The economics of new car sales

[daemon]

liner33 said:

I've found buying outright cheaper based on the cars I have , after three years my Fabia will have lost getting on for 50% of the purchase cost , I have had to pay nothing in repairs or maintenance which works out to about £211pm . I'm sure I could have got something as good for that amount per month but by the time you add initial payments, arrangement fees and deposits I'm not so sure.

Plus I don't need to find £7600 to buy the car and have the deposit should I choose to change

Interesting. From your profile you said you bought it for £15,700. As per your 50% estimation, its cost you £7850 in depreciation, plus £145 * 3 for the road tax (included in lease) = £8285.

The first lease deal i found was 35+6 @ £167+VAT = £8216.40

http://www.simpsonsskoda.co.uk/simpsons-business/l...

Probably a bit of an admin fee in there somewhere, but theres also the lost interest to include on £15,700 tied up for 3 years on a cash purchase.

Edited by daemon on Friday 21st November 15:24

[daemon]

scenario8 said:

But you had to find that £7600+ to buy it in the first place...

He had to find £15,700 to buy it in the first place, to be returned only 50% of that after 3 years.

[Grandfondo]

daemon said:

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

That made me LOL Rob!

You tell us - why do you do it with the Q5?

Must be the longest PCP in history because I still have it!
Q5 was purchased outright but I did have a car I use for work on PCP due to manufacturer deposit contribution but paid it off early!

You would have a better insight into the mind of the serial borrower?

[Antony Moxey]

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

Depends what you mean by 'afford to own'. You can finance a car and still own it without needing to pay everything up front. Do you consider people with mortgages on their houses as homeowners?

[daemon]

Grandfondo said:

Must be the longest PCP in history because I still have it!
Q5 was purchased outright but I did have a car I use for work on PCP due to manufacturer deposit contribution but paid it off early!

You would have a better insight into the mind of the serial borrower?

Of the four cars at our home, two are on PCP, two were bought outright with cash. The PCP will be paid off early on the Golf next year and the PCP on the BMW will just run its course because wifie likes the car and its an easy payment.

If push comes to shove we could dispose of her z4 and wifie could slum it in some old six series or something like that, but hopefully it wont come to that

[liner33]

daemon said:

Interesting. From your profile you said you bought it for £15,700. As per your 50% estimation, its cost you £7850 in depreciation, plus £145 * 3 for the road tax (included in lease) = £8285.

The first lease deal i found was 35+6 @ £167+VAT = £8216.40

http://www.simpsonsskoda.co.uk/simpsons-business/l...

Probably a bit of an admin fee in there somewhere, but theres also the lost interest to include on £15,700 tied up for 3 years on a cash purchase.

Edited by daemon on Friday 21st November 15:24

Mine had a few options though but as well as the admin fee and other charges you have the
+£19pm for service/maintenance I got included so that's another £684

Interst rates at the moment are dire , any money saved barely breaks even

[daemon]

Antony Moxey said:

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

Depends what you mean by 'afford to own'. You can finance a car and still own it without needing to pay everything up front. Do you consider people with mortgages on their houses as homeowners?

He cant help himself. Its his idea of humour - even though he uses PCP deals when it suits him.

[Sump]

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

It gets them into cars they couldn't afford to own.

Waits for the I know multi millionaires who lease their cars brigade.

[daemon]

liner33 said:

daemon said:

Interesting. From your profile you said you bought it for £15,700. As per your 50% estimation, its cost you £7850 in depreciation, plus £145 * 3 for the road tax (included in lease) = £8285.

The first lease deal i found was 35+6 @ £167+VAT = £8216.40

http://www.simpsonsskoda.co.uk/simpsons-business/l...

Probably a bit of an admin fee in there somewhere, but theres also the lost interest to include on £15,700 tied up for 3 years on a cash purchase.

Edited by daemon on Friday 21st November 15:24

Mine had a few options though but as well as the admin fee and other charges you have the
+£19pm for service/maintenance I got included so that's another £684

Interst rates at the moment are dire , any money saved barely breaks even

Indeed. Just thought it was an interesting example relative to the "20% more expensive" statement from someone else earlier.

[daemon]

Sump said:

It gets them into cars they couldn't afford to own.

Waits for the I know multi millionaires who lease their cars brigade.

Just turning this around for the sake of debate -

Is that not like saying you really cant afford to own a new Porsche because you bought a rather old one?

No one buys second hand shoes after all, do they?

Therefore is leasing / PCP not just a choice in the same way as buying a second hand one is - rather than a statement of "not being able to afford a new one for cash"?

[liner33]

daemon said:

Indeed. Just thought it was an interesting example relative to the "20% more expensive" statement from someone else earlier.

True is not massively cheaper but it's cheaper nonetheless

Pcp does put people in cars they otherwise couldn't afford of that there is no doubt

[Antony Moxey]

liner33 said:

daemon said:

Indeed. Just thought it was an interesting example relative to the "20% more expensive" statement from someone else earlier.

True is not massively cheaper but it's cheaper nonetheless

Pcp does put people in cars they otherwise couldn't afford of that there is no doubt

As I said, depends what you mean by 'afford'. The monthly payments or the outright screen price?

[daemon]

liner33 said:

True is not massively cheaper but it's cheaper nonetheless

Pcp does put people in cars they otherwise couldn't afford of that there is no doubt

What you're saying is "afford to buy new", not "afford". And again, i would question the "afford to buy new". Of course, everyone on here is clearly cash rich and a powerfully built company director, so they'll pull out £30K from the back of their settee for a new car on a whim, but i'd say the reality is for the bulk of people who snub or poo poo PCP / lease deals and are driving cars of reasonable value, they'll have a finance agreement or personal loan or taken equity from a house to finance the cash purchase. Not that they'll admit it on here of course. And even IF thats not the case on here, it certainly is out in the real world.

If people chose not to put £16,000 or £20,000 or £50,000 into a car it may be for a variety of reasons

For a lot of people a controlled set monthly payment makes a lot of sense.

£16,000 cash might seem a lot for some to put in to a Skoda Fabia, however a £200 a month monthly payment might be a lot more palatable.

Edited by daemon on Friday 21st November 15:45

[Antony Moxey]

daemon said:

£16,000 cash might seem a lot for some to put in to a Skoda Fabia, however a £200 a month monthly payment might be a lot more palatable.

Exactly. For my daughter's 21st we bought her a SEAT Mii. Our choice was £10k or £109 a month. It wasn't really a difficult decision.

[MJK 24]

mikeyr said:

thelawnet said:

'000s Maker
184 Volkswagen
2 Subaru

And where the most popular car in 2004 was the Focus, it's now the Fiesta.

Selective quoting because I want to highlight a couple of these points...

• In the US Subaru have sold more cars than VW for the last two years!!!

• I'm looking at the sizes of these two cars and whilst they've grown over the last 10 years the Fiesta still isn't the size of an original Focus. Is it the most popular car now because of price points or this now the optimal size car because of economy concerns, parking restrictions or just becuase it hits the sweet spot all round?

Volkswagen seem to have been decimated in the USA. I was there in the summer. I saw dozens and dozens of Vento's and B4 Passat's in California. Ie early to mid 90's models. From their current range, I saw one Touareg. Why have they taken such a kicking over there?

[daemon]

MJK 24 said:

Volkswagen seem to have been decimated in the USA. I was there in the summer. I saw dozens and dozens of Vento's and B4 Passat's in California. Ie early to mid 90's models. From their current range, I saw one Touareg. Why have they taken such a kicking over there?

I had a look at this previously

http://247wallst.com/autos/2014/04/02/vw-sales-tro...

VW’s U.S. struggle stems primarily from two things.

• The first is the perception that its cars suffer from low quality.
• VW also has a limited lineup of cars and SUVs, and it does not sell a pickup. Pickups are a substantial portion of U.S. vehicles sales.

[xRIEx]

nickfrog said:

xRIEx said:

Again, impossible to say across the board - 20% is a made up figure. There are too many variables: which manufacturer? Which model? How old is the model line? What is the manufacturer's business model? We all know the fluctuations in the Golf R deals recently, they've been dirt cheap, now they're more expensive, showroom prices haven't changed one bit - is anyone saying that "20% more expensive" has consistently been accurate throughout these varying discounts? Bullst. It's a figure made up to support one side of an Internet argument.

As a maths nerd, I'd love to see how the representative figures are calculated if anyone can provide?

20% is a conservative figure based on a decent sample of checks I make every time I compare lease to cash. It is not scientific, just a rule of thumb that corresponds to my observations (what you elegantly call bullst) which are impartial (I would lease if it was cheaper on the cars that I choose), it's a far better indicator than say 50% depreciation over 3 years. Not just because I haven't never lost more than 30% over 3 years. It's really simple : compare the lease total cost to the likely depreciation over 3 years (providing it's based on transaction prices NOT list) : 20% difference is typical. But the leasers don't buy so they don't know what the transaction prices are both buying and selling so they can't actually compare. To go back to that 50% rule on second hand car : how can it be when if you buy wisely you don't even suffer that on a new car ? I have asked many times and still haven't had a response.

How is this depreciation forecast calculated? Manufacturer GFVs? Once again just picking a figure out of the air?

You say this applies to cars you are interested - I assume this means you're not comparing all of the several hundred models on offer at any one time, and therefore your "20%" may be indicative on cars you like, but not 'across the board'. If it is only a small sample then it cannot be called representative.

nickfrog said:

how can it be when if you buy wisely you don't even suffer that on a new car ?

Again, you're obsessing about your own experiential horizons and fail to register that across the 60+ million people in this country, not everyone has the same experience as you. Once again, there are too many factors - that is why individual cases are meaningless and averages are required (although easily misunderstood by those not statistically minded). Some people are great at negotiating, some people are st. If you are experiencing lower depreciation than suggested by the representative curve, great! Bully for you, you're a better negotiator than the average Joe/Joanne.

You might as well ask why traders manage negative depreciation: they buy, they sell for more - the depreciation curve is bullst! If you cherry pick your sample data then you can say cars never lose their value, they only ever appreciate - this is why sample size is important.

[romeogolf]

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

I PCP my car because I don't have £36k sitting around to buy it outright. If I saved the £300 a month that I pay out on it, it would take me 10 years to buy it. Which makes no sense to me. So, yeah, I have it on PCP, at an amount I can afford each month to drive the car I'd like to drive and for it to always be relatively new, reliable and comfortable. Simple.

[mikeyr]

MJK 24 said:

Volkswagen seem to have been decimated in the USA. I was there in the summer. I saw dozens and dozens of Vento's and B4 Passat's in California. Ie early to mid 90's models. From their current range, I saw one Touareg. Why have they taken such a kicking over there?

No idea - I only heard because I watched a US review of the new Impreza and they mentioned how Subaru was booming over there. Maybe US doesn't have similar levels of emissions/MPG taxes?

[Grandfondo]

Antony Moxey said:

Grandfondo said:

Are the majority of people leasing/PCP'ing because it's cheaper or is it the fact it gets them into cars they could not afford to own?

Edited by Grandfondo on Friday 21st November 15:02

Depends what you mean by 'afford to own'. You can finance a car and still own it without needing to pay everything up front. Do you consider people with mortgages on their houses as homeowners?

Sorry but if the car is on finance you don't own it the finance company does until the last payment is made!
If the mortgage is interest only I would say they are nearly tenants!