New car sales 75% via PCP
Discussion
rxe said:
I would guess that new discs, pads and tyres on your existing Focus would be cheaper than the deposit on a new one, let alone the monthly payments.
"Discount for cash" works in a business that is cash starved or values the immediacy and certainty of the transaction. Car dealers don't really care - they would rather make money on the finance deal - they get the money anyway.
The numbers are made up. "Full retail price" is a largely made up number. "Depreciation" is an estimate based on a made up number.
I'll give an example from my business. There was a bit of kit that used to cost £1m. That was list. You could pretty easily get 30% off that, but getting more was hard. Actual physical cost of production was about £90k. Yes, you could build one yourself, but the bills and support costs added up very fast, and in the end it was cheaper to pay the man £700k with your 30% discount.
However, once you understood the sales motivation, it all became much simpler. The salesman (and hence his managers) were targeted with a sales number, in £. The number of units sold was pretty much irrelevant. So a discussion along the lines of "buy one full price and get three free" was easy. So were these devices worth £1m .... or £250K? If you bought boat loads of them, you got closer to the real pricing which was 80% discount.
The car industry will be a bit less clear than that, but not by much. What do you think the incremental cost of building a Focus is? You build a factory, you spend millions in R&D, and you build a million of them .... the additional cost of building a million and 1 would be a rounding error.
When times are good, they hold to list (don't want to upset the market), and can provide all sorts of inducements to get you to part with £200 a month for a new one. They have to, because no one in their right mind would hand over the list price of a Focus in used 20s. So you look at the deal and think "this is a flippin bargain, how do they do it" - and sign up - which people do in droves as we can see.
When times are bad, they will finesse stuff all over the place and the 6 month old bargains crop up. I bought an Alfa 156 in the 2001 when it was all going a bit wobbly - 9 months old, 3k on the clock, owned by Alfa GB - 50% off list.
Thanks for that. "Discount for cash" works in a business that is cash starved or values the immediacy and certainty of the transaction. Car dealers don't really care - they would rather make money on the finance deal - they get the money anyway.
The numbers are made up. "Full retail price" is a largely made up number. "Depreciation" is an estimate based on a made up number.
I'll give an example from my business. There was a bit of kit that used to cost £1m. That was list. You could pretty easily get 30% off that, but getting more was hard. Actual physical cost of production was about £90k. Yes, you could build one yourself, but the bills and support costs added up very fast, and in the end it was cheaper to pay the man £700k with your 30% discount.
However, once you understood the sales motivation, it all became much simpler. The salesman (and hence his managers) were targeted with a sales number, in £. The number of units sold was pretty much irrelevant. So a discussion along the lines of "buy one full price and get three free" was easy. So were these devices worth £1m .... or £250K? If you bought boat loads of them, you got closer to the real pricing which was 80% discount.
The car industry will be a bit less clear than that, but not by much. What do you think the incremental cost of building a Focus is? You build a factory, you spend millions in R&D, and you build a million of them .... the additional cost of building a million and 1 would be a rounding error.
When times are good, they hold to list (don't want to upset the market), and can provide all sorts of inducements to get you to part with £200 a month for a new one. They have to, because no one in their right mind would hand over the list price of a Focus in used 20s. So you look at the deal and think "this is a flippin bargain, how do they do it" - and sign up - which people do in droves as we can see.
When times are bad, they will finesse stuff all over the place and the 6 month old bargains crop up. I bought an Alfa 156 in the 2001 when it was all going a bit wobbly - 9 months old, 3k on the clock, owned by Alfa GB - 50% off list.
Edited by rxe on Friday 6th January 19:43
Isn't the price of second hand cars something that keeps up the price of new ones? I've always bought second hand, once 6 months old, and my Focus is 10 years old and has 75k, so know it's coming near the end of its dependable life. Mind you, it's been very reliable. It's worth a fair bit as a well looked after 2 litre auto estate. If a problem developed then there's the chance of a repair cost not being worth it.
Three or four years without that concern might be nice.
jsf said:
No Problem.
I bought a 55 plate Widetrack Subaru Impreza JDM STi for £8.5K, good stock ones go for upto £12K now.
My own is fairly modified now, although it looks stock. It has circa 500BHP and some pretty trick stuff going on under the skin which if sold as is would probably cost someone £18K to buy, but best way financially to sell it would be put the stock parts back on and sell the trick stuff separately. The ECU and Turbo alone are £5.5K new.
Awesome looking car. Certainly a lot more interesting buy than a stock 2 litre diesel German saloon.I bought a 55 plate Widetrack Subaru Impreza JDM STi for £8.5K, good stock ones go for upto £12K now.
My own is fairly modified now, although it looks stock. It has circa 500BHP and some pretty trick stuff going on under the skin which if sold as is would probably cost someone £18K to buy, but best way financially to sell it would be put the stock parts back on and sell the trick stuff separately. The ECU and Turbo alone are £5.5K new.
My biggest regret is I never bought a Escort RS cosworth back in the day. They're fetching silly money now. That's the thing, something like your Impreza is always going to have an enthusiastic following putting a floor under the resale price. A 2 litre Audi diesel A4 s line is just going to end up a minicab then get scrapped.
nyxster said:
Awesome looking car. Certainly a lot more interesting buy than a stock 2 litre diesel German saloon.
My biggest regret is I never bought a Escort RS cosworth back in the day. They're fetching silly money now. That's the thing, something like your Impreza is always going to have an enthusiastic following putting a floor under the resale price. A 2 litre Audi diesel A4 s line is just going to end up a minicab then get scrapped.
Cheers, it's a lot of fun.My biggest regret is I never bought a Escort RS cosworth back in the day. They're fetching silly money now. That's the thing, something like your Impreza is always going to have an enthusiastic following putting a floor under the resale price. A 2 litre Audi diesel A4 s line is just going to end up a minicab then get scrapped.
I used to own a 2WD Sapphire Cosworth with 360BHP back in the mid 90's I put 100K miles on that. It now lives a pampered life owned by one of the area organisers of the RS Owners Club. I wish I kept that car now.
My previous MY99 JDM STI Type RA LTD now has 165K miles on it and is still going strong.
I don't understand the thought that modern cars should be binned so soon, they are so well designed and built now they go on for ages. It's the modern high pressure diesels that are where the big bills are when they get higher mileage. If I wasn't an enthusiast and used the car in competition and like to modify, had left my current car stock, it would have cost pennies to run.
Derek Smith said:
Thanks for that.
Isn't the price of second hand cars something that keeps up the price of new ones? I've always bought second hand, once 6 months old, and my Focus is 10 years old and has 75k, so know it's coming near the end of its dependable life. Mind you, it's been very reliable. It's worth a fair bit as a well looked after 2 litre auto estate. If a problem developed then there's the chance of a repair cost not being worth it.
Three or four years without that concern might be nice.
It's the eternal debate. Do you chop in the old car that comes with a risk of an ugly bill, and take the hit of monthly payments? I would look less at the value of what I am repairing, and more at the total cost of keeping a car on the road, but others will disagree.Isn't the price of second hand cars something that keeps up the price of new ones? I've always bought second hand, once 6 months old, and my Focus is 10 years old and has 75k, so know it's coming near the end of its dependable life. Mind you, it's been very reliable. It's worth a fair bit as a well looked after 2 litre auto estate. If a problem developed then there's the chance of a repair cost not being worth it.
Three or four years without that concern might be nice.
I think the question of s/h prices is what several posters are questioning. The people selling the lease set some putative future value on the car, and basically you pay (list - future value + finance costs) over three years. Clearly, altering the future value makes a huge difference to the viability of the lease. So to sell the lease the future value needs to be high - but if the "real" future value is not so high, then someone ends up taking a hit. While the market is still growing, everything is fine, but when it goes into reverse, someone is going to end up with a lot of 3 year old cars that are not worth their "book" value.
jsf said:
Sheepshanks said:
jsf said:
I am one of the people who managed to benefit from the crazy selling that went on after the 2008 crash. I bought a 3 year old car with 25K miles on the clock for half the price it was selling for pre crash. I paid cash for it.
It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.
Care to share some details - car and cost? I can't get my head around a car that would now be 10-11yrs old still being worth 20% more than you paid.It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.
Mind you, at that time a colleague bought a demo VW Tourareg for £19,500 cash - he had to come up with the money in 2 days, he thinks they needed it to pay wages and the dealer did go bust shortly afterwards. When he went back he tried to get it for £18K by saying that's all he could get together but they put the other £1500 on finance.
I bought a 55 plate Widetrack Subaru Impreza JDM STi for £8.5K, good stock ones go for upto £12K now.
My own is fairly modified now, although it looks stock. It has circa 500BHP and some pretty trick stuff going on under the skin which if sold as is would probably cost someone £18K to buy, but best way financially to sell it would be put the stock parts back on and sell the trick stuff separately. The ECU and Turbo alone are £5.5K new.
PurpleTurtle said:
jsf said:
Sheepshanks said:
jsf said:
I am one of the people who managed to benefit from the crazy selling that went on after the 2008 crash. I bought a 3 year old car with 25K miles on the clock for half the price it was selling for pre crash. I paid cash for it.
It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.
Care to share some details - car and cost? I can't get my head around a car that would now be 10-11yrs old still being worth 20% more than you paid.It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.
Mind you, at that time a colleague bought a demo VW Tourareg for £19,500 cash - he had to come up with the money in 2 days, he thinks they needed it to pay wages and the dealer did go bust shortly afterwards. When he went back he tried to get it for £18K by saying that's all he could get together but they put the other £1500 on finance.
I bought a 55 plate Widetrack Subaru Impreza JDM STi for £8.5K, good stock ones go for upto £12K now.
My own is fairly modified now, although it looks stock. It has circa 500BHP and some pretty trick stuff going on under the skin which if sold as is would probably cost someone £18K to buy, but best way financially to sell it would be put the stock parts back on and sell the trick stuff separately. The ECU and Turbo alone are £5.5K new.
rxe said:
It's the eternal debate. Do you chop in the old car that comes with a risk of an ugly bill, and take the hit of monthly payments? I would look less at the value of what I am repairing, and more at the total cost of keeping a car on the road, but others will disagree.
I think the question of s/h prices is what several posters are questioning. The people selling the lease set some putative future value on the car, and basically you pay (list - future value + finance costs) over three years. Clearly, altering the future value makes a huge difference to the viability of the lease. So to sell the lease the future value needs to be high - but if the "real" future value is not so high, then someone ends up taking a hit. While the market is still growing, everything is fine, but when it goes into reverse, someone is going to end up with a lot of 3 year old cars that are not worth their "book" value.
It is what concerns me about private leasing. If it looks to good to be true then . . .I think the question of s/h prices is what several posters are questioning. The people selling the lease set some putative future value on the car, and basically you pay (list - future value + finance costs) over three years. Clearly, altering the future value makes a huge difference to the viability of the lease. So to sell the lease the future value needs to be high - but if the "real" future value is not so high, then someone ends up taking a hit. While the market is still growing, everything is fine, but when it goes into reverse, someone is going to end up with a lot of 3 year old cars that are not worth their "book" value.
Logically - and I know logic must not be depended on in these circs - if leasing is such a good deal then it must have an effect on the other ways of buying cars. But although many people suggest they bought their cars at 50% list I was less successful in negotiating a massive reduction.
I wouldn't mind buying a 3-year-old car with 30K on the clock for a give-away price. These stockpiles of ex-lease can't be parked up forever, can they? The local car supermarket has a number of cars that were originally registered in Ireland. When I asked the sales staff why, he said that there was a dearth of low mileage, 2-3 year old cars in the UK.
I'm confused at a time of my biggest single item purchase. Not a nice feeling.
It took me over two months to find my current Focus, and even then it wasn't the spec I really fancied, but it was OK. It took me seven months to find my SLK. I enjoyed speccing my Focus in the main dealers. So what is the best way for a 70-year-old to buy his day-to-day car?
V8 Fettler said:
Buy two classic Range Rovers Derek.
I've got a mate who runs a classic V8 Landy. He spends more on it each year than I do on my two cars. Mind you, he gets a lot of fun from it. It is certainly tempting. I was thinking of buying a straight 6 W124 Merc. I used to have a 2.8 but in those days did a lot of miles running my lad to rugby matches all over the country. I once got 17mpg on a 'fast' run back to Brighton from the Gower. Now mpg wouldn't be as much of a factor. But that's for second cars. I need something for day to day pottering. I really like my Focus. Reliable, quiet, not too slow and with enough room, but old. The suspension feels a bit wallowy, but the MoT chap reckoned it was OK 'for another year or two at least'. I was going to buy a new one a couple of years or so ago but the dash put me off. The current one is much better in that respect. I haven't yet driven one as I know as soon as I do I'll buy it.
You're asking for a discount at a time when sales are hot - they've just posted record sales figures. This applies to all levels - new cars are selling/leasing to people who used to buy 3 year old cars, and 3 year old cars are selling to people who used to by 7 year old cars. The economy is allegedly doing well, money is cheap/free, everyone is trading up.
So the choices are:
- decide that £250 a month (or whatever the deal is) + vat + deposit is a reasonable price to pay for transport. Hassle free, new car, forever, as long as you can pay the monthly bills. Think of it as a car "subscription" rather than buying a car.
- try and find something newish s/h - but you'll struggle to find the 50% bargains right now
- keep the focus. At 70, I'm guessing you're not doing crazy mileages, it works, you know it. Think of it this way - every month it keeps working, that's £250 or so in your back pocket compared to a lease deal. Puts the occasional £500 repair into perspective.
I'd do the latter and wait until the wheels fall off the current sales boom - it's a bit like predicting houses prices, but you have the advantage of not being in a hurry. You might get a bit of a bargain when models change or something like that.
The real bargains at the moment are for bottom feeders like me - I just bought an Alfa Estate for £350. There's literally nothing wrong with it. New tyres and brakes, I've changed the belts and serviced it just to make sure. Hardly a mark on the bodywork, starts every time.
Edit - seen the above. Suspension - wallop a set of B4s on it and some new rubber bits - £700 or so? Sounds like a lot - but that's just 3 or 4 monthly payments. Range Rovers - you'd need at least 2 to make sure you had one that worked.
So the choices are:
- decide that £250 a month (or whatever the deal is) + vat + deposit is a reasonable price to pay for transport. Hassle free, new car, forever, as long as you can pay the monthly bills. Think of it as a car "subscription" rather than buying a car.
- try and find something newish s/h - but you'll struggle to find the 50% bargains right now
- keep the focus. At 70, I'm guessing you're not doing crazy mileages, it works, you know it. Think of it this way - every month it keeps working, that's £250 or so in your back pocket compared to a lease deal. Puts the occasional £500 repair into perspective.
I'd do the latter and wait until the wheels fall off the current sales boom - it's a bit like predicting houses prices, but you have the advantage of not being in a hurry. You might get a bit of a bargain when models change or something like that.
The real bargains at the moment are for bottom feeders like me - I just bought an Alfa Estate for £350. There's literally nothing wrong with it. New tyres and brakes, I've changed the belts and serviced it just to make sure. Hardly a mark on the bodywork, starts every time.
Edit - seen the above. Suspension - wallop a set of B4s on it and some new rubber bits - £700 or so? Sounds like a lot - but that's just 3 or 4 monthly payments. Range Rovers - you'd need at least 2 to make sure you had one that worked.
Edited by rxe on Saturday 7th January 09:28
rxe said:
I would guess that new discs, pads and tyres on your existing Focus would be cheaper than the deposit on a new one, let alone the monthly payments.
"Discount for cash" works in a business that is cash starved or values the immediacy and certainty of the transaction. Car dealers don't really care - they would rather make money on the finance deal - they get the money anyway.
The numbers are made up. "Full retail price" is a largely made up number. "Depreciation" is an estimate based on a made up number.
I'll give an example from my business. There was a bit of kit that used to cost £1m. That was list. You could pretty easily get 30% off that, but getting more was hard. Actual physical cost of production was about £90k. Yes, you could build one yourself, but the bills and support costs added up very fast, and in the end it was cheaper to pay the man £700k with your 30% discount.
However, once you understood the sales motivation, it all became much simpler. The salesman (and hence his managers) were targeted with a sales number, in £. The number of units sold was pretty much irrelevant. So a discussion along the lines of "buy one full price and get three free" was easy. So were these devices worth £1m .... or £250K? If you bought boat loads of them, you got closer to the real pricing which was 80% discount.
The car industry will be a bit less clear than that, but not by much. What do you think the incremental cost of building a Focus is? You build a factory, you spend millions in R&D, and you build a million of them .... the additional cost of building a million and 1 would be a rounding error.
When times are good, they hold to list (don't want to upset the market), and can provide all sorts of inducements to get you to part with £200 a month for a new one. They have to, because no one in their right mind would hand over the list price of a Focus in used 20s. So you look at the deal and think "this is a flippin bargain, how do they do it" - and sign up - which people do in droves as we can see.
When times are bad, they will finesse stuff all over the place and the 6 month old bargains crop up. I bought an Alfa 156 in the 2001 when it was all going a bit wobbly - 9 months old, 3k on the clock, owned by Alfa GB - 50% off list.
Best explanation of how it works that I've ever seen. "Discount for cash" works in a business that is cash starved or values the immediacy and certainty of the transaction. Car dealers don't really care - they would rather make money on the finance deal - they get the money anyway.
The numbers are made up. "Full retail price" is a largely made up number. "Depreciation" is an estimate based on a made up number.
I'll give an example from my business. There was a bit of kit that used to cost £1m. That was list. You could pretty easily get 30% off that, but getting more was hard. Actual physical cost of production was about £90k. Yes, you could build one yourself, but the bills and support costs added up very fast, and in the end it was cheaper to pay the man £700k with your 30% discount.
However, once you understood the sales motivation, it all became much simpler. The salesman (and hence his managers) were targeted with a sales number, in £. The number of units sold was pretty much irrelevant. So a discussion along the lines of "buy one full price and get three free" was easy. So were these devices worth £1m .... or £250K? If you bought boat loads of them, you got closer to the real pricing which was 80% discount.
The car industry will be a bit less clear than that, but not by much. What do you think the incremental cost of building a Focus is? You build a factory, you spend millions in R&D, and you build a million of them .... the additional cost of building a million and 1 would be a rounding error.
When times are good, they hold to list (don't want to upset the market), and can provide all sorts of inducements to get you to part with £200 a month for a new one. They have to, because no one in their right mind would hand over the list price of a Focus in used 20s. So you look at the deal and think "this is a flippin bargain, how do they do it" - and sign up - which people do in droves as we can see.
When times are bad, they will finesse stuff all over the place and the 6 month old bargains crop up. I bought an Alfa 156 in the 2001 when it was all going a bit wobbly - 9 months old, 3k on the clock, owned by Alfa GB - 50% off list.
Everyone gets hung up on the list price and how it's 'cheaper' to PCP, as though they've found some amazing method of magic-ing away depreciation and finance costs.
Only one person is paying those costs - the customer.
jsf said:
Get a fresh set of Monroe or OEM dampers fitted Derek. They are cheap as chips for a Focus. That will make a big difference as you tend not to realise they are losing their performance as it's a gradual slow deterioration.
If the car is sound why change it. It's just run in.
Sure I read somewhere that a MK1 Focus less than 2.0 Zetec driven by a good driver (not me then) was really quick and good fun A to B on British roads. If the car is sound why change it. It's just run in.
As per above, why not make suspension as new and enjoy car ongoing for not too much money and zero debt?
Also I am sure Autocar did an article where some fella ran a MK1 Focus to over 200K with no issues.
SDB660 said:
jsf said:
Get a fresh set of Monroe or OEM dampers fitted Derek. They are cheap as chips for a Focus. That will make a big difference as you tend not to realise they are losing their performance as it's a gradual slow deterioration.
If the car is sound why change it. It's just run in.
Sure I read somewhere that a MK1 Focus less than 2.0 Zetec driven by a good driver (not me then) was really quick and good fun A to B on British roads. If the car is sound why change it. It's just run in.
As per above, why not make suspension as new and enjoy car ongoing for not too much money and zero debt?
Also I am sure Autocar did an article where some fella ran a MK1 Focus to over 200K with no issues.
Derek Smith said:
I've got a mate who runs a classic V8 Landy. He spends more on it each year than I do on my two cars. Mind you, he gets a lot of fun from it. It is certainly tempting. I was thinking of buying a straight 6 W124 Merc. I used to have a 2.8 but in those days did a lot of miles running my lad to rugby matches all over the country. I once got 17mpg on a 'fast' run back to Brighton from the Gower. Now mpg wouldn't be as much of a factor.
But that's for second cars. I need something for day to day pottering. I really like my Focus. Reliable, quiet, not too slow and with enough room, but old. The suspension feels a bit wallowy, but the MoT chap reckoned it was OK 'for another year or two at least'. I was going to buy a new one a couple of years or so ago but the dash put me off. The current one is much better in that respect. I haven't yet driven one as I know as soon as I do I'll buy it.
If you are not in a hurry to replace it, just keep your eye open for a good deal on a car you want/like. As it sounds like it is your second car, I'd be inclined to run it into the ground and just cough up when it finally dies. But that's for second cars. I need something for day to day pottering. I really like my Focus. Reliable, quiet, not too slow and with enough room, but old. The suspension feels a bit wallowy, but the MoT chap reckoned it was OK 'for another year or two at least'. I was going to buy a new one a couple of years or so ago but the dash put me off. The current one is much better in that respect. I haven't yet driven one as I know as soon as I do I'll buy it.
I don't buy the thinking that because a car is only "worth" a few hundred quid that biggish bill can render it uneconomical to repair. My reasoning is that, yes, a £500 bill on a £500 car seems like you could buy another car for the 500 quid, but the another car could well also cough up and equally big bill. So my thinking is when the annual repair bills, over and above service items, exceed the annual depreciation, it's time for a change, but buy something significantly better and repeat. The caveat being, that the vehicle must be capable of getting between services without repair, this is largely down to how it gets maintained.
However, if you are 70 as you say, in good physical health and financially sound, it would be perfectly acceptable to "waste" a little money on a car you don't really need if you fancy it.
Interesting note from Chris Harris
“I say I’ve got an F12 but I own, like, the rear bumper — the finance company owns the rest.”
http://www.driving.co.uk/news/interview/motor-chri...
“I say I’ve got an F12 but I own, like, the rear bumper — the finance company owns the rest.”
http://www.driving.co.uk/news/interview/motor-chri...
SDB660 said:
jsf said:
Get a fresh set of Monroe or OEM dampers fitted Derek. They are cheap as chips for a Focus. That will make a big difference as you tend not to realise they are losing their performance as it's a gradual slow deterioration.
If the car is sound why change it. It's just run in.
Sure I read somewhere that a MK1 Focus less than 2.0 Zetec driven by a good driver (not me then) was really quick and good fun A to B on British roads. If the car is sound why change it. It's just run in.
As per above, why not make suspension as new and enjoy car ongoing for not too much money and zero debt?
Also I am sure Autocar did an article where some fella ran a MK1 Focus to over 200K with no issues.
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