The economics of new car sales

[Grandfondo]

daemon said:

Grandfondo said:

WRONG again!!!!!! Learn To read. See if you can get this into your head.

PCP/lease gets some people into cars they can't afford to own!

Which part of that sentence is not factually correct ?

Speaking of yourself in the third party, which is weird and creepy in equal measures you said

Grandfondo said:

Not at all,but his honesty is a breath of fresh air which makes him a bigger man than most of the look rich quick renters on PH.

You are really living up to the Irish stereotype!!

Why don't you quote the post I was answering which makes it clear that I was saying the poster "was the bigger man" Becaues he said that he not afford to buy £36k car but could lease it.

Edited by Grandfondo on Friday 21st November 23:40

[nickfrog]

daemon said:

Dealer finance is often the best way to buy a NEW car as its usually incentivised by the manufacturer with "manufacturer contributions" or subsidised rates or PCP format deals.

Or you could get exactly the same incentive (or more) by buying through a broker (often a lease company with a different front). Or choose a brand that offers the same incentives irrespective of finance method like BMW. But unlike Mercedes for instance.

Still, I would genuinely like someone to tell me how I could have leased the Qashqai for less than the £173/month that is has cost us in depreciation over 3 years.

List was £20.5k, Broker price £16,870. This was the best value family car for us having looked at an array of others (both on lease and cash deals of course).

I know it's one example and I have never claimed to have looked at the entire automotive product offering available (why would anyone do that?).

Again, I am totally impartial as I don't care about what method I use, I have no prejudice, I want the cheapest way. Which, for me (I have no intention to speak for the rest of the population and averages don't matter to me), is cash.

We'll definitely look at the lease deals for the daughter's forthcoming car of course as I have no pre-conceived ideas unlike the renters if would seem.

Loss of interest ? Yield over the past 3 years has been terrible on cash ISA (ie similar amount of risk to putting it in a car) and just about matched inflation and anything over the ISA/NISA threshold attracts 40% tax anyway so your capital shrinks as this would have been less than inflation. The last thing I want is cash in the bank. I'd rather invest it and be prepared to take a risk while putting some of it in a car rather than pay more each month. I appreciate not everyone can do that but tough, not my fault. Oh an this is not finance expertise btw, just very very basic stuff. My financial knowledge is rudimentary.

As for second hand cars these are my last 3 cars :

2006 987 Boxster - Bought June 2011 - sold Jan 2012 - £123.53 depreciation per month.
2008 MINI Cooper S - Bought January 2012 - sold June 2013 - £74.25 depreciation per month.
2008 125i - Bought June 2013 - sold November 2014 - £17.10 appreciation per month.
Will I do as well with the GT86 ? I doubt it but I can see it selling for £10k in 3 years, crystallising £180/month depreciation.

None of them were Mondeos bought from Motorpoint. So ? No one has to buy a Mondeo from Motorpoint. They could just buy a new Qashqai from a broker.

We all make decisions based on our own fiscal and cash flow situations, that doesn't mean that anyone is right or wrong but there is a certain element of reverse snobbery at play here IMO.

[Earthdweller]

There was some American billionaire guy ( I forget who ) famously said that he only bought things that would appreciate in value and rented everything that depreciated in value ..

Seems perfectly sensible to me

Every car is on the slope to a crusher .. Where and when you get on/off is upto you

My current car as case in point

Bought with a £5k deposit (equity in old car) then £300 or so pm

New car ordered and getting in the new year £5k deposit after finance paid off on current car being traded in

So £300 per month to run a very nice reliable economical and trouble free car for the last three half years and I still have my £5k deposit (nominally)

My house mortgage will be paid off in two years and that has probably doubled in value since I bought it

I am happy to have had the use of my car I would not want to spend £20-30k on something that 10-15 yrs later is £250 for scrap

I'd rather still have my capital .. Have it working for me rather than watch it turn to nothing on my driveway

£300 as a chunk of my income is so much more sensible (to me)

I have a friend who only buys old cars and seems to be very good at buying the right ones and making money on them .. I d t have that talent and d t have his financial clout to buy cars that appreciate !

Horses for courses I suppose

Just my humble take on it

[Grandfondo]

Earthdweller said:

There was some American billionaire guy ( I forget who ) famously said that he only bought things that would appreciate in value and rented everything that depreciated in value ..

Seems perfectly sensible to me

Every car is on the slope to a crusher .. Where and when you get on/off is upto you

My current car as case in point

Bought with a £5k deposit (equity in old car) then £300 or so pm

New car ordered and getting in the new year £5k deposit after finance paid off on current car being traded in

So £300 per month to run a very nice reliable economical and trouble free car for the last three half years and I still have my £5k deposit (nominally)

My house mortgage will be paid off in two years and that has probably doubled in value since I bought it

I am happy to have had the use of my car I would not want to spend £20-30k on something that 10-15 yrs later is £250 for scrap

I'd rather still have my capital .. Have it working for me rather than watch it turn to nothing on my driveway

£300 as a chunk of my income is so much more sensible (to me)

I have a friend who only buys old cars and seems to be very good at buying the right ones and making money on them .. I

d t have that talent and d t have his financial clout to buy cars that appreciate !

Horses for courses I suppose

Just my humble take on it

Do you rent your wife?

Because the saying goes "if it flys fks or floats rent it"

[Grandfondo]

nickfrog said:

daemon said:

Dealer finance is often the best way to buy a NEW car as its usually incentivised by the manufacturer with "manufacturer contributions" or subsidised rates or PCP format deals.

Or you could get exactly the same incentive (or more) by buying through a broker (often a lease company with a different front). Or choose a brand that offers the same incentives irrespective of finance method like BMW. But unlike Mercedes for instance.

Still, I would genuinely like someone to tell me how I could have leased the Qashqai for less than the £173/month that is has cost us in depreciation over 3 years.

List was £20.5k, Broker price £16,870. This was the best value family car for us having looked at an array of others (both on lease and cash deals of course).

I know it's one example and I have never claimed to have looked at the entire automotive product offering available (why would anyone do that?).

Again, I am totally impartial as I don't care about what method I use, I have no prejudice, I want the cheapest way. Which, for me (I have no intention to speak for the rest of the population and averages don't matter to me), is cash.

We'll definitely look at the lease deals for the daughter's forthcoming car of course as I have no pre-conceived ideas unlike
the renters if would seem.

Loss of interest ? Yield over the past 3 years has been terrible on cash ISA (ie similar amount of risk to putting it in a car) and just about matched inflation and anything over the ISA/NISA threshold attracts 40% tax anyway so your capital shrinks as this would have been less than inflation. The last thing I want is cash in the bank. I'd rather invest it and be prepared to take a risk while putting some of it in a car rather than pay more each month. I appreciate not everyone can do that but tough, not my fault. Oh an this is not finance expertise btw, just very very basic stuff. My financial knowledge is
rudimentary.

As for second hand cars these are my last 3 cars :

2006 987 Boxster - Bought June 2011 - sold Jan 2012 - £123.53 depreciation per month.
2008 MINI Cooper S - Bought January 2012 - sold June 2013 - £74.25 depreciation per month.
2008 125i - Bought June 2013 - sold November 2014 - £17.10 appreciation per month.
Will I do as well with the GT86 ? I doubt it but I can see it selling for £10k in 3 years, crystallising

£180/month depreciation.

None of them were Mondeos bought from Motorpoint. So ? No one has to buy a Mondeo from Motorpoint. They could just buy a new Qashqai from a broker.

We all make decisions based on our own fiscal and cash flow situations, that doesn't mean that anyone is right or wrong but there is a certain element of reverse snobbery at play here IMO.

All very good but your missing the point that daemon is making!

Most people using the smoke and mirror method of car "ownership" don't have the fking money!!!!!!!

[liner33]

I dont believe that most main dealers dont have a massive amount in a new car that they can discount even if they wanted to, they can however discount more if you take out credit as they know they will make more down the line.

The last two new cars I bought (For cash) the dealer price matched Drive the deal and I negotiated free servicing for the first three years so you can still get good deals on cash sales. Of course it might be rarer nowadays for people to pay for a new car with cash but for some manufacturers its not that common to get private sales at all.

[nickfrog]

Grandfondo said:

All very good but your missing the point that daemon is making!

Most people using the smoke and mirror method of car "ownership" don't have the fking money!!!!!!!

True. It may also explain the usual bitterness. And the serial posting...

If people spent less time posting all through the day, maybe they would make a better living...

[nickfrog]

[Earthdweller]

Grandfondo said:

Do you rent your wife?

Because the saying goes "if it flys fks or floats rent it"

It would most probably be cheaper if I did !

[Earthdweller]

Grandfondo said:

Do you rent your wife?

Because the saying goes "if it flys fks or floats rent it"

It would most probably be cheaper if I did !

[Antony Moxey]

thelawnet said:

Antony Moxey said:

Its £109 actually, so a bit better. As it happens my daughter is a 20 year old girl and is pleased as punch to have a brand new Mii sat outside. I'll point out to her the error of her ways later, as well as chastising both myself and my wife for agreeing to the deal for her birthday present. Tw*t.

I beg your pardon. Unless you are a 20 year old girl.

Well she is so what's your point? You don't particularly like her car of choice so therefore it's a bad deal? Perhaps she'd look at your choice of car, and how you chose to pay for that car and scoff equally as dismissively - perhaps she'd have a point.

[Antony Moxey]

Grandfondo said:

PCP/lease gets some people into cars they can't afford to own!

Which part of that sentence is not factually correct ?

Does it matter? Just because you don't want to shell out everything up front doesn't mean you cant. I could afford my daughter's car, but I'd rather spread the cost to monthly payments. The car is affordable, the monthly payments even more so. It's how I choose to pay for a new car.

[forzaminardi]

I don't understand why people get so upset by what other people spend or don't spend their money on. Most people, rightly or wrongly, aren't especially interested or even have the option of wondering whether they're saving £2k here or there. Perhaps, in pure pounds and pence terms, they should care; perhaps, in terms of getting on with life, they shouldn't.

Ultimately if you look only at the costs of it, any car is a waste of money, isn't it? But most people would say that the price they pay isn't for the car itself, it's for the freedom to go where they want when they want. Some would overlay that with it being the cost also of having a 'nice' car, however and whoever it is that niceness is judged. PHers would overlay it with it being the cost of having a car they like.

I'd suggest that those getting off on the idea of other people throwing their money away on PCP deals or whatever consider carefully what they spend their money on - I very much doubt that in every single instance and activity through their life they make the most financially-sensible and logical choice. Obviously there is a scale of what's sensible and what's daft but where you sit on that scale is your own business.

I suppose the point is - buying a M&S sandwich is a waste of money. But it's convenient if you fancy a sandwich.

[Frankthered]

When it comes to buying a new car, PCPs are certainly a great enabler.

Mrs FTR and I bought a new QQ earlier this year and it suited us fine at the time.

We didn't really want to stump up to buy outright and we were looking at something around 3 years old which would have been around £200 a month on HP. At the time, Nissan were also selling off the run-out of the old model on a PCP for not much more and a similar deposit.

Then I realised we could get a new mode for a similar deposit and around £250 per month. The monthly payment isn't really a concern, can certainly afford the extra £50. Obviously, the difference with the PCP is the balloon payment at the end. I did try to get the salesman to quote HP for the new QQ, but he didn't seem to want to - I guess it would have been £400 or so.

The PCP is definitely a factor in keeping sales up, not least because of the balloon payment - these can be pretty big these days. If the deal is structured so that there is some equity left in the car at the time the PCP expires, it does tend to lead very neatly into being the deposit for the next deal and this is what I expect will happen for us when the time comes.

When I look at it like this, it doesn't take a great leap to see how leasing can make sense.

Could we spend less on our car - certainly.

[anonymous-user]

Frankthered said:

When it comes to buying a new car, PCPs are certainly a great enabler.

Mrs FTR and I bought a new QQ earlier this year and it suited us fine at the time.

We didn't really want to stump up to buy outright and we were looking at something around 3 years old which would have been around £200 a month on HP. At the time, Nissan were also selling off the run-out of the old model on a PCP for not much more and a similar deposit.

Then I realised we could get a new mode for a similar deposit and around £250 per month. The monthly payment isn't really a concern, can certainly afford the extra £50. Obviously, the difference with the PCP is the balloon payment at the end. I did try to get the salesman to quote HP for the new QQ, but he didn't seem to want to - I guess it would have been £400 or so.

The PCP is definitely a factor in keeping sales up, not least because of the balloon payment - these can be pretty big these days. If the deal is structured so that there is some equity left in the car at the time the PCP expires, it does tend to lead very neatly into being the deposit for the next deal and this is what I expect will happen for us when the time comes.

When I look at it like this, it doesn't take a great leap to see how leasing can make sense.

Could we spend less on our car - certainly.

my bold

and, of course, the manufacturer / dealer has higher hopes that you will roll neatly into another deal through them - retention is certainly one aim of the model

[Grandfondo]

JPJPJP said:

Frankthered said:

When it comes to buying a new car, PCPs are certainly a great enabler.

Mrs FTR and I bought a new QQ earlier this year and it suited us fine at the time.

We didn't really want to stump up to buy outright and we were looking at something around 3 years old which would have been around £200 a month on HP. At the time, Nissan were also selling off the run-out of the old model on a PCP for not much more and a similar deposit.

Then I realised we could get a new mode for a similar deposit and around £250 per month. The monthly payment isn't really a concern, can certainly afford the extra £50. Obviously, the difference with the PCP is the balloon payment at the end. I did try to get the salesman to quote HP for the new QQ, but he didn't seem to want to - I guess it would have been £400 or so.

The PCP is definitely a factor in keeping sales up, not least because of the balloon payment - these can be pretty big these days. [b]If the deal is structured so that there is some equity left in the car at the time the PCP expires, it does tend to lead




very neatly into being the deposit for the next deal and this is what I expect will happen for us when the time comes.[/b]

When I look at it like this, it doesn't take a great leap to see how leasing can make sense.

Could we spend less on our car - certainly.

my bold



and, of course, the manufacturer / dealer has higher hopes that you will roll neatly into another deal through them - retention is certainly one aim of the model

That's why it's called Perpetual Car Prison!

[Willy Nilly]

I paid cash for my ex-demo bike and paid cash 11 months later for my then nearly 3 year old car. Leasing certainly makes sense for business users and in certain circumstances for private users. For me, I earned (a miniscule amount) interest on the lump sum I had put aside for the car. Now I own and have no debts on a car that will serve me for a least a decade and while I drive it some money will be put aside for its eventual replacement which will also earn some interest.

For the first few years of ownership leasing looks cheap, but assuming I look after my car (which I will) I will be able to depreciate, fuel, insure and provide a fair chunk of the R&M for the cost of the lease.

[Grandfondo]

Antony Moxey said:

Grandfondo said:

PCP/lease gets some people into cars they can't afford to own!

Which part of that sentence is not factually correct ?

Does it matter? Just because you don't want to shell out everything up front doesn't mean you cant. I could afford my daughter's car, but I'd rather spread the cost to monthly payments. The car is affordable, the monthly payments even more so. It's how I choose to pay for a new car.

So are you saying you agree with the statement?

[Antony Moxey]

Grandfondo said:

Antony Moxey said:

Grandfondo said:

PCP/lease gets some people into cars they can't afford to own!

Which part of that sentence is not factually correct ?

Does it matter? Just because you don't want to shell out everything up front doesn't mean you cant. I could afford my daughter's car, but I'd rather spread the cost to monthly payments. The car is affordable, the monthly payments even more so. It's how I choose to pay for a new car.

So are you saying you agree with the statement?

I'm saying that it's an irrelevent statement. Who cares how people finance their purchases - most sensible people work out which is the best way for them and that's what they do. Some people finance a purchase one way, others do it differently. As I said, does it matter.

[daemon]

nickfrog said:

Or you could get exactly the same incentive (or more) by buying through a broker (often a lease company with a different front). Or choose a brand that offers the same incentives irrespective of finance method like BMW. But unlike Mercedes for instance.

To get the extra finance contribution you still have to use the manufacturers finance.

nickfrog said:

Still, I would genuinely like someone to tell me how I could have leased the Qashqai for less than the £173/month that is has cost us in depreciation over 3 years.

Did we not establish a number of pages back that you appear to be the exception to the norm?

We could look at other exceptions to the norm such as the Golf R deals for example?

nickfrog said:

List was £20.5k, Broker price £16,870. This was the best value family car for us having looked at an array of others (both on lease and cash deals of course).

I know it's one example and I have never claimed to have looked at the entire automotive product offering available (why would anyone do that?).

Exactly. You cant extrapolate your own particular circumstances across the millions of car transactions that happen in the UK each year.

nickfrog said:

Again, I am totally impartial as I don't care about what method I use, I have no prejudice, I want the cheapest way. Which, for me (I have no intention to speak for the rest of the population and averages don't matter to me), is cash.

There we go. Again, your method worked for you. Other methods work for other people. Doesnt make them "stupid" and doesnt mean they "cant afford it".

nickfrog said:

We'll definitely look at the lease deals for the daughter's forthcoming car of course as I have no pre-conceived ideas unlike the renters if would seem.

I have no preconceived ideas. In fact i've never leased a car, and never intend to - i think they are a bit too restrictive for me personally. Doesnt mean they dont work for other people. And i wouldnt be so derrogatory as to call them "renters".

nickfrog said:

Loss of interest ? Yield over the past 3 years has been terrible on cash ISA (ie similar amount of risk to putting it in a car) and just about matched inflation and anything over the ISA/NISA threshold attracts 40% tax anyway so your capital shrinks as this would have been less than inflation. The last thing I want is cash in the bank. I'd rather invest it and be prepared to take a risk while putting some of it in a car rather than pay more each month. I appreciate not everyone can do that but tough, not my fault. Oh an this is not finance expertise btw, just very very basic stuff. My financial knowledge is rudimentary.

Not much of an investment if its returning -40% in three years.

nickfrog said:

As for second hand cars these are my last 3 cars :

2006 987 Boxster - Bought June 2011 - sold Jan 2012 - £123.53 depreciation per month.
2008 MINI Cooper S - Bought January 2012 - sold June 2013 - £74.25 depreciation per month.
2008 125i - Bought June 2013 - sold November 2014 - £17.10 appreciation per month.
Will I do as well with the GT86 ? I doubt it but I can see it selling for £10k in 3 years, crystallising £180/month depreciation.

Good for you. 50% of the cars in my profile i made a profit on when i sold them. That doesnt mean i cant see the reasoning behind someone leasing / PCPing / finance new, if they chose to do so.

nickfrog said:

We all make decisions based on our own fiscal and cash flow situations, that doesn't mean that anyone is right or wrong but there is a certain element of reverse snobbery at play here IMO.

Yes. Absolutely there is. You only have to look at terms being used when people lease or PCP like "renters", "cant afford to buy them", "like renting a TV", etc, etc, to see that yes there is reverse snobbery going on - by people who cant see that other methods suit other people at other times better.