IT WAS recently reported that the Terengganu mentri besar had claimed that the purchase of 14 Mercedes cars for RM3.42 million instead of Proton Perdanas for executive councillors was a cost-cutting measure.

Let’s do some simple calculations – RM3.42 million divided by 14 = RM245,000 for each Mercedes E200 Kompressor.

A Proton Perdana V6 is RM100,000. Assuming it depreciates by 25% a year, and assuming they buy the Perdana and use it for four years.

After four years, the car’s value would be RM31,640. It is sold off and another bought, and this again sold off for another RM31,640 after four years. Over an eight year period, they would have spent RM200,000, recouping RM63,280, so the loss would be RM136,720.

Now, compare this to buying that Mercedes and using it for eight years.

Assuming they use the Mercedes for eight years, and the depreciation of the Mercedes is 10% a year (a very optimistic figure), the car’s value would be RM105,464 after eight years. Thus the loss would be RM139,536.

So, the monetary loss is still higher with the Mercedes, despite the much lower depreciation rate.

If the Perdana is sold off after only four years, the car would not have aged or travelled so much that it would require major repairs.

The cost of replacing spare parts in the Mercedes is much higher than in the Perdana. The value of the Mercedes is higher, hence the insurance premium is also higher. Multiply all of the above with 14.

Despite the above facts, I doubt the councillors would be willing to use the Mercedes for eight years, because by then, they would consider it too old and run down. Which means the state government would have to purchase a new fleet of Mercedes for their councillors.

So, in all logic, how could it be that purchasing the Mercedes is more cost effective than purchasing the Perdana? And that doesn’t even include the fact that they are not supporting our own industry.

Haven’t the politicians learned anything since the last general election?

Adri Hemy Abdul Ghani
Saudi Arabia

Source: The Sun – July 22, 2008