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Is it wise to buy a brand that is no longer being made?

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By Mustafa Ziraba

Posted  Thursday, December 19  2013 at  13:26

In Summary

It could be ignorance about the industry or simply having fallen in love with some brands. It could also be about standing out from the crowd. Whichever reason advanced, some Ugandan should be cautious about discontinued brands or the very rare ones whose maintenance maybe costly and challenging.

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I was at the Jinja road lights, minding my own business. A car pulls up on my left and instinctively I turn to see what car it is. As luck would have it is a PT Cruiser. This is a retro styled hatchback manufactured by Chrysler. First off it is an American car and was discontinued. Brands such as Saab (is soon bouncing back), Hummer, Isuzu (passenger cars) are each in their unique way in the same category.
Here is the thing, today’s buyers face a key question, is it wise to buy a brand or model that is no longer being made? There are several issues to consider first.

The good news is that low prices and discounts are far more likely for discontinued models. Dealers have limited space, and are anxious to clear these cars from inventory and reduce their carrying costs. Fact is, buying a discontinued brand is essentially trading a low price today for uncertainty tomorrow. This only makes sense if you are planning to drive the car for several years and are not concerned about resale values. The normal rules of depreciation will not apply to discontinued brands.

One of the bigger fears among potential buyers is the future availability and cost of spare parts. This may be minimised due to the sharing of parts between some brands. Unlike Toyota, who share interchangeable parts among many models in their stable, parts for a discontinued model can be very difficult to find and expensive.

Parts that are made by the auto manufacturer and its suppliers are referred to as original equipment manufacturer (OEM), or stock parts. Many dealers will continue to carry these parts for several years as the discontinued cars are phased out for instance you may still find Hummer parts at Africa Motors but at some point, it will become difficult and expensive to buy original parts. When OEM parts are no longer available or are too costly, there will be aftermarket parts to close the gap.
There are clearly trade-offs to consider when buying a discontinued brand. Discontinued models may be ‘great’ buys at the time, but the upfront savings lose their lustre twice as fast on the resale market. Nonetheless, the amount of disruption to owners of discontinued brands is a function of scale and volume.

The larger discontinued brands will be better supported in the future than the smaller brands and more exotic models. For instance, the Toyota has several discontinued models flourishing in Uganda thanks to availability of parts to a degree due to Toyota’s model of part sharing among different models. However, for a car like the Isuzu Gemini, a passenger car, the story is a bit different.

However, that said, a minority of exotic models may attract “collectors” and I believe there are some cars that will be collector’s items such as the Hummer, so if you were to buy one and garage it or keep it in great condition, it may be worth more money than what you pay for it.