Sat | Apr 29, 2017

Discontinuation not a death sentence

Published:Sunday | September 13, 2015 | 9:00 AMKawain Fearon
The Honda Stream, a popular seven-seater wagon which has been discontinued.
Lynvalle Hamilton, president of the Jamaica Used Car Dealers' Association.
A Toyota Camry Prominent
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When buying a car, parts availability is always a consideration if you plan to have it up and running instead of up on four blocks. While some parts are hard to get locally, based on the brand vehicle and year it was made, some are readily available from the numerous parts dealers across the island.

However, what happens to parts if or when your car is discontinued by the manufacturer and is completely taken off the production line?

This is where the laws of the most basic principle of economics - supply and demand - kick in. However, there is some good news if your car is relatively new but has been discontinued. While there may be a slight increase in price over the short term, the real shelling out of big bucks to acquire parts for your vehicle will come in the long term when, eventually, the parts fall under the hard-to-get category.

According to Lynvalle Hamilton of Auto Channel and president of the Jamaica Used Car Dealers' Association, "Actually, when a car is discontinued it doesn't mean that the parts are not manufactured anymore. It's really not an issue in most cases. Normally, the companies that make the cars are not usually the parts manufacturers. So once they (parts manufacturers) know that the cars exist, then parts will be available."

Hamilton explained that the parts acquisition problems encountered after the purchase of a relatively new car will be solved as the car becomes more popular. "When the cars are new (to the market) the parts may not be readily available in abundance, but as the car gets older then there will be more demand for those parts, especially

service parts," he said.

POPULAR CAR

For instance, with the discontinuation of the Honda Stream (a seven-seater wagon), Hamilton noted that "It's a very popular car, the sales for that car have been good and there is still a demand for the car. And you will still have people having parts for years to come."

But for how long can motorists with discontinued cars have relatively easy access to parts? Hamilton said, "It's hard to give a definite answer, but approximately 10 to 15 years. You

have persons now who have a Toyota Prominent, which has been discontinued for some time now, over 20 years, and persons that are driving those cars to this day are still getting parts for it."

According to Marlon Lawrence of Bert's Auto Parts, Jamaicans tend to keep their cars for at least 10 years, and this normally provides a cushion for cars that are relatively new at the time of purchase, given that there would be an abundance of parts available locally to fill the demand.

Lawrence noted that the increase in cost for parts would not be reflected immediately but years down the line, if all things remain constant. "It wouldn't be now; it would probably be for older cars that the price goes up. Not for a Stream or a car that's relatively new to consumers. Not because the manufacturer stops making them, it's relatively new to consumers, especially here in Jamaica where we keep our cars for 10 years, so at least you would still have that cushion to buy those parts," Lawrence said.

He added: "It would more be for older cars, where the older the car is you would be getting less demand for it, then the price would go up, because as you know, production drives price."

With a car discontinued and parts becoming expensive as the years go by, resale value is another important factor to consider. But how much can the owner possibly get when it is time to change the car, most likely looking to put the money towards purchasing another vehicle?

According to a technical supervisor at Priority Loss Adjusters, Alkebuan Hotep, "When we do a valuation on a car we would make reference to prices, like a replacement cost of that same motor car at the dealer. ... When they discontinue a unit or replace it with something else, we always have to use a higher rate of depreciation when going back to that old vehicle. What that means is that we will be taking (reference) from a newer vehicle or a vehicle that has replaced that old one, so there's a higher rate of depreciation which is applied.

"Valuations are not scientific,

but there's an accepted standard of somewhere between 15 and 20 per

cent when moving from a unit that's still being carried to a unit that is

discontinued," Hotep said.

kawain.fearon@gleanerjm.com