Used Cars - Where is the Value?
Discussion
So, a family need a nice big car to transport kids, luggage etc. They want relatively a relatively new vehicle from a premium manufacturer. SUVs are desirable but are they worth the premium? Case in point below:
Merc E350d Estate
Volvo XC90
I suppose there's more to the argument than purchase price, such as depreciation, but here the Merc looks really good value to me and exposes the SUV as being very expensive. Admittedly, they are cars in a different segments but, in a way, are also competitors.
Merc E350d Estate
Volvo XC90
I suppose there's more to the argument than purchase price, such as depreciation, but here the Merc looks really good value to me and exposes the SUV as being very expensive. Admittedly, they are cars in a different segments but, in a way, are also competitors.
Various factors at play here :-
Discount on the car new (you can get £10K off the Merc new at Broadspeed)
Demand (the Volvo is a new model and in demand)
Prevalence (Merc E estates arent uncommon)
Its not what they're "worth" relative to each other - ie, the Volvo isnt £15,000 better than the Merc. Its what the market is prepared to pay for any particular car - ie, the market hasnt decided the Volvo is worth £15,000 more than the Merc, it has decided that a 2 year old Volvo is worth £39K relative to a new one at £52K.
I bought a 2016 Passat 3 months ago for £15,250. Loads of them about so prices are low. Ironically a Skoda Superb would have cost me more even though its considered the "value brand" - but theres less Superbs about and demand is higher with a lower supply.
Discount on the car new (you can get £10K off the Merc new at Broadspeed)
Demand (the Volvo is a new model and in demand)
Prevalence (Merc E estates arent uncommon)
Its not what they're "worth" relative to each other - ie, the Volvo isnt £15,000 better than the Merc. Its what the market is prepared to pay for any particular car - ie, the market hasnt decided the Volvo is worth £15,000 more than the Merc, it has decided that a 2 year old Volvo is worth £39K relative to a new one at £52K.
I bought a 2016 Passat 3 months ago for £15,250. Loads of them about so prices are low. Ironically a Skoda Superb would have cost me more even though its considered the "value brand" - but theres less Superbs about and demand is higher with a lower supply.
daemon said:
Its not what they're "worth" relative to each other - ie, the Volvo isnt £15,000 better than the Merc. Its what the market is prepared to pay for any particular car - ie, the market hasnt decided the Volvo is worth £15,000 more than the Merc, it has decided that a 2 year old Volvo is worth £39K relative to a new one at £52K.
I agree with most of your points with the exception of the bit quoted above. Surely, the market has indeed decided the relative value of the cars: one is £15k more expensive than the other.I suppose what I'm more interested in is where do other examples of 'value' exist. In my example, both cars are from premium brands, are capable of carrying a family and their stuff and have (arguably) nice interiors. The price differential seems to be associated with 'desirability' or other intangibles. OK, the XC90 is an SUV and there's value in that... but £15k of value? Obviously there is because that's what the market is telling us.
Using this logic (flawed as it is), where else does value exist? What models look cheap when put up against comparable models (not necessarily direct competitors) from similar manufacturers?
mcbook said:
daemon said:
Its not what they're "worth" relative to each other - ie, the Volvo isnt £15,000 better than the Merc. Its what the market is prepared to pay for any particular car - ie, the market hasnt decided the Volvo is worth £15,000 more than the Merc, it has decided that a 2 year old Volvo is worth £39K relative to a new one at £52K.
I agree with most of your points with the exception of the bit quoted above. Surely, the market has indeed decided the relative value of the cars: one is £15k more expensive than the other.I suppose what I'm more interested in is where do other examples of 'value' exist. In my example, both cars are from premium brands, are capable of carrying a family and their stuff and have (arguably) nice interiors. The price differential seems to be associated with 'desirability' or other intangibles. OK, the XC90 is an SUV and there's value in that... but £15k of value? Obviously there is because that's what the market is telling us.
Using this logic (flawed as it is), where else does value exist? What models look cheap when put up against comparable models (not necessarily direct competitors) from similar manufacturers?
Relative to its (discounted) price new, its ok ish value at £39K. Relative to its (discounted) price new the Merc is ok ish value too.
Very few people who would want the Volvo will opt to "save" £15K and buy the Merc.
If it were down to relative value compared to each other, there would only be a few £K of a difference at most.
Likewise you could buy a similar spec'd 2015 Passat estate for maybe £16K. And again thats because of its relative price new, desirability and availability - NOT because its "worth" £24,000 less than the Volvo in terms of value.
Merc e220/250s are even better value, especially in undesirable se exec spec.
Infinitis are dirt cheap. A friend bought an 18 month old one for 16k. He gets 6k a year car allowance and car can't be more than 5 years old, so over 3 years he will get more car allowance than he paid for the car, and the car will still be worth something.
If you aren't fussy on brand then there are bargains to be had
Infinitis are dirt cheap. A friend bought an 18 month old one for 16k. He gets 6k a year car allowance and car can't be more than 5 years old, so over 3 years he will get more car allowance than he paid for the car, and the car will still be worth something.
If you aren't fussy on brand then there are bargains to be had
SteBrown91 said:
Merc e220/250s are even better value, especially in undesirable se exec spec.
Infinitis are dirt cheap. A friend bought an 18 month old one for 16k. He gets 6k a year car allowance and car can't be more than 5 years old, so over 3 years he will get more car allowance than he paid for the car, and the car will still be worth something.
If you aren't fussy on brand then there are bargains to be had
Thats the bottom line. Less desirable brands / less desirable models / availability all play a factor.Infinitis are dirt cheap. A friend bought an 18 month old one for 16k. He gets 6k a year car allowance and car can't be more than 5 years old, so over 3 years he will get more car allowance than he paid for the car, and the car will still be worth something.
If you aren't fussy on brand then there are bargains to be had
Always has been the case.
Arguably though, a used infiniti may be cheap but thats because thats how the market values it - so technically, is it a bargain if you're paying what the market thinks its worth?
When buying a motorway hack for Sarah we needed - estate, 3 dogs. Comfortable, all toys. Frugal, she does 25K a year for work. Auto, she hates manuals.
I'd suggested to her that she should get a 320d M-sport, within our £11k budget you'd have been looking at a 10-11 plate with circa 50-60k on the clock. Instead we got a 2015 Insignia 2.0 CDTi elite with less than half the miles. OK, the Vauxhall is Cat D (but 'only' because of a vandal attack) but still, it was a £29k list price car, with a few pricey options on top of that.
The cheapest 2015 320d M-sport Auto estate with comparable mileage today is £19,500. 8 months after we bought ours, so it would have been more then.
Image and brand perception aside not that much stands between the two. Certainly the BM isn't worth near twice as much to us.
Yes, I fully await 'council' comments from some powerfully builts....
I'd suggested to her that she should get a 320d M-sport, within our £11k budget you'd have been looking at a 10-11 plate with circa 50-60k on the clock. Instead we got a 2015 Insignia 2.0 CDTi elite with less than half the miles. OK, the Vauxhall is Cat D (but 'only' because of a vandal attack) but still, it was a £29k list price car, with a few pricey options on top of that.
The cheapest 2015 320d M-sport Auto estate with comparable mileage today is £19,500. 8 months after we bought ours, so it would have been more then.
Image and brand perception aside not that much stands between the two. Certainly the BM isn't worth near twice as much to us.
Yes, I fully await 'council' comments from some powerfully builts....
md4776 said:
daemon said:
Arguably though, a used infiniti may be cheap but thats because thats how the market values it - so technically, is it a bargain if you're paying what the market thinks its worth?
But 'the market' ia nothing more than thd collective wisdom of the crowd. "The market" used to value mortgage backed securities stuffed full of sub prime loans highly only to later decide they were actually relatively worthless. Same as the bookies? Everything they know has already been built into determining the price, but theres still plenty of room for winning. You might "win" by picking up a car thats priced out if sync with what its really worth, but thats a lot rarer these days than it was as dealers are using software (or simply stock price checking) against what other dealers are using
There's a nuance here that I'm not sure I've explained properly: the Merc and Volvo in my OP are both cars from premium brands (you could argue Mercedes is more so than Volvo), and are generally viewed as upmarket purchases.
BWM vs Vauxhall isn't quite the same argument although I do appreciate that a used Insignia is good value from a functional point of view.
BWM vs Vauxhall isn't quite the same argument although I do appreciate that a used Insignia is good value from a functional point of view.
mcbook said:
There's a nuance here that I'm not sure I've explained properly: the Merc and Volvo in my OP are both cars from premium brands (you could argue Mercedes is more so than Volvo), and are generally viewed as upmarket purchases.
BWM vs Vauxhall isn't quite the same argument although I do appreciate that a used Insignia is good value from a functional point of view.
Its still back then to price relative to new (discounted) price, demand relative to availability, market sector and peers.BWM vs Vauxhall isn't quite the same argument although I do appreciate that a used Insignia is good value from a functional point of view.
If it were just about value then the Insignia would always win - the Merc isnt giving an extra £13,000 of benefit over the Insignia nor the Volvo £27,000 of extra benefit.
Thus the Merc isnt better value relative to the Volvo as they're both competing at different markets, purchase price etc.
mcbook said:
There's a nuance here that I'm not sure I've explained properly: the Merc and Volvo in my OP are both cars from premium brands (you could argue Mercedes is more so than Volvo), and are generally viewed as upmarket purchases.
You could argue that Volvo has been heading towards becoming more premium than Mercedes for a while.I think Mercedes have become terribly cheapened over recent years, both in the product and its image. A Mercedes was once a pretty safe place to put your money. With very few exceptions they now drop like a stone. I looked at a mint low mileage 2012 S Class ( 500 ) the other day up for peanuts. But who would really want that car ?
SUV's are massively popular at the moment. Its easy to see why. Running costs have dropped to sensible levels with a lot of them - a later Touareg V6 TDi is £220 a year tax and can see 45mpg on run. Loads of space and the higher seating position is nice for everyone who uses the car. They make most saloons and estates look dated and cramped inside, especially anything smaller and rear wheel drive.
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