Why demand overrides value in used car sales
What you need to know:
So demand for elderly but elegant is limited to just a small niche — those who cannot afford a new limo but who can afford the cost of running the luxury... especially because they have saved so much on purchase price.
And, necessarily, those in that financial slot who also have enough mechanical knowledge to identify the difference between a bargain and a blunder and can find a low-cost way out of ... a fix.
This niche is getting smaller — not because of macro-economics but because of techno-ergonomics.
The depreciation rate on most high-prestige vehicles is breathtaking. From the moment they leave the showroom, their market price can plunge by several thousand shillings… per day!
Must be odd to go to bed at night and know your car will be worth less in the morning. A lot less… every night… and every morning.
Even if megabucks cars are maintained in good condition, by the time they are middle aged they are dirt cheap. You can buy an ageing Rolls Royce, a Ferrari, a Porsche, a Lamborghini, a Cadilac, or some of the super-sumptuous 4WDs for the same price as a town runabout.
There’s a simple — and good — reason why most people don’t go for that apparently incredible bargain: the cost of running and maintaining a mdossmobile. They may be cheap to buy and fabulous to own, but their fuel consumption, service requirements and spare parts prices are eye-watering.
Used car prices are driven less by value; more by demand. And there’s no demand for any used car from the fully loaded wallet. If your ancestry or other luck (that’s why great wealth is often referred to as “a fortune”) or your moral by-pass valves enable you to afford super car running costs with ease, then you don’t need a used super car. You can and will buy a new one.
There’s no demand from the budget cadre, either. Even if a super car came with a price tag of nil it would be unaffordable. I was recently offered a king’s carriage for Sh1 million; all it needed was a new gearbox…costing Sh1.8 million!
And unlike other high-maintenance items (like the ex-wife of a billionaire or the ex husband of an heiress), mature limos don’t come with alimony. By all means take one for a joy ride, but for goodness sake don’t take it home with you.
Saved so much
So demand for elderly but elegant is limited to just a small niche — those who cannot afford a new limo but who can afford the cost of running the luxury... especially because they have saved so much on purchase price.
And, necessarily, those in that financial slot who also have enough mechanical knowledge to identify the difference between a bargain and a blunder and can find a low-cost way out of ... a fix.
This niche is getting smaller — not because of macro-economics but because of techno-ergonomics. In bygone days, even the highest pedigree cars worked in much the same way as bog-standard bangers, only at a hyper-quality level.
When they reached their mechanical menopause they could be repaired fully, formally and expensively, or they could be fudge-fixed using cheaper parts and available know-how.
Modern cars generally, and especially high-end status cars, aren’t so simple and they willfully defy repair. If something breaks you have to replace it, and the mega-luxury brands make sure you have to buy their part at their price.
So if you are in the gold and old and bold niche, by all means go for the dream ride. But beware the nightmares.
