenomenon that we Pakistanis have no comprehension of, that is depreciation of vehicles, let me explain it with an example.
Mercedes-Benz requires no introduction, it is world renowned manufacturer, they invented the car more then century ago so they have earned the prestige of the world with their long and illustrious history, quality, reliability and so have unmatched heritage.
In Mercedes portfolio they have E class which is synonymous for being the utmost choice of the executives from all over the world.
In 1960's Merc's engineers started preparing the vehicles independently for motorsports (after 1954 Le-Mans disaster, factory stopped their involvement in motorsport), so this void was filled with these Merc engineers who in their spare time prepared the vehicles for racing, and they were successful to such an extent that eventually AMG were brought in-house, and now all of their motorsport activity are performed under AMG banner, while they also started tuning the road cars, and AMG tuned vehicle is not just a shiny badge, in the world of mass production where efficiency is the mantra, the AMG vehicles are finished by hand, the engine alone is built from start to finish by single artisan whose name is placed for the reference, and no part of stock vehicle is left unturned, and this executive luxury sedan performs almost on the same level of super-cars while still remaining executive sedan as well, but for all of this bespoke quality, a very hefty premium is charged compared to the stock E550.
My flowery post till this point looks like paid advertisement for E63 AMG, but the praise for E63 AMG is justified as its extraordinary vehicle, but there is another reason as well, let me give you price in USA.
Official Mercedes-Benz USA price
Brand New E63 AMG Price=$ 92,770
CPO E63 AMG Model 2013 Mileage 3,127 Price=$ 83,847
CPO E63 AMG Model 2012 Mileage 13,464 Price=$ 76,888
CPO E63 AMG Model 2011 Mileage 55,991 Price=$ 51,994
CPO E63 AMG Model 2010 Mileage 42,947 Price=$ 47,998
Autotrader price in USA
CPO E63 AMG Model 2013 Mileage 3,127 Price=$ 83,847 (Same car is present in autotrader.com)
Autotrader E63 AMG 2012 14,379 Mile Price=$ 63,999
Autotrader E63 AMG 2011 48,991Mile Price=$ 48,986
Autotrader E63 AMG 2010 65,835 Mile Price=$ 40,999
Note; Autotrader.com prices are not fixed, they are flexible and bargaining, negotiation and haggling is still the order of the day.
Hopefully you see a pattern in the aforementioned prices and also get the reason for my flowery opening paragraphs. Its bit shocking isn't it? That even the Certified Pre-owned vehicle (that certification process is very extensive and hefty sum is charged) still can not ensure better resale value, that you have one of the most desirable vehicle in the world during ownership of which the largest expense during its ownership is, yes you guessed it right, depreciation.
Well does it mean? It means that no matter how prestigious the make and how desirable the end-product, its still not immune to the depreciation of value when it becomes used item, and also these are ruthless and cutthroat environment for vehicle manufacturers, at the end of year even the vehicle that is on the assembly line is aready depreciating in value.
Manufacturers have to evolve constantly in these circumstances or die a slow death (even the mighty can die, just check the GM portfolio for the brands that are discontinued), and don't think this is just north American phenomenon, in Pakwheel the very favorite/active thread is about the discounts in Indian market where most of members come out shaking their heads in disbelief.
Also in these markets List price is just the beginning point for negotiations, and dealers throw in additional goodies to attract the customers, now compare this situation with local market where getting the vehicle on list price is quite an achievement, while for the service from dealer check the threads from new city owners who thought that fuel gauges in their vehicles are faulty, when new owners put Rs1000 worth of fuel & the gauge still remains at the bottom, they thought surely the gauge is stuck, the response from dealer to their customer was you were lucky to even get to the petrol station, half a kilometer further and you would have being stranded in the middle of road with no fuel, as dealers suck all the fuel that comes from factory.
In Pakistan the specifications of vehicles remain static for a generation, which for Suzuki Bolan means 1984-2012, and then they had to change the engine because of emission regulation otherwise Pak Suzuki would have happily deliver same vehicle (with falling quality standards) for 50 years, why should Pak Suzuki let public buy JDM alternative, God forbid if someone get to know about the advances in last 30 years and get to know the comfort, safety and economy, why would that person buy the Bolan again?
In the land where value of vehicles appreciate with the passage of time, why should manufacturers bring new product.
While the situation in the rest of world is such that the moment the companies stop the path of innovation they would sink to the abyss, Survival of the fittest.