New car sales 75% via PCP

[del mar]

http://www.bbc.co.uk/news/business-38516247

Although this doesn't say it, on Radio 2 the report said 75% were via PCP.

Is this good or bad for the car industry ?
Yes there is a steady flow of income, but they don't get the full amount for the car as most are just returned after 3 years ?

[del mar]

walm said:

Dog Star said:

unrepentant said:

Here in the USA most of the major manufacturers own their own finance houses and leases are run through those sources. The 3 yr lease is usually the most attractive as it means that the dealer network has a prime stock of used inventory coming back to them still under warranty and ready for CPO status. I can't believe that the U.K. is any different?

For people who do low to mid range mileage and like a new car every 3 years leasing makes a huge amount of sense. For example, BMW 330i x drive. MSRP $43,395 plus tax. Lease for $558 per month (ave with cash down and tax rolled in) with 10k miles per year allowed. Or finance for 60 months at 2.91% = $835 per month. So after 36 months on the lease you've paid $20,088. On the loan you've paid $30,060 and owe $20,040. The car is worth $24k assuming a 55% residual. You've saved $6k by leasing , you haven't had to worry about depreciation and you're now driving a new car.

In reality if the buyer stays with the same brand he's probably flipped into a new lease after 30 or 32 months as most manufacturers offer early lease termination for repeat customers, making leasing even more attractive.

Maybe the U.K. is different but I can't think why,.

Best post on this thread, I reckon.

TLandCruiser said:

That's my point, I earn 55k a year and I would not want to pay £400 - £500 a month on a car, my old land cruiser keeps on ticking along and never needs anything other than a service.

So you must be taking home in the region of 3K a month after deductions, and you reckon 400 a month to drive around in a nice new car all the time is unacceptably dear? It's 2017, it's not a lot.

I still feel my point still stands which is while clearly MANY can happily afford £400 a month out of their take-home of £3k or whatever... is it really worth 2x what you can get for £200 a month??

I just find the concept that a brand new car is worth 2x a 3-year-old one mad.
Given the extremely high level of reliability these days I simply cannot justify twice the cost for what, to me, is EXACTLY the same car!!

The bit I don't get is why you would want to spend £400 a month to drive around in a "nice new car" - what difference does it make ? Other than trying to outdo the neighbours. At the end of the 3 year period you would have spent £14,400 and in 99% of the time give the car back and walk away with nothing, not a great return....

What is wrong with a 3 year old £10,000 Golf / Focus etc ?

Most of our driving is done in an old A class merc that costs nothing, but no longer looks nice.

[del mar]

Have we become that materialistic as a society that we will pay to have something nice sitting on our drive - that we cant afford, rather than buy a car that we can ?

I cant name an advert that actually advertises the price of a car anymore, it is all how much per month.

A friend bought a BMW;

£4000 (car) as a deposit.
36 months at £300 or so
Then a lump of £16,000 - which they didn't have.

The logic was that to buy it new was £32,000 - which they didn't have and if they took a loan out the car would be worth £16,000 at the end so a £16,000 loss. So they rented a car for £16,000 over 3 years and had a return of £0 a £16,000 loss.

Surely a £15,000 car that might be worth £10,000 after 3 years is a better return for your money ?