Monday, June 23, 2014

Choosing a New Car (2)

On my previous post, I wrote about how my wife and I came to choose Suzuki All New Swift GX M/T for our new car. This is a sequel to that post as we still needed to decide whether we're going to buy it here in Balikpapan or Jakarta/Bandung, and new or used.


New VS Used

The advantages of buying a new car is pretty obvious (e.g. free service, warranty) but it's not without disadvantages where higher price is the main downside. A new car will also undergo a high depreciation especially in the 1st year. In 2 years of ownership, it may lose up to around 30% of its initial value. If we're going to sell a car in just a few years, buying a quality used car is more economical than buying a new car.

A properly maintained 2 year old car, on the other hand, doesn't differ much from a new car; while if we buy a new car, we pay the extra 30% which is a significant amount just for the smell of a brand new car. So based on these considerations, we were open to purchase a used car which is 2 years old max to avoid the problems that older cars may have. Of course, buying a used car is also not without any downside. It's not going to be as flawless as a new car, and more importantly, it might not always be easy to identify, for instance, if a used car was involved in an accident, went through a flood, etc.

When we paid a visit to the Suzuki dealer, we were informed that 2 units from last year's stock (in silver and grey) were available with 8 mio cashback offer. We immediately think that this is attractive since we'll get the advantages of a new car but with a lower price point. If we're selling the car say after 5 years, the resale value difference with the 2014 units should be lower than or at least not significantly higher than 8 mio anyway.


Jakarta VS Balikpapan

We live in Balikpapan, and lots of people purchase their car from Jakarta/Bandung (or other major cities in Java), have it shipped here, and still consider it more cost-effective compared to buying here with the higher price tag. Suzuki officially listed the All New Swift GX M/T with a 182.5 mio price (on the road). The shipping fee from Jakarta to Balikpapan for this type of car is around 4 mio including insurance. The extra cost of administration and legal paperwork is around 3 mio. This equals to a total cost of 189.5 mio. Compared to Balikpapan price which is 193.7 mio, there is a 4.2 mio difference!

Being 4.2 mio cheaper, buying from Jakarta is again not without its disadvantages which are at least:
  1. We'll have to wait longer due to shipment before it arrives in Balikpapan for us to start using.
  2. There's always a risk during shipment, be it as simple as the car getting scratched to more scary stories of parts stolen and replaced with lower grade aftermarket products. Even if we have it insured, it certainly won't be part of the happy story of a new car purchase.
  3. We even still have to go through the hassle of paperwork and administration once the car arrives to meet legal requirements.
Moreover, we're interested in the 2013 stock units available in colors we prefer with the 8 mio cashback which equals to price reduction down to 185.7 mio. This is already cheaper than the total cost of buying in Jakarta plus shipping to Balikpapan alone! Sure if we could manage to find 2013 stock unit(s) in Jakarta, the price will be under 185.7 mio, it should even be under 182.5 mio which is the brand new price, but were we going to succeed in finding one? My brother in law asked a Suzuki dealer nearby his office in Bandung and got a 184 mio quotation for the new 2014 unit with no cashback promo. He was also told that there's no 2013 stock unit left. Another risk is that even if we manage to find one, will the available color suit our taste? No one can tell. Considering further the convenience of purchasing the car in Balikpapan, we agreed that this is our preferred option.


Negotiation and Conclusion

In order to maximize our benefit, we scheduled for a test drive and intended to negotiate for the price. Two separate sessions of negotiation resulted in increased cashback up to 12 mio with floor mat and vent visors as included accessories. So we got the price down to 181.7 mio plus around 0.7 mio worth bonus. I guess it's not bad after all!

In my previous post, we learnt that once we have set our priorities straight and clearly defined requirements, the one fulfilling all or most of our criteria might not be the most expensive. In fact, it might even be the least expensive if economical price is one of the criteria!

Secondly, we were probably just lucky to have the 2013 stock units available in the colors we like. But this proves that fair deals can also be found in Balikpapan, especially if you're willing to work it out and maybe pay just a little extra for the convenience and your own peace of mind.

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