New-train or Ex-train? That is the Question

My point of view on the decision-making process of purchasing new or ex-trains
Bedy Kharisma Posted on: 2023-03-20 07:30:00 Viewer: 2,140 Comments: 0 Country: Indonesia City: Jakarta

New-train or Ex-train? That is the Question

Currently there is this debate over whether to buy a new or used car in Indonesia. The plan to import used electric trains or KRL from Japan by PT Kereta Commuter Indonesia (KCI) has sparked controversy. KCI initially planned to import 10 train cars in 2023 and 19 more in 2024. However, their efforts to import these trains encountered obstacles when their request for approval to import used capital goods in January 2023 was rejected by the Ministry of Industry (Kemenperin) because it did not meet the minimum requirement for local content levels (TKDN). This polemic highlights the ongoing debate about the benefits and drawbacks of importing used trains from overseas, especially as it relates to the development of Indonesia's domestic manufacturing capabilities. While some argue that importing used trains could help modernize the country's public transportation system, others raise concerns about potential safety issues, maintenance costs, and the impact on local manufacturers. Thus, it is intriguing to dive on the how the decision making process should be in this process.

One of the main factors to consider when deciding between new or used EMUs is cost. The cost of purchasing a new EMU globally is around $3.7 million USD, or around 56 billion rupiah.

However, the cost of purchasing a new EMU in Asia is slightly lower, at only $2.9 million USD, or around 44 billion rupiah.

While the lower cost in Asia may be appealing, it’s important to note that not many manufacturers are able to deliver EMUs in less than 36 months. Based on historical records, only Hitachi Rail was able to deliver EMUs in 24 months in Taiwan in 2021. Bombardier and CRRC took around 30 months, and other may took around 34 months.

Furthermore, there is a correlation between the price and delivery time of EMUs, with the lower-priced options typically taking longer to deliver. That being said, if one requires their train to be delivered faster, one should increase the price.

Assuming a purchase of 10TS @ 10 cars with a price per car of 44 million rupiah, the required capital would be 4.4 trillion rupiah, which is within the graph. The delivery time of 24 months is also acceptable, but the question remains: has any manufacturer have been able to deliver on this timeline and within this budget?

Another point of concern when considering the purchase of a new EMU is the cost of owning the car during operation. To justify the cost of a new EMU, the cost of ownership over time must surpass a certain threshold. We have crunched some number and came up with this equation that will help to make decision on this matter. 

To put it simply, there are two sections that are demarcated by a line on a graph, which is represented by the x and y axes. The x-axis represents the ratio of the operating cost of used cars compared to that of new cars, while the y-axis represents the operating cost of new cars. This information is crucial for operators, who can then use it to determine the optimal choice. The area that is formed by the two axes is divided by a line. If the value falls below this line, then purchasing used cars is the most cost-effective option. However, if the value is above the line, then purchasing new cars may be the better decision.

Aside from that, there are several factors that must be considered when procuring a used fleet, such as the structural integrity, cosmetic requirements, life cycle of systems, technological continuity, and integration. All of these factors must be taken into account when determining the duration, effort, and cost required to make the fleet 

suitable for service. Looking at so, it's worth noting that maintenance costs may exceed the general rule of thumb, since newer technologies with sensors and applications can provide condition-based maintenance and improve reliability. Therefore, when considering purchasing a used fleet, it's essential to weigh these factors and consider the long-term maintenance costs associated with the fleet.

How is it the life cycle cost berakdown of a new rolling stock anyway, is there a hy generic rule of thumb? In a study published by the US Department of Transportation’s Federal Railroad Administration in 2016, it was stated that the procurement cost only makes up between 20% to 40% of the total lifecycle cost. This means that the cost of maintenance, from the time of procurement to disposal, should account for between 1.5 to 4 times the initial procurement cost. Although this figure is not specific to any particular type of train, it can be used as a general guideline.

Based on this information, if the cost of maintenance of an ex-car exceeds 1.24 times the cost of maintaining an old car, then it may be more cost-effective to own a new car. According to the equation. Looking at this number, the manufacturer of new rolling stock should be getting serious to beat this number. Starting from selecting the right components.

In conclusion, the decision to purchase a new or used EMU is a complex one that requires careful consideration of many factors, including cost, delivery time, and cost of ownership during operation. While the cost savings of purchasing a used EMU may be appealing, it’s important to weigh the long-term benefits of investing in a new, sustainable option for public transportation.

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