Used cars not selling?

[Deep Thought]

Alex_225 said:

But, say I get a car that would cost me £40k to actually own but I can get it for £300 a month for say four years. After that term, you've still sunk £15k into nothing. OK, so yeah I could have a relatively expensive car on the driveway but it's not mine, I'm borrowing it and I hate that idea personally.

And how much would that £40K car new be worth after four years?

[hadleighhammer]

Alex_225 said:

But, say I get a car that would cost me £40k to actually own but I can get it for £300 a month for say four years. After that term, you've still sunk £15k into nothing.

What if you'd bought the car outright for £40k and after 4 years it is worth £20k? Is that the better deal as you own it?

[Camelot1971]

hadleighhammer said:

Alex_225 said:

But, say I get a car that would cost me £40k to actually own but I can get it for £300 a month for say four years. After that term, you've still sunk £15k into nothing.

What if you'd bought the car outright for £40k and after 4 years it is worth £20k? Is that the better deal as you own it?

This is what the anti finance people fail to grasp.

Depreciation happens whether you pay cash or finance it. If you change your car every 3 years regardless, you are losing thousands. If you keep a new car forever, again, it doesn't matter whether you financed or paid cash, unless you are paying a high APR. But a lot of deals these days are low or 0% APR.

At least on a lease or PCP, a consumer can walk away at the end of the term if the bottom falls out of the market. What's the manufacturer going to do if the residual value is out by 20%+?

[Alex_225]

jakesmith said:

I got a loan for £10k and bought a 987S Boxster for £150 a month. It’s at a very low apr of 3%. So I’m paying £1 a day interest to own the car and it will deprecate roughly in line with repayments for the first 3-4 years so I can get out at any time, after that I’ll have some equity. The car costs some to run but even factoring in say another £1500 a year ... that’s about £270 a month and after the 7 years I’ll own a car worth maybe £7k. What could I have leased for that. A diesel golf? And after 7 years I’d be left with nothing.

I can totally see that, for £10k a Boxster seems like a great fun car to enjoy. More enjoyable than a diesel Golf. I guess on the flip side a Boxster to some people doesn't tick the boxes the Golf would. Personally I'd take the Porsche.

Wooda80 said:

Alex's comment is a sensible one that acknowledges that different people have different priorities.

If you buy the £40k car and keep it indefinitely that's definitely the cheapest way of running a car. On the other hand if you are going to change it every 4 years, you might get into the habit of paying £40k and getting £25k back for it after 4 years then you've effectively spent £15k. If the penny then drops that you can actually keep your £40k in the bank and just pay the depreciation monthly then PCP might suit you.

I have my moments haha.

Absolutely though if it's a habit someone is in, changing cars regularly then actually PCP works as you're not ploughing as much money into it.

nickfrog said:

I am currently "sinking" £6k over 2 years on a car I don't own. I am confident that owning it would have meant sinking 20% more in depreciation at best. And then the opportunity cost at 2% p/a would have been another £1,000 over 2 years. I can't see any downsides.

I guess it all depends if you planning to get shot of it at the end of the term or if it's a plan to keep. It's not a dig at anyone who does PCP by the way. It's not my thing but I can see the perks of it.

hadleighhammer said:

Alex_225 said:

But, say I get a car that would cost me £40k to actually own but I can get it for £300 a month for say four years. After that term, you've still sunk £15k into nothing.

What if you'd bought the car outright for £40k and after 4 years it is worth £20k? Is that the better deal as you own it?

Well that's always the new car quandary really. Any car you buy new will drop a huge chunk what with VAT and immediate depreciation so it's something to consider. Again it depends I suppose on whether you keep the car or you don't. If you're going to move onto another car after 4 years then you just restart the deal and the cycle begins again.

Personally and this is purely my way of thinking. If I wanted a £40k car, I'd gladly take HP on it and be in a position to repay the amount I'd imagine that would be double the monthly cost of a PCP deal. Whether that be a brand new car or otherwise. For that sum of money it would be a car I'd be willing to keep not just a 4 year plan.

With the monthly cost being higher, I'd in turn prefer to buy a car that was perhaps once £40k that's now four years old and £20k instead. That's just me though as it's what I've done with the cars I have.

I'll be honest with mortgage re-payments and two kids, I'm not in a position to actually buy a £40k car. PCP would be different but it's just not for me.

[iloveteacakes]

Well folks, this topic has been an interesting read for me so thanks again for all who have posted a reply.

Sadly things have still not turned around in terms of sales. Out of the 8 cars in stock, I am still sitting with each one and still no interest. I believe pricing is one of the issues, but it’s not one that has been the immediate and most obvious reason.

The dynamic now seems to be that there are very few cash buyers around. This in turn means that those who are the cheapest win (in theory). This has then made the market 'difficult' at certain levels, especially anything under £8,000 and circa seven years old and older. PCP makes sense to those that justify paying a monthly fee for an effectively 'rented' new car. I just always thought there would be those folks who prefer something they can own (live within their means) and at the same time want something that is low miles, good condition and ready to be enjoyed/used. Those that are of this mind set are few on the ground when it comes to my market. That is the biggest and most sudden change I have noticed.

Looking at the numbers, last year was one of my best. In July, August and September I sold 21 cars. Nearly all were under £6,000, all were from 2008 to 2000 in age (yes some were 18 years old!) and all were of a good quality and low miles. Same time this year... next to nothing. What changed all of a sudden? Looking yesterday at the headlines it said the ONS announced a 40 year low in unemployment figures, but my phone is not ringing? I had a mix of convertibles, saloons and estates. Luxury barges to economical estates. All low miles, all effectively mint condition, all mechanically sound. The same is said today of my current stock. However, interest has fallen over the cliff edge. I have just reduced a couple over the weekend and still no bites.

When it comes to recessions, things still tick over. You get the 'it’s the end of the World' feeling at first, but things level out. A correction as it were. Now, I am not so sure. This feels completely different to what I have experienced. I hate to be the one who encourages others to start collecting tins of beans and soup but I do think that may be a plan. Recession is small fry compared to what’s coming this time I believe. I think a major re-organization on a global scale is coming and major changes to the way countries, central banks, economies and currency is controlled and operated. What I am experiencing is the start of the decline, and it is instant. Like a punch in the gut.

Now, I am concerned. I have less than 20k in debts and stock value of around 50k. I think a re-calculation of stock at 40k is more realistic but I am holding out just now. If September and October is a no go then its certain we are on the decline.

I do however believe there will be a rebound at some point. PCP deals are bound to change because they are just like the subprime mortgage scam. Virtually no deposit in some cases with minimal payments per month cannot and will not last. If property now requires you to have a minimum of 20% deposit, then cars will be no different. Finance regulation will be enforced.

In turn, I suspect that more will go back to buying used cars. But, another whirlwind and upset will return when EV's start to infiltrate and the day of reckoning approaches. I mean who voted for killing the car industry at the last election? That 2040 mandate came out of the blue and it has hacked me off ever since. These people would not last in the real working World, that’s why there in politics because all they can do is tell lies. We don't need spin doctors, we need real doctors!

Anyway, back to reading up on emigrating to the USA (it will crash too, but at least Trump likes coal, gas, oil and everything else that is opposite to the 'progressive', politically correct, deep state libtards of today).

Pancakes anyone?

[anonymous-user]

Sa Calobra said:

Yep.

What I've noticed is the amount of ads promising super fast broadband, fast delivery, same day delivery etc etc.

People have become time poor out of their expectations of the world revolving around them.

Ive come across a fair few 20yr olds who drive better cars than me. Way better. When I was their age I couldn't afford to run a car nor would I have entertained/bothered with it.

Now it seems everyone commits to monthlies as it's seen as the default way to live.

This'll all change next year and it'll mean I'll be working round the clock along with my colleagues in the NHS with an explosion in mental health issues

I work with a 23 year old who I would guess is earning somewhere around the £25k to £30k a year mark and has just leased an A class. Nothing unusual about that except he still has the previous car he leased, a Vauxhall Corsa sitting on the drive.

That's right, he was so excited to get the A class he couldn't actually wait until his current Corsa lease was over so was paying two lease payments for a while.

I guess that like me most people first few cars were bangers, the idea of driving around in a brand new car was absolutely ludicrous. Now it appears for a large amount of youngsters driving an old banger is absolutely ludicrous.

[Earthdweller]

It’s interesting for sure

If everybody wants to buy cars like iPhones .. and only new will do (2-3 yrs repeat)

And the deals are so cheap because of high residuals ....

then surely if there is no demand for the 3year old cars then the residuals will fall .. unless artificially raised by the manufacturers supporting

That therefore would raise the cost of the deals ( unless the manufacturers artificially raise the support )

Now as some would say car manufacturers are finance companies now that make cars to sell the finance ..,

If rates rise ( likely ) and residuals fall ( likely ) how long will/can Manufacturers artificially support the deals ?

Or will we see a market correction ?

[Deep Thought]

Earthdweller said:

It’s interesting for sure

If everybody wants to buy cars like iPhones .. and only new will do (2-3 yrs repeat)

And the deals are so cheap because of high residuals ....

then surely if there is no demand for the 3year old cars then the residuals will fall .. unless artificially raised by the manufacturers supporting

That therefore would raise the cost of the deals ( unless the manufacturers artificially raise the support )

Now as some would say car manufacturers are finance companies now that make cars to sell the finance ..,

If rates rise ( likely ) and residuals fall ( likely ) how long will/can Manufacturers artificially support the deals ?

Or will we see a market correction ?

Its happening already. Residual values on Mercedes, etc are piss poor to be honest.

I think the only reason we dont see the impact so much is because of very low interest rates.

I do think though that either people will have to either pay more per month OR drop down a car level or two.

I also think that we'll see leasing becoming more prominent. Manufacturers can hide a multitude of sins within a leasing contract - you dont know what was paid for the car, the interest rate, the residual, how much the manufacturer is putting in to the deal, therefore used values could be influenced less.

I dont think there will be a big market "correction" though, it will be incremental, and those who are expecting PCPers to get their come-uppance - well i dont think it will happen. They'll just gravitate to the next best leasing deal or whatever suits them best at the time.

[ToothbrushMan]

nikaiyo2 said:

I love these threads.

I drive a Montego it only cost me 14 B&H and a packet of Quavers in 1996 any one who has ever paid more than 18 Silk Cut and a toffee crisp for any car is a fool and is going to bankrupt the country. Am I doing it right?

I genuinely don’t get why people post “I drive an (insert old car) it only costs X.” Is this meant to be news? Stop the presses buying a brand new car costs more than buying a second hand one.
fk me I never realised, the slick in the dealership must have used his spiv magic on me. If only I had known that I did not need to pay whatever I do for a new car and I could have bought a decade old one for less... bd.

I love PCP it’s brilliant, I get a new car every 2 or 3 years for an amount I can afford each month. Tell me what is not to love? Ok I might pay a few £ more than had I paid cash or used a bank loan... It’s like anything there is a cost associated with choices.
I love not having to be concerned about the car, small ding, don’t care, scuffed wheel, oh well, worry about getting swirls on paint from a car wash, nope.

Yup.....until the handover inspection when you return the car.......

[nickfrog]

ToothbrushMan said:

Yup.....until the handover inspection when you return the car.......

And what happens then ? The BVRLA guidelines on wear and tear are pretty clear and fair. I never had any issues or charges. What's your experience?

Edited by nickfrog on Wednesday 15th August 18:09

[roadsmash]

nickfrog said:

And what happens then ? The BVRLA guidelines on wear and tear are pretty clear and fair. I never had any issues or charges. What's your experience?

Edited by nickfrog on Wednesday 15th August 18:09

Nick, clearly he has never leased so he doesn’t know.

It’s interesting, a lot of people who have leased have also bought outright in the past, and know the pros and cons. Yet, most people shouting their mouth off have never leased so don’t have a clue how any of it works.

[Edible Roadkill]

I wonder would people be so keen on a new car every couple years if they were paying 7-10% interest instead of 0-3%

[Wooda80]

Edible Roadkill said:

I wonder would people be so keen on a new car every couple years if they were paying 7-10% interest instead of 0-3%

The answer to that is fewer people, maybe.

If I still wanted a new car every couple of years, even though interest rates were higher then I'd have some choices to make:

• accept a higher monthly payment
• accept a less expensive car
• consider going back to a used car or paying cash

Car sales, along with the housing market, are an early bellweather of impending changes in the economy both positive and negative.

Rather than feeling sorry ( or maybe smug ) for those poor people who "will only be able to afford" a 1.6 rather than a 2.0 or an SE rather than an S-Line, you might want to consider what implications a down turn in UK car sales will have for those working in the industry - in manufacturing and associated industries, not just in retail sales and repair.

Yes the cars that people seem to resent others having are often made abroad but it's a global industry run by international companies.

[nikaiyo2]

nickfrog said:

ToothbrushMan said:

Yup.....until the handover inspection when you return the car.......

And what happens then ? The BVRLA guidelines on wear and tear are pretty clear and fair. I never had any issues or charges. What's your experience?

Edited by nickfrog on Wednesday 15th August 18:09

I have PX’d all my personal cars so no, but I have always gotten an offer that I was happy with. Cleared all the finance outstanding and left a bit over to add to “deposit.”

I have handed back company vehicles to various lease companies.

We handed back a 3 series to BMWFS a few months back.

2 supermarket dings and a scuff to a door was about £100 to fix
2 badly scuffed kerb nibbled alloys £52.

All the other marks and wheel damage was within the guidelines so no charge, what I do know is I would have paid more than the total PCP penalty to fix the body damage alone.

[Gliese]

I've been looking at the used market for the last 6 months or so looking to buy and if anything the market feels artificially high.
When I was looking in March there was a decent selection and using that as a baseline over the last few months similar cars seems to be 1-2k higher.
It's possible that this is simply down to the time of the year for plate changes so there is a flood of new cars to the market but it feels like the used market doesn't tally up against the kind of deals offered via pcp.
It's cleary visible that for not much more you can have new instead of 3 years old. I wonder if the used market is high to try and recoup some of the profit lost on the new deals.

[Sheepshanks]

Joey Deacon said:

I work with a 23 year old who I would guess is earning somewhere around the £25k to £30k a year mark and has just leased an A class. Nothing unusual about that except he still has the previous car he leased, a Vauxhall Corsa sitting on the drive.

That's right, he was so excited to get the A class he couldn't actually wait until his current Corsa lease was over so was paying two lease payments for a while.

So what's he done about insurance? He'll get into trouble if he's switched it over.

[gizlaroc]

Gliese said:

I've been looking at the used market for the last 6 months or so looking to buy and if anything the market feels artificially high.
When I was looking in March there was a decent selection and using that as a baseline over the last few months similar cars seems to be 1-2k higher.
It's possible that this is simply down to the time of the year for plate changes so there is a flood of new cars to the market but it feels like the used market doesn't tally up against the kind of deals offered via pcp.
It's cleary visible that for not much more you can have new instead of 3 years old. I wonder if the used market is high to try and recoup some of the profit lost on the new deals.

I agree with that, used cars are just too expensive at the moment.

I was looking at F11 5 series 2 years ago and there were a few 2010 530d's for £12k or so with 90-100k on them, I ended up with a Merc E350 instead. I looked again 3 months ago and 2010/11 530d Tourings with 90-100k were £8-9k, so not much lower. However, after selling my Merc E350 (I got £12k for it, paid £13750 for it 2.5 years ago and 50k miles less) the prices of the BMWs are much higher. Try an find me a 90k miles 2010/11 M-Sport for £8-9k today?
There are none, they are all the ones that were for sale 3-4 months back at £12k, still for £12k.

Mate has been looking for 3 series Tourings, A4 Avants, Merc C Class estates, XC60s etc. etc. and they are all so expensive, 10 year old ones with 80-100k are still £7-8k for one that is not knackered.
I sold my C320 estate 2 years back with 88k miles on it, 9 years old and struggled to get £3500 for it.

Also, 15 plate cars are still be sold for nearly the same price as a broker discount new one, and finance on those doesn't make sense to me, but they are obviously selling them?
I think people forget a 15 plate is already 3 years old and probably out of warranty already.

[MC Bodge]

Is the used car market obeying the laws of supply & demand ir is there some sort of large-scale manipulation going on?

Simplistically, if prices if used cars are "high" and not selling, because newer and new cars are the same price (or monthlies etc.) then at some point the prices of the used cars will need to be reduced otherwise the cars will never be sold and the trader will go bust.

If course, if manufacturers decided to crush all 3 year old rental returns, there would be no second hand market, but then the renter would need to have paid the full price of the car before returning it for it to be recycled.

[Deep Thought]

MC Bodge said:

Is the used car market obeying the laws of supply & demand ir is there some sort of large-scale manipulation going on?

Simplistically, if prices if used cars are "high" and not selling, because newer and new cars are the same price (or monthlies etc.) then at some point the prices of the used cars will need to be reduced otherwise the cars will never be sold and the trader will go bust.

If course, if manufacturers decided to crush all 3 year old rental returns, there would be no second hand market, but then the renter would need to have paid the full price of the car before returning it for it to be recycled.

Used car prices arent "high". The market is just very price driven.

The real issue is that good, used stock is hard to find. Therefore you have to pay more to get it (or spend more on lower standard cars) however the market isnt prepared to pay extra.

And its a shrinking market (the below £10K cash buyer) because more and more people are opting for a cheap lease or PCP.

[swisstoni]

Deep Thought said:

MC Bodge said:

Is the used car market obeying the laws of supply & demand ir is there some sort of large-scale manipulation going on?

Simplistically, if prices if used cars are "high" and not selling, because newer and new cars are the same price (or monthlies etc.) then at some point the prices of the used cars will need to be reduced otherwise the cars will never be sold and the trader will go bust.

If course, if manufacturers decided to crush all 3 year old rental returns, there would be no second hand market, but then the renter would need to have paid the full price of the car before returning it for it to be recycled.

Used car prices arent "high". The market is just very price driven.

The real issue is that good, used stock is hard to find. Therefore you have to pay more to get it (or spend more on lower standard cars) however the market isnt prepared to pay extra.

And its a shrinking market (the below £10K cash buyer) because more and more people are opting for a cheap lease or PCP.

Why is good used stock hard to find if 3-4 year old cars are coming off lease all the time?