Monday, January 12, 2009

The Current Economic Crisis and Build Quality in Cars - The old Datsun wins over the Continentals

Recently the whole world seems to be facing some sort of economic crisis. American financial institutions like Frannie May, Freddie Mac, Lehman Brothers and so on have toppled. Banks in Europe also suffering from the same calamity. The price of petrol has gone down drastically within a period of 2 months. People getting thrown out of their jobs. People stopping their purchases on new electronic goods. The list goes on and on.

Basically the economic system as we know it is faulty. Let me give you a straight forward example of what is happening on a local scale. Let’s imagine that you and 100,000 of your friends decide to take up RM1 million each of loans. Then you tell them that we should not bother paying back these loans. The bank would go into cardiac arrest. RM1,000,000,000,000.00 is something that the bank doesn’t rightly have to give out for free in the first place and it is most probably that the bank had to get an interbank loan to come out with that stately amount. So once you and your friends default, it is very likely that the bank would not be able to pay the sum it borrowed from the other banks and it would be bankrupt. The other banks who in turn loaned a few billion to that bank would also be affected, and they too would become bankrupt. Once bankrupt, and if these banks were not given a governmental bailout, we’d see thousands on unemployed bankers. We’d also see people rushing to these banks trying to get their money out from their accounts before it all goes to heck. If the central bank does not guarantee all deposits, everyone’s going to be broke. Once everyone is broke, no one buys new calculators, cars, PDAs, telephones, clothers or even food; thus making factory workers, farmers, managers, engineers all out of a job and joining the bankers having a nice cosy chat by the Penang bridge, where some of these people have decided to take a closer look at the sea right below it.

What I’ve basically said is that it is not hard to topple any economy. All we have to do is gang up and not pay anyone. It is as horrifyingly simple as that. And after all has been said and done, we should all go back to farming. Each of us growing what we need and barter trading for what we don’t have. 10 eggs for a bunch or two of cabbages please.

So as we’ve seen, the economy is pretty beaten up today and you have been thinking of changing to a newer car but is now prevented to do so due to the fact that times are bad. The real question you have to ask is that is your car really that shitty to drive after 5 years of ownership? The actual answer is no. As a consumer, you are bombarded by marketing and hype as well as trying to keep up with the Joneses.

Every time you pick up a motoring magazine someone tells you that it may be uneconomical to drive around in a car older than 10 years. Someone also says that the car you bought has terrible build quality and will disintegrate after a week’s usage. The whole truth of the matter is that nothing of that sort will happen.

Take a look carefully when you drive along any busy road in KL and you will find cars older than 15 years still conveniently plying the streets. You can see old Datsuns, Toyota Corollas, 1st generation Proton Sagas with their metal bumpers, old Mercedes (W123, W124, W126 and some W116 even) and so on. Many of these older cars are still going strong and will have many years of service still in them.

So what’s the point of this then? Very Simple. Have you ever got into a discussion where someone told you that the reason he bought a certain continental car due to the fact that it has fabulous build quality? The chap so adamant that his new BMW was built from a solid ingot of silver and nothing will break in that car? Well you tell him that you’ve got news for him. His RM200k car will have the same chance of surviving past 15years as the person who bought the RM30k Perodua Viva. The reason is out there for him to see.

Take a look over to some older Hondas, Nissans and even Mitsubishis on the road today. Some of these cars have heen around since the seventies and are still performing tasks for their owners. Note that their supposedly flimsy signal stalks, door handles, wing mirrors that most people criticised still work perfectly. Take a look at the old Datsun (pre Nissan) 120y beside you on the road and see that it still cruises at 90km/h on the highway. Look around you. Do you see a continental car from the same era at that Datsun? You might see the odd Mercedes, but these are the exception. They are actually built from solid steel blocks and cut to size. Do you see any old Ford Escorts, Fiats or VWs from the 1970s? occasionally you do see one or two, but what you do see are old Datsuns, Toyotas and other Japanese cars. Yes, in the beginning these were flimsy looking and feeling cars. Their controls feel tinny and cheap to hold. But why are they still on the road compared to those supposedly solidly built continentals? Build quality? Or just because it’s cheap to maintain?

The thing about these cars is that they are built using cheap looking plastics with no tactile feel whatsoever. However, these items last. Having no tactile feel does not mean it is doing a bad job. It is just doing its job even more soullessly than a switch with more feel. Somehow, it is because of this fact that I sometimes ignore people who like to argue that their continental is the best car in the world. The hard fact is that 20 years down the road, their ultimate driving machine is just scrap metal, whereas a 20 year old Toyota, is still usable and friendly enough to be used in KL on a day to day basis.

An example of continental engineering and build quality; a father of a friend of mine recently sold off with 1988 Jaguar XJ6 2.9 (XJ40 series) for a grand sum of RM3,000.00. The reason is that no one wanted it with its slightly faulty brakes and what not. Note that some 1989 Honda Civic hatchbacks are going for RM15,000.00 if the condition immaculate. Which is of better quality? The Jag, or the Civic? You figure it out.

The XJ40 Series Jaguar (pictured)- My Friend should have told me!!!!! I'd gotten that RM3K Jag for weekends! If it breaks down, just leave it at the roadside, like some Arab Sheikh who has too many cars!


Anonymous said...

so TRUE!! the current system is flawed in many ways. and you know the most fundamental idea of "interest" is the key driver for printing money out of thin air and inflation. if someone loaned you rm1000 in a closed economy, how are you supposed to pay back rm1200 (200 interest)????? someone has to print an additional rm200 out of thin air.

Jimmy Liew said...

"Take a look over to some older Hondas, Nissans and even Mitsubishis on the road today. Some of these cars have heen around since the seventies and are still performing tasks for their owners."
There's another reason why you still see these cars on the road. It's because all the other Hondas, Nissans and Mits are in the junkyard.