Month: January 2019

Interview with David McKay: Motor Vehicles and their Value

Question: David, I think that most people are concerned about the value of their car, how does MSC McKay arrive at the value of a car?

David: Yes, I would agree that most people in Jamaica are deeply aware of the significance of the value of their vehicle. You have to remember that motor vehicles are expensive in Jamaica and represent a sizeable asset value – they have every reason to be sensitized to this issue. We will be providing an opportunity through our E-Value product for people to go online and check on the approximate value of their car, a precise value is impossible without actually seeing and test driving the car.

Question: What factors determine the value of a motor vehicle?

David:The main factors which determine the value of a vehicle are the model year, accessories (factory fitted or otherwise), mileage, general overall condition and current market trends.

Question: What impact does depreciation have on motor vehicle values?

David: The rate of depreciation will differ depending on the make, model and type of vehicle. The depreciation factor can range between 5% a year to as much as 20% as year. The regular depreciation factor for Japanese Domestic model vehicles (and here I refer to cars built in Japan for domestic sale) and local dealer imports range between 12% and 15% a year on average. Devaluation of the Ja$ will in some instances either reduce the rate of depreciation on a vehicle over a one year period, and in a few instances will actually result in an increase in the market value of some vehicles.

Question: If two vehicles are the same year, make and model, are they likely to have different values if one is a deportee and the other one made specifically for the export market?

David: The ‘deportee’ (Japanese Domestic) vehicle in several instances may have a higher level of trim and more features (such as air bags and anti-locking brake systems) which the regular export model does not have. This may result in the Japanese Domestic model having a marginally higher value than the comparable local dealer model in some instances.

Question: Are genuine spare parts sourced for all types of vehicles, e.g., deportee vehicles?

David: No. Used parts/aftermarket parts are usually sourced for vehicles over four years old. However, for vehicles less than four years old, genuine OEM replacement parts would be the first choice. All replacement parts allowed must comply with the standards set by the Jamaica Bureau of Standards. The Insurer’s responsibility is to ensure that the Insured is placed in the same position he/she was in prior to the vehicle being damaged.

Question: Are Sports Utility Vehicles valued differently from cars?

David: No. The same procedure is used, i.e., the prices of the latest model vehicle, less depreciation and adjustments for current market trends and the overall condition of the particular vehicle.

Question: Is there a standard valuation methodology used by all valuators?

David: There are standard methodologies used by all valuators, but different opinions of market trends and the discretion of the individual valuator may result in differences in market values between valuators. This difference of opinion, however, should be minimal.

Question: Is there an Association of Valuators and are its members bound by any standards?

David: Yes, the Loss Adjusters Association. A Committee comprised of its members are engaged in setting standards and establishing best practices for the industry.

Question: Are there differences between the functions of a Loss Adjuster, Valuator and an Assessor?

David: Yes, the Loss Adjuster/Assessor can also be Valuators. However, they usually quantify motor vehicle damage, and may sometime quantify property damage loss as well.

Question: What is the significance of “year of manufacture” versus “model year’ to a Valuator?

David: The Assessor uses the model year as one of the main components in determining the value of a vehicle. The model year can be verified in most instances by decoding the VIN (Vehicle Identification Number) on the vehicle. The “year of manufacture” can be either one year before or the same year as the correct “model year” of the vehicle. The Loss Adjustors Association along with the Bureau of standards and various local New & Used Car Dealers are presently engaged in discussions regarding the change of the motor vehicle importation policy to require correct ‘model year’ instead of ‘year of manufacture’ or ‘year of registration’.

Question: What value is recommended for ‘use for insurance purposes’? Is it forced sale value or market value and why?

David: The value recommended for the use for insurance purposes is the market value. The forced sale value is used mainly by financial institutions which may be using the vehicle as collateral for providing a loan.

Question: What features/factors/accessories help preserve or increase the value of a vehicle?

David: Keeping the vehicles in a good condition overall (including using proper servicing intervals) will help to preserve the value of the vehicle. The addition of after-market accessories (e.g.,) alloy rims, may increase the value of the unit, but only marginally in most instances. It is therefore, advisable to insure major additional accessories (such as elaborate stereo systems) separately.

Interviewer: Well, thanks for this information David, I certainly enjoyed talking with you and I hope that this clears up many of the questions about values and insurance that the public has.

Factors Affecting Vehicle Values

The present Jamaican Automobile Market is comprised of vehicles manufactured for various world markets and imported to Jamaica. Japanese Domestic, Asian, European, Canadian, and United States are some of the market models that are imported alongside the Local Dealer models. As such, a particular model vehicle may have features, engine types, drive train, and even body parts that may vary from that of the Local Dealer model. This factor makes the determination of Market Value a more intensive process.

Changes in Import Duties and Policies

These changes by the Jamaican Government have a major effect on the value of Motor Vehicles. Some changes make it uneconomical to import vehicles with larger engine sizes, and at other times the changes make importation again feasible. Another change had increased the age limit on used cars imported allowing an influx of older model vehicles on the market. Over the last 10 years the duty rates and import policy had been adjusted many times having a dramatic effect on automobile values on the Jamaican market.

Currency Value Changes

Any large change to the value of the manufacturer’s currency will have an effect on the local values of those vehicle models. Should the Japanese Yen dramatically rise in value, the cost of importing these vehicles automatically increases. Should the Euro dramatically fall in value it affects the vehicles imported from these markets. Devaluation in the value of Jamaican Currency also has an effect on vehicle values.

Dealer Price Adjustment

These usually take place with the introduction of a new model but may happen at anytime during the year. These adjustments have a cascade effect on the value of the older models. New models are usually sold at a similar or higher price that the previous model. There have been several instances in which there had been a reduction in the price of a new model being offered that dramatically affected the values of the older models. Usually for vehicle models with uncommon features, obtaining the price information from the Local Dealer may cause delays in the calculation of the value.

Visit MSC McKay for information on how to get you valuations reports today.

Why Valuate Your Vehicle?

Vehicle owners should ensure that they are not under-insuring a vehicle that has appreciated in value due to changes in economic conditions resulting in the inability to replace it in the case of total loss. Care should also be taken to ensure that they are not over-insuring a vehicle that has deteriorated in condition or value resulting in the paying of unnecessarily high Insurance Premiums. Many Jamaicans have learned through experience that many vehicles for sale may actually be incorrectly registered, (Click here for More Info) or may have been tampered with (Click Here for More Info). Being informed of the correct market value prevents conflict with your Insurance Company should a claim situation arise. 

The Jamaican Automobile market comprises of vehicles manufactured for various world markets and imported to Jamaica. Japanese Domestic, Asian, European, Canadian, and United States are some of the markets that are imported alongside the Local Dealer models. As such, a particular model vehicle may have features, engine types, drivetrain, and body parts that may vary from that of the Local Dealer model. This often makes it difficult to easily procure replacement parts for maintenance service or damage repair. In some instances, these vehicles are purchased under salvage titles, repaired and then imported into Jamaica.

Insurance Companies also require owners to do regular valuations due to the high incident of fraud in Jamaica with all types of vehicles. As such, they need to verify that the car you are insuring is still the same car as originally registered and that it is roadworthy.

So safeguard yourself when investing in the purchase of a vehicle!

Visit MSC McKay for information on how to get you valuations reports today.  

Do You Own A Left-Hand Drive Car?

Things you should know Part 1:

In times like these, everyone is looking to save a buck, especially when selecting a quality used car. Cost-conscious shoppers may end up finding a bargain with a LHD vehicle, but purchasing a LHD vehicle isn’t always what it’s cut out to be.

While strolling around a car lot you might end up stumbling on that “perfect” looking car. Although the steering wheel maybe on the “wrong side”, you’ll be quick to realize how affordable this car could be. After you’ve sat in it and drooled over the thought of owning it, keep your eyes peeled for two words staring at you in small print – ‘Salvage Title’ in the interior of the car.

 A Salvage Title indicates that the car had suffered enough damage to be deemed a ‘Total Loss’, or as Jamaicans are quick to put it “It did right-off”. Now hold your horses! Given that the car was a total loss, it doesn’t always mean that the car had a massive collision, it only means that the cost of the damage done to the vehicle was more than the cost to repair the unit.

What happens next is that, depending on the US State the car came from, generally the motor vehicle agency would issue a ‘Salvage Title’ or ‘Junk Certificate’. It only means that the car cannot be driven, sold or registered in its current condition. Insurance companies then sell the salvage to a repair shop or parts dismantler. If the vehicle has been repaired, it will undergo a safety check/inspection before the governing agency issues a new title. When the State issues this title, it will now be ‘branded’ so that future owners will know that the car has been salvaged.

Keep your eyes peeled for Part 2, as we delve into the different kinds of damages usually associated with a salvaged and rebuilt vehicle.

Visit MSC McKay for information on how to check your car history today.