Car pricing - things going mental or is it just me?
Discussion
Slightly off topic but I find it interesting that motorcycles are now cheaper than years ago when cars have generally got more expensive. I bought a new Honda Hornet 600 in 1999 for £3,995. Adjusted for inflation using CPI that is £7,284 according to the bank of England inflation calculator. Using RPI instead of CPI gives a figure of over £9,000 in todays money. I bought a similar bike (Suzuki GSX-8S) in January this year for £6,995.
Ecosseven said:
Slightly off topic but I find it interesting that motorcycles are now cheaper than years ago when cars have generally got more expensive. I bought a new Honda Hornet 600 in 1999 for £3,995. Adjusted for inflation using CPI that is £7,284 according to the bank of England inflation calculator. Using RPI instead of CPI gives a figure of over £9,000 in todays money. I bought a similar bike (Suzuki GSX-8S) in January this year for £6,995.
I could be wrong but I suspect demand has dropped. I seem to recall a lot more bikes on the road in the 80s, 90s than I see now. Most of my friends in the 80s and 90s had bikes, most of my sons mates have cars or a bus pass.brillomaster said:
no one actually buys new cars outright, so its almost immaterial what the list price is - for the first 5 or so years of a cars life, it'll be paid for with monthly payments.
once it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.
Plainly untrue / lieonce it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.
I’ve bought a couple of brand new cars, a 21 Jazz was list price £22k now they are £28k only a couple of years later. Manufacturer trying it on it that case.
There are some bargains around for pre-reg if you are prepared to travel a few hundred miles.
23 Corolla lists for £31k, bought one with under 50 miles on it for £24k - had only been registered a month before. There were a few of them around the country.
With the 10 year or 100k miles free Toyota warranty the equivalent monthlies work out cheap for buying with cash.
There are some bargains around for pre-reg if you are prepared to travel a few hundred miles.
23 Corolla lists for £31k, bought one with under 50 miles on it for £24k - had only been registered a month before. There were a few of them around the country.
With the 10 year or 100k miles free Toyota warranty the equivalent monthlies work out cheap for buying with cash.
As a kid at a fee-paying school I remember there being the odd car such as a 300E-24 and, a little later, an 8-Series and these were proper "got to go over and have a look" things. Even an Escort Cosworth (c.£45k in today's money) was deemed to be a bit special, certainly not something that most parents could stretch to.
What I'm driving at is that the last couple of decades have been an era in which a variety of unusually virtuous circumstances have allowed people to procure cars that are considerably "more" (performance, technology/features, raw bulk - or some combination thereof) than people in their income bracket could have stretched to in previous decades - even allowing for technological advances, improved manufacturing productivity and the general growth of the economy.
Now there's something of a correction and having to take a step or two back always stings!
What I'm driving at is that the last couple of decades have been an era in which a variety of unusually virtuous circumstances have allowed people to procure cars that are considerably "more" (performance, technology/features, raw bulk - or some combination thereof) than people in their income bracket could have stretched to in previous decades - even allowing for technological advances, improved manufacturing productivity and the general growth of the economy.
Now there's something of a correction and having to take a step or two back always stings!
bloomen said:
iphonedyou said:
People absolutely do buy new cars outright.
8% of them apparently. Which makes them outliers. Really weird ones who like burning money.
Do you mean "avoiding finance costs"?
All you do when you want to buy in cash is sit down, do a deal with awful financing, get a good deal on the sale price then settle the finance within a couple of weeks.
Result is the same deal you'd have got on finance but without the cost of credit.
bloomen said:
iphonedyou said:
People absolutely do buy new cars outright.
8% of them apparently. Which makes them outliers. Really weird ones who like burning money.
It tickles me reading people trying to claim that having someone else buy their car and rent it to them is a better deal. Anyone who can afford to just pay cash and buy a car is going to get a better deal, that’s how the lease companies make money.
The 8% are not fools, they are just lucky that they don’t have to rent their car from the company who could afford it and who actually own it.
The 8% are not fools, they are just lucky that they don’t have to rent their car from the company who could afford it and who actually own it.
fatjon said:
It tickles me reading people trying to claim that having someone else buy their car and rent it to them is a better deal. Anyone who can afford to just pay cash and buy a car is going to get a better deal, that’s how the lease companies make money.
The 8% are not fools, they are just lucky that they don’t have to rent their car from the company who could afford it and who actually own it.
In a normal, steady-state situation where car pricing matches supply-demand perfectly, you're right.The 8% are not fools, they are just lucky that they don’t have to rent their car from the company who could afford it and who actually own it.
That's also why in 2022 financing % of new car purchases fell (to some figure in the 80%s) and last year fell further below 80%, because of high APR rates and restricted supply meaning people on finance were paying more than cash buyers. So there is certainly a not-insignificant proportion of retail buyers using cash at the moment rather than a PCP or HP product.
However, the reality is the industry is very rarely in a perfect steady state, and even rarer for supply and demand to be in perfect balance.
In that situation, buying on finance absolutely in many cases is cheaper and a no-brainer deal, to the point of the behaviour suggested above (buy on PCP then settle early to stick it to them) becomes pointless as well, since a combination of manufacturers, dealers and finance houses will all try to shift stock by buying out either the APR or just offering contributions. On a 0% APR deal, even if you just want to buy the car outright, you're better off taking the finance deal and paying the exact same amount over 5 years than either paying cash or settling early.
For manufacturers who sell direct or via agency models (to a lesser degree), this usually means that they're just putting money onto every vehicle, and whether you buy cash or PCP shouldn't make an iota of difference, you'll just get (e.g.) £10k of support on that car, one form or another.
The problem is often the incentives are split between finance houses and dealers as well as the manufacturer, so while the manufacturer might be supporting £10k, the dealer might also be willing to stump up £5k, especially if they are still receiving a commission from the finance house on a contract (which could be anywhere between 1-5% of the contract amount).
In extreme cases of stock clearance, even actual rentals (e.g. contract hire; PCP is not a rental, it's a purchase product) can become the more sensible way to run a car, as contract hire can be supported even more than PCP since the support tends to be slightly more hidden and they are guaranteed to get the car back on fixed terms.
Indeed it's scary how much the list price has gone up.
I must be weird as the last 2 cars I've bought were new without finance.
However, I always keep them a long time, GT86 is 2013 car and SWMBO Vitara is 8 years old. Because of this, depreciation is well below £1k per year and zero interest costs which I don't think is too bad.
I wouldn't want to replace either though at the current prices, approx £32k and £25k respectively, so I'll be keeping for a good few years yet!
I must be weird as the last 2 cars I've bought were new without finance.
However, I always keep them a long time, GT86 is 2013 car and SWMBO Vitara is 8 years old. Because of this, depreciation is well below £1k per year and zero interest costs which I don't think is too bad.
I wouldn't want to replace either though at the current prices, approx £32k and £25k respectively, so I'll be keeping for a good few years yet!
clive_candy said:
bloomen said:
iphonedyou said:
People absolutely do buy new cars outright.
8% of them apparently. Which makes them outliers. Really weird ones who like burning money.
brillomaster said:
no one actually buys new cars outright, so its almost immaterial what the list price is - for the first 5 or so years of a cars life, it'll be paid for with monthly payments.
once it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.
Who / how - is that money lost. There must be some 'danger point' where you should absolutely not buy a car unless you want to be the one who suffers the 75% depreciation. Like a very serious game of pass the parcel. once it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.
worldwidewebs said:
jhonn said:
You're not alone - the only new car I've ever bought was my MX-5 which cost circa £18k in 2018 - the same car now is £27k ish.
I bought a new MX-5 in February 1991 - it was £15,250. £27k over 30 years later seems a bit of a bargain reallyWages simply haven't kept up with inflation, that's why most people are baulking at the price of goods and services these days, when any increase you have had has been taken by increases on essentials like rent/mortgages/heating/food/electricity/council tax and others there simply isn't anything left therefore people feel poorer.
But there is value on used EVs you can jump into a 2 year old 20k mile iX3 that's still in its warranty period for 40% of its list price as an example.
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