The Previous Recession
Discussion
We're told that another recession is on the way, with all the fun and change that can potentially bring. We've got a few threads on predictions of used car prices, but I'm interested what deals/prices people have anecdotes of from the last recession (call it 2008-2012 for the sake of argument- we were in the doldrums economically for a long time).
Only a humdrum example, but I remember my folks picking up an 18 month old Focus Estate LX 1.6 TDCi for £7999 from a Ford main dealer in December 2008. Was up at £9999, list price was £15,585. Was ex-demo, so didn't have many miles on it.
Just checked now and the equivalent used model now is over £18k- obviously a better equipped car with a more powerful engine, but it's amazing how much prices have jumped over this economic cycle. List price £22,645. Used price is over 80% of list price, yet in 2008 you could pick one up for just over half of list.
Only a humdrum example, but I remember my folks picking up an 18 month old Focus Estate LX 1.6 TDCi for £7999 from a Ford main dealer in December 2008. Was up at £9999, list price was £15,585. Was ex-demo, so didn't have many miles on it.
Just checked now and the equivalent used model now is over £18k- obviously a better equipped car with a more powerful engine, but it's amazing how much prices have jumped over this economic cycle. List price £22,645. Used price is over 80% of list price, yet in 2008 you could pick one up for just over half of list.
From memory I'm pretty sure prices of used rose as people weren't buying new and only changed when they absolutely had to and needed it immediately and therefore as people weren't changing as often as they normally did there was a lack of used cars.
Edited by HTP99 on Sunday 7th August 11:29
I don't think this is the same kind of recession. A lot of bad businesses (and some good ones) were culled as a result of the lockdown crisis. That air of desperation which comes when business has totally dried up I would say has past due to the aforementioned. I would say businesses will just really slow down, shed staff, reduce costs and hold on tight for the next few years.
I was going through a divorce in 2009 and can't say I even noticed the 'great recession'.
In car terms I had..
Focus 1.6 Zetec which I bought in 2005. It was 18 months old with 20k miles and cist £7k.
That car was sold in 2010 with 85k miles on for £1600. Part ex for a 207GT diesel (awful). The Pug was 4 years old and 50k miles and cost £6500.
Sold the Pug in 2011 for £5k and bought a 9 year old Puma for £2k.
Sold the Puma for £1500 in 2012 and bought a 2002 Celica T sport for £2500. That was an excellent motor which I ran for 3 years.
For me personally, I didn't notice any kind of recession.
In car terms I had..
Focus 1.6 Zetec which I bought in 2005. It was 18 months old with 20k miles and cist £7k.
That car was sold in 2010 with 85k miles on for £1600. Part ex for a 207GT diesel (awful). The Pug was 4 years old and 50k miles and cost £6500.
Sold the Pug in 2011 for £5k and bought a 9 year old Puma for £2k.
Sold the Puma for £1500 in 2012 and bought a 2002 Celica T sport for £2500. That was an excellent motor which I ran for 3 years.
For me personally, I didn't notice any kind of recession.
In alot of ways the recession ahead will be different to the crash of 2008.
The man on the street then did not really feel the crash as global interventions by the central banks prevented the worst happening. Yes house prices dipped and lending tightned but it was largely contained and propping up the banks in a co ordinated way meant that businesses were still able to access capital and keep trading.
They also lowered IR which at the time from memory were around 5% instantly making borrowing cheaper.
In many ways this time its the opposite, Inflation is now the bigger risk so pumping in more money or lowering IR is not the answer and will likely make things worse. So there is a different set of challenges, car prices and sales have been strong due to supply issues, alot of businesses have been doing well on the back of staff support with Furlough and other measures that were taken to support businesses at the time. So giving more money to businesses now in order for them to keep charging customers more is just fuelling inflation further and will see employees asking for pay rises to keep up with rising costs. As the BOE said last week there are no easy answers and there is going to be pain, rising IR is hard for people and businesses when already struggling but the alternative of continued spiralling inflation will be worse.
So hard to compare to what happened in 2008, as back then energy and fuel costs along with food was no where near where it is now and still rising. This will be a recession that hurts the man on the street and likely local businesses as well rather than banks and other institutions.
As for car prices as been said many times, I struggle to see where the money is going to come from to keep the bubble going, there are things that people will continue to find money for like rapairs to their property and general maintenance and that well deserved holiday, but cars and the price of fuel I just think for the majority their minds will be elsewhere and little appetite to be paying so much for used cars, most will sit tight and ride it out with what they have or even sell if no longer needed, buying a second car for a bit of fun or convenience I think is behind us and belt tightening takes hold.
If supply was anything like in 2008 we would no doubt see some good deals out there next year, but as things stand if we are to get a correction and lowering of prices then a recession combined with a lack of spending power will accelerate that, but think it would take mass job losses for prices to really fall through the floor.
The man on the street then did not really feel the crash as global interventions by the central banks prevented the worst happening. Yes house prices dipped and lending tightned but it was largely contained and propping up the banks in a co ordinated way meant that businesses were still able to access capital and keep trading.
They also lowered IR which at the time from memory were around 5% instantly making borrowing cheaper.
In many ways this time its the opposite, Inflation is now the bigger risk so pumping in more money or lowering IR is not the answer and will likely make things worse. So there is a different set of challenges, car prices and sales have been strong due to supply issues, alot of businesses have been doing well on the back of staff support with Furlough and other measures that were taken to support businesses at the time. So giving more money to businesses now in order for them to keep charging customers more is just fuelling inflation further and will see employees asking for pay rises to keep up with rising costs. As the BOE said last week there are no easy answers and there is going to be pain, rising IR is hard for people and businesses when already struggling but the alternative of continued spiralling inflation will be worse.
So hard to compare to what happened in 2008, as back then energy and fuel costs along with food was no where near where it is now and still rising. This will be a recession that hurts the man on the street and likely local businesses as well rather than banks and other institutions.
As for car prices as been said many times, I struggle to see where the money is going to come from to keep the bubble going, there are things that people will continue to find money for like rapairs to their property and general maintenance and that well deserved holiday, but cars and the price of fuel I just think for the majority their minds will be elsewhere and little appetite to be paying so much for used cars, most will sit tight and ride it out with what they have or even sell if no longer needed, buying a second car for a bit of fun or convenience I think is behind us and belt tightening takes hold.
If supply was anything like in 2008 we would no doubt see some good deals out there next year, but as things stand if we are to get a correction and lowering of prices then a recession combined with a lack of spending power will accelerate that, but think it would take mass job losses for prices to really fall through the floor.
Edited by Theoldguard on Sunday 7th August 14:21
Trevor555 said:
Sold my Renault spider in 2008 for £14,250
Sold my S1 Sport 160 for £9500 IIRC in 2010. Still hurts a bit.Had only bought it 9-10 months previously for £10500. It had a full respray and various other new parts due to being rear ended whilst parked. I'd lost my job and needed the money.
I recall around that time everyone seemed to be picking up cheap Chimaeras in the group of PH'ers I knocked about with. Also S2 Exige in the classifieds for £16k. Some of that is a product of their relative popularity/point in their depreciation curve of course.
I'm kind of hoping we see the same thing as I'm planning to buy a weekend car next year.
No doubt every recession is different- there is always a different combination of interest rates, inflation, unemployment and underlying causes. The end results tend to be similar though. For the record, I don't see car valuing dropping as much as they did last time around, and I don't see unemployment hitting over 8% like last time.
My perception is that not that much really happened to older car prices in 2008-12. Cars were cheap, but then prices for cars 10-40 years old had been low and falling since about the bursting of the eighties classic car bubble. Only 50+ year old blue chip classic cars were valuable, like E-Types and 60s Ferraris.
The thing that was surprising and different was during approx the period 2012-16, quite a few enthusiast cars that were 10-25 years old suddenly started shooting up in value. All the 90s JDM stuff, E30s M3s, 911 GT3s, air-cooled 911s, the BMW Z8. The BMW 1M came out and pretty much never depreciated, just went from new and in short supply straight to being an appreciating classic.
So it wasn't so much the recession itself that seemed to have a noticeable impact on car prices, but during I guess the recovery phase from that recession something happened that was unexpected.
In terms of personal recollections I bought an RX-7 in 2012 for £4500; now buying an RX-7 could never really be described as a sensible financial decision, but if you were going to buy one, 2012 was probably the least bad time to do so.
The thing that was surprising and different was during approx the period 2012-16, quite a few enthusiast cars that were 10-25 years old suddenly started shooting up in value. All the 90s JDM stuff, E30s M3s, 911 GT3s, air-cooled 911s, the BMW Z8. The BMW 1M came out and pretty much never depreciated, just went from new and in short supply straight to being an appreciating classic.
So it wasn't so much the recession itself that seemed to have a noticeable impact on car prices, but during I guess the recovery phase from that recession something happened that was unexpected.
In terms of personal recollections I bought an RX-7 in 2012 for £4500; now buying an RX-7 could never really be described as a sensible financial decision, but if you were going to buy one, 2012 was probably the least bad time to do so.
Edited by samoht on Saturday 13th August 09:23
I bought a approved used BMW 130i circa 2008 when everyone wanted diesels and ecoboxes to save fuel costs. List, including options was £31k and the dealer had it at £15k at 3 years old with 29k miles. Phoned up to enquire and had the price down to £13.5k with various stuff (RFL etc) thrown in.
Seemed like a good deal at the time and, I believe, somewhat influenced by consumer sentiment and the economic outlook at the time I suspect.
Seemed like a good deal at the time and, I believe, somewhat influenced by consumer sentiment and the economic outlook at the time I suspect.
I remember a distinct period when people were wanting to get out of their thirsty whatever, for something much more economical, however many couldn't understand why their trade in was worth so little, the irony being that it wasn't as desirable so therefore not worth as much as it may have been pre recession, for the very reason that they wanted out of it, many just couldn't grasp it.
This won’t be the same as the last recession, or the recovery shouldn’t be anyway. Central banks printed their way out of the last one. They’ve suggested that won’t happen this time.
If interest rates continue to rise to control inflation and QT does happen, then the days of ‘free motoring’ might be coming to an end.
I wouldn’t want to be holding a traditional ‘wasting asset’ as an investment when Q3 stats start coming in.
If interest rates continue to rise to control inflation and QT does happen, then the days of ‘free motoring’ might be coming to an end.
I wouldn’t want to be holding a traditional ‘wasting asset’ as an investment when Q3 stats start coming in.
In October 2008, i bought a 4 year old Ford Ranger 4X4 single cab for £4500. I think it had around 75K and came with a good history and was very clean for a commercial. ( no VAT on this either).
I know it was a great price at the time and six years later, when it was wrote off ( with another 35k on the clock) i still got 3.5K for it from the insurers.
God knows how much a 4 year old Ranger would cost me now!
I know it was a great price at the time and six years later, when it was wrote off ( with another 35k on the clock) i still got 3.5K for it from the insurers.
God knows how much a 4 year old Ranger would cost me now!
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