Abacus Wealth Management

Buying a Car? Think like a Businessman

General Motors has posted a 7.4% increase in bus, truck and pick-up sales for the seven months to July 2012. The motor vehicle company sold 1,833 vehicles up from 1,350 at the beginning of the year.

The company’s Managing Director, Rita Kavashe said that General Motors profit was pushed by increased orders from government programmes, public service vehicle investors and private businesses.

With entrepreneurs making a killing from the motor industry, buying a truck or a pick-up can seem like a good idea. There are more than a thousand vehicles just waiting to be purchased. It therefore makes sense to know what you’re getting into before spending all your money on some half-baked investment scheme.

Your First Car

Assuming you have the money needed to purchase a vehicle, what kind would you buy? The average buyer would get a Toyota. After all, it is one of the country’s most popular cars with a 24% market share. A less educated driver would buy a Subaru, forgetting the fact that it is a high-performance car that uses up fuel like a dehydrated elephant with half a glass of water.

Advantages of a Pick-Up

An entrepreneur might purchase a small Pick-Up. According to Cheki, one of the country’s used car dealers, a second-hand Nissan can cost as little as KES 160,000. This is a bargain compared to a second-hand KES 650,000 Subaru Impreza. A Nissan is cheaper and more fuel efficient. It also has a larger luggage carrying capacity than two Imprezas combined.

Chances are, someone is always moving house. A pick-up can be used to ferry goods to and from destinations depending on how large and how many things need to be transported. This kind of opportunity can be exploited as long as the vehicle owner keeps the transportation charges above the cost of time and fuel.

Better still is the fact that there is an ever-present need to transport commodities such as milk, bread, flour and other basic goods from the producer to the retailer. Shops are always looking for a cheaper means of transport for their goods. As long as your service charges are competitive, you will always have a market.

Advantages of Truck

If you have the necessary finances to invest in a larger vehicle, a truck may be the way to go. Cheki can get you a Toyota Toyoace for only KES 780,000. Trucks obviously have a larger carrying capacity than pick-ups. They may consume more fuel but they make less trips when transporting larger goods. They can also be leased to private bodies for a negotiable fee.

If you plan on owning any vehicle, it is important to note that cars depreciate as soon as they are purchased. So if you’re buying to avoid the hassles of public transport, remember that you still have to pay for fuel, repairs and maintenance. Below is a table with a brief comparison of the three vehicles:

Vehicle Price Carrying Capacity Fuel Consumption
Subaru Impreza KES 650,000 250 kg including 5 passengers 7 km per litre
Toyota Toyoace Truck KES 780,000 1000 kg including 2 passengers 10 km per litre
Nissan Pick Up KES 150,000 400 kg including 2 passengers 12 km per litre

 

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