How far are manufacturers subsidising new car sales?
Discussion
Just wondering what opinion is on the subject here on PH?
Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
£40k is the retail price. Cost to Mercedes is a lot less, hence the payments he'll make (£22k) will more than cover it. I wouldn't be at all surprised if it only cost them £22k to make it, so whatever they sell if for afterwards is profit.
You know this, hence your question. I'd be a bit disappointed if my business bank manager couldn't work it out!
You know this, hence your question. I'd be a bit disappointed if my business bank manager couldn't work it out!
Digga said:
Just wondering what opinion is on the subject here on PH?
Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
Start here!!Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
http://www.pistonheads.co.uk/gassing/topic.asp?h=0...
Any idea of exact spec?
NoelWatson said:
Digga said:
Just wondering what opinion is on the subject here on PH?
Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
Start here!!Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
http://www.pistonheads.co.uk/gassing/topic.asp?h=0...
Any idea of exact spec?
http://www2.mercedes-benz.co.uk/content/unitedking...
blugnu said:
You know this, hence your question. I'd be a bit disappointed if my business bank manager couldn't work it out!
His point is that they still have to sell it on - he just walks away from it - and he was looking at it from a purely financial perspective in terms of the cost to finance by loan/HP. He could work it out - they'd be way better off if he 'bought' the car from them, clearly.NoelWatson said:
NoelWatson said:
Digga said:
Just wondering what opinion is on the subject here on PH?
Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
Start here!!Our business bank manager came of a regular visit and bowled up in a new Merc E class. After we'd covered all the usual updates - and our routine analysis of how far house prices might fall - talk turned to the new motor.
He could not fathom how the deal stacks up for Mercedes, othehr than the fact it's shfiting metal and the car is a rolling billboard for the brand. He'd taken a PCP, with 5k down which worked out at about £470 a month on a £40 grand motor. That barely covers depreciation.
3yr, 36,000ish mile cars seem to be pretty abundant...
http://www.pistonheads.co.uk/gassing/topic.asp?h=0...
Any idea of exact spec?
http://www2.mercedes-benz.co.uk/content/unitedking...
Dracoro said:
Seems quite simple.
.....
Customer is paying £7k a year, every year and has nothing at the end of it.
Precisely......
Customer is paying £7k a year, every year and has nothing at the end of it.
Whereas, if the car was bought for cash or financed, there is interest to consider on top of depreciation. In the case of the former it's the opportunity cost of interest foregone, by not being able to use/invest the capital elsewhere, whilst in the case of the latter, it's the cost of finance.
Since a £40is k motor will loose £7k per year anyway, and the deposit is minimal, it seems a good deal for the customer.
Some "interesting" answers above, bless them.
This is how it would work using approximate figures:
List £40k
Discounted PCP price £32k
Deposit £5k
Amount to finance £27k
Estimated Residual Value £15k
Lifetime Rental
Depreciation £12k
Interest @ circa 9% £6k - may include some other fees
Total £18k
£470 * 38 = £18k (likely to have an inital rental of 3 times future rentals)
This is how it would work using approximate figures:
List £40k
Discounted PCP price £32k
Deposit £5k
Amount to finance £27k
Estimated Residual Value £15k
Lifetime Rental
Depreciation £12k
Interest @ circa 9% £6k - may include some other fees
Total £18k
£470 * 38 = £18k (likely to have an inital rental of 3 times future rentals)
So £23k to rent a car for 3 years, i.e. A bit over £7k a year.
Ultimatey, if you "have" to have a new car then you really have to pay for it!
Regardless, MB WILL be making money out of this, if someone who should know better, e.g. a bank manager can't see this, he's a fool.
Ultimatey, if you "have" to have a new car then you really have to pay for it!
Regardless, MB WILL be making money out of this, if someone who should know better, e.g. a bank manager can't see this, he's a fool.
Edited by Dracoro on Thursday 25th November 15:08
Dracoro said:
So £23k to rent a car for 3 years, i.e. A bit over £7k a year.
Ultimatey, if you "have" to have a new car then you really have to pay for it!
Regardless, MB WILL be making money out of this, if someone who should know better, e.g. a bank manager can't see this, he's a fool.
Hang on, we're getting a bit off topic here.Ultimatey, if you "have" to have a new car then you really have to pay for it!
Regardless, MB WILL be making money out of this, if someone who should know better, e.g. a bank manager can't see this, he's a fool.
Edited by Dracoro on Thursday 25th November 15:08
By the way, IMHO 'buying' a £40k car will cost - with interest (either charged on finance or foregone through paying cash) and depreciation - at least as much.
What I'm more concerned about is that manufacturers are discounting so aggressively. There's a lot of metal being offloaded at the 2 to 4 year mark...
I'm wondering how 'well' these (particualrly German, prestige) manufacturers are really doing.
Dracoro said:
MB make car for, say, £20k cost.
That's probably a bit high. Manufacturing cost of cars is typically just under half the net (pre tax) list price.Dracoro said:
Buyer pays £5k plus £15k in payments so £20k. PLUS they then have the car to sell on for, say, £15k all of which is clear profit.
Customer is paying £7k a year, every year and has nothing at the end of it.
Bear in mind that the typical customer will be an opt-out company car driver.Customer is paying £7k a year, every year and has nothing at the end of it.
So they'll have been paying a couple of hundred a month in BIK tax on a similar car provided by their company. So their net cost is under £300/mth. They probably get a car allowance of maybe £600/mth, which is £360/mth. Tidy. They get a free E Class.
Digga said:
There's a lot of metal being offloaded at the 2 to 4 year mark...
That's of no interest to the manufacturers whatsoever (despite claims to the contrary). The clue is in the description of what they do - they make motor vehicles. The more the better. They couldn't give a toss what happens to them once the factory has spewed them out and they've been sold to their first owner.Deva Link said:
Digga said:
There's a lot of metal being offloaded at the 2 to 4 year mark...
That's of no interest to the manufacturers whatsoever (despite claims to the contrary). The clue is in the description of what they do - they make motor vehicles. The more the better. They couldn't give a toss what happens to them once the factory has spewed them out and they've been sold to their first owner.Digga said:
Deva Link said:
Digga said:
There's a lot of metal being offloaded at the 2 to 4 year mark...
That's of no interest to the manufacturers whatsoever (despite claims to the contrary). The clue is in the description of what they do - they make motor vehicles. The more the better. They couldn't give a toss what happens to them once the factory has spewed them out and they've been sold to their first owner.Dirt cheap personal lease (which is really just what PCP is) deals have sustained the US new car market for years.
E30M3SE said:
Think it is this onehttp://www.whatcar.com/car-reviews/mercedes-benz/e...
worth £11875 at end of year 3
http://www.whatcar.com/car-depreciation-calculator...
assume that is for 36k miles, so how much for 30k miles, £13k?
Would be able to get for maybe £26k, so for cash, cost is £13k
For finance, cost works out around £17k. What am I missing?
Edited by NoelWatson on Thursday 25th November 15:54
soxboy said:
Just had an email offer for a Mercedes C180CGi Exec SE, with Comand.
6+35 @ £262 per month plus Vat, i.e. £1850 deposit then £314 per month for 3 years (based on Vat rate changing in January and 10,000 miles per annum)
So you drive around in their car for three years at a cost of just over £2.1k p/a. What's not to like? I really don't see a downside, especially when - if you buy - there is so much subsidised, used stuff hitting the market.6+35 @ £262 per month plus Vat, i.e. £1850 deposit then £314 per month for 3 years (based on Vat rate changing in January and 10,000 miles per annum)
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