Hearing it from Big BrotherPOSTED BY Dinesh Appavu ON 03 August 2014
It would be really nice if we could spend the entire Sunday getting to know Lim Ah Koon, the 64-year-old head of Fader Auto Parts Supply in Klang who started life as a fisherman.
We could tell you an inspiring story about a Kuala Selangor boy who made it big though he was only educated up to Standard 5. Or of the time when his fishing boat engine went kaput at sea. Lim and his shipmates were only rescued two days later. Without a radio, they had to wait for Lady Luck to send them a passing ship.
But as president of the Malaysian Used Vehicles Autoparts Traders Association (MUVATA), Lim has bigger fish to fry.
The first thing he’d like to do is to tell us about the used auto spare parts industry. He estimates some 2,000 companies in the business. It is an industry that sees the movement of at least 3,000 containers in a month. Easily, it is an activity that can touch a yearly worth of RM1.8 billion.
One thorn that has continuously irritated the industry is public misperception. It’s mostly stolen goods… The engine’s gonna burn out the moment you haul it out the yard… And so on and so forth.
If that’s the case, it’d be pretty hard to explain how Lim had managed to sustain for the last 25 years. At age 39, he started from two shop lots selling everything from head lamps to bumpers and radiators to engines from chopped up Japanese cars. Today, the company inventory occupies up to 15 acres of land and does a turnover of RM90 million in a year with 99 per cent of its activities concentrated in the export market. His first overseas customers were Indonesians in 1996. Lim is still trading with them up till this day, plus with 30 other countries including the United Kingdom and the United States.
“Just as there are as many dishonest people, there are also those who believe in integrity. I used to get into arguments with friends who thought I’d exchange their faulty alternator with a good one from my used engines. ‘No one would know’, they said. But I knew. And it matters to me things like that do not happen in my yard. So, I’d tell my friends, ‘If you want the alternator, take it. But don’t replace it with your faulty one. Just leave it empty. I’ll let the customer know and persuade him to take it with a discount. That is how I run things,” says Lim.
For Lim, it is imperative the public should know where used spare parts come from. In his case, it’s from the Land of the Rising Sun, namely the areas of Hokkaido, Osaka and Kyushu. In Japan. they have a policy for on-road vehicles to be scrapped after five years. Most times, there is still a lot of life left in these parts. This is where used auto parts dealers come in, as recylers for parts that may give an old vehicle another two years of on-road time.
“I first started buying used parts from Japan in 1991 with the help of a Taiwanese aide. I had seen the market as early as 1989 at insurance panel workshops in Klang. You might have heard about the Betterment Clause in insurance claims which states they will replace a vehicle with new parts if it has not reached the five-year mark. Over that period, owners are encouraged to utilise used parts to reduce repair costs. Sometimes, it also depends on the type of insurance policies the vehicle owners have signed up for. Those with only second or third party policies will have to bear the bill out of their own wallets. So, you can imagine how the used part option can sound more attractive in these circumstances,” says Lim.
The used parts industry will exist as long as auto vehicles are on Earth. It is a major industry even in advanced countries like Australia, Europe, UK and US. Even a car producing giant like Japan is a consumer of used auto parts. They call it kokunai in their local market.
To be in this business, a company has to have strong cash reserves because it requires a large capital outlay. One container can easily cost up to RM50,000 and don’t forget there is a waiting period as there is no guarantee you can sell a part immediately. But it is a viable business because no automobile can remain trouble free after four years, even with regular maintenance.
“You just have to sit down in a used spare parts retailer to see how busy they can be. I know a friend who has three handphones and they do not stop ringing. But as a buyer, you must know the market. What are people driving? What make of car is currently ruling the roads? If you’ve done your homework, you won’t go too far wrong. In the worst scenario, if the parts cannot be sold after four years, they can still fetch a good price as scrap metal at RM1,000 per ton,” says Lim.
Dealing with mindsets, adds Lim, is a major challenge in the industry.
“The fact is when you buy a brand new door for RM1,000, for example, what you’ll get is just the metal frame. With a secondhand door for only RM300 or so, it comes with upholstery, power window switch, side panels and if you’re lucky, a speaker as well. The second option is obviously good value for money. But there are people who think why settle for a cast off when they can afford a RM100,000 car? So they think new is better,” shrugs Lim.
But MUVATA, which has some 117 members, is not looking at a glossy advertising campaign.
“We are starting from within first with a service enhancement programme. The first one is to make it compulsory for used auto parts dealers to offer a 14-day warranty. It is already in existence but not all practise this. Second is to standardise info disclosure pertaining to engines, like the make and origin,” says Lim.
And lastly, Lim, who drives a Lexus, is ready to look his critics in the eye and reiterate once and for all, that used auto parts are not the cause of accidents. Humans are. Let’s not forget road conditions and the quality of instruction from the nation’s driving schools.
“In my line, I’ve seen new cars, barely a month old, getting into crashes. So logically, an engine is a dead thing. It takes a driver to get it to run. If a car crashes, is the engine to blame? Just something to think about…,” concludes Lim.