The economics of new car sales
Discussion
daemon said:
If you bought a £10K used car for cash and sold it for £5K three years later (and you'd be doing well), you're going to suffer £138 a month in depreciation anyway, plus maintenance, plus MOT, plus servicing. So is £200 a month much of a hardship?
I don't understand that logic as I have just sold the BMW for £12,995 asking price last week privately, having bought it for £12,000 in June last year (from a trader!). OK, I spent £700 on it and dedicated 10 hours machine polishing it but still, what simpleton would manage to lose 50% on a second hand car in 3 years ? Even a new car doesn't lose that much when bought at huge broker discounts. £7K loss in 40 months on the QQ is far less than the best lease deals.The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
nickfrog said:
daemon said:
If you bought a £10K used car for cash and sold it for £5K three years later (and you'd be doing well), you're going to suffer £138 a month in depreciation anyway, plus maintenance, plus MOT, plus servicing. So is £200 a month much of a hardship?
I don't understand that logic as I have just sold the BMW for £12,995 asking price last week privately, having bought it for £12,000 in June last year (from a trader!). OK, I spent £700 on it and dedicated 10 hours machine polishing it but still, what simpleton would manage to lose 50% on a second hand car in 3 years ? Even a new car doesn't lose that much when bought at huge broker discounts. £7K loss in 40 months on the QQ is far less than the best lease deals.The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
Few ever do, but if any average Joe or Josephine UK Car Consumer sat down and carefully and honestly calculated the total overall cost of their motoring they would get a huge shock.
Fleet discounted sales and pre-reg 'new' cars distort the UK car consumer market hugely against the private buyer. Even so, it is possible to offset those private buyer costs if you are patient and resist that "must have" temptation which invariably in the cold light of day a little later, makes you realise it was a wrong and costly move.
The last time I part exchanged my old car against a new was in 1970.
nickfrog said:
The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
This, over and over! There'll be those who have signed up to leases and are burying the 'renter's remorse', or willfully spunk the extra cash away because they are comfortable with waste or simply don't understand the principle of equity.It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
They will defend their decision in here until they are blue in the face (always a case of 'they doth protest too much') but the figures speak for themselves.
nickfrog said:
I don't understand that logic as I have just sold the BMW for £12,995 asking price last week privately, having bought it for £12,000 in June last year (from a trader!). OK, I spent £700 on it and dedicated 10 hours machine polishing it but still, what simpleton would manage to lose 50% on a second hand car in 3 years ? Even a new car doesn't lose that much when bought at huge broker discounts. £7K loss in 40 months on the QQ is far less than the best lease deals.
The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
So if someone buys a Ford Focus from say MotorGiant at £10,000, they can reasonably expect to drive it three years and get £9,000 for it?The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
Or would your particular example be at best, the exception to the rule, relative to the car buying public out there, and what the motor trade sees happening?
Edited by daemon on Friday 21st November 07:50
MGJohn said:
... and for the private punter, never part exchange. Sell old car privately and shop round for the best discount new or good deal used. That way the private punter can win on both swings and roundabouts... or, at least, reduce the overall cost of their motoring.
Selling a car privately isnt always viable. In fact, isnt USUALLY viable. If you rely on your car to commute or take the kids to school then its hardly an option to sell it then try to look for a new one.Also, over a certain price point its becomes a lot more difficult to sell a car privately. Start to push much over £5K and the bulk of people want dealer facilities - trade in, warranty, finance, etc, etc.
So whilst in the simplistic world of internet forums its a great idea, in reality its not practical for a lot of people.
MGJohn said:
Few ever do, but if any average Joe or Josephine UK Car Consumer sat down and carefully and honestly calculated the total overall cost of their motoring they would get a huge shock.
Yes. Very true. Motoring is probably peoples biggest outgoing after their home. Most people could get by just as easily driving a lot cheaper car, but chose not to.MGJohn said:
Fleet discounted sales and pre-reg 'new' cars distort the UK car consumer market hugely against the private buyer. Even so, it is possible to offset those private buyer costs if you are patient and resist that "must have" temptation which invariably in the cold light of day a little later, makes you realise it was a wrong and costly move.
I dont see how fleet discoutns or pre-reg distorts the UK consumer market? I just saw over on Hot UK Deal a Perrys offer on a new pre-reg C4 1.6HDI for £9995. How do deals like that not help the consumer?MGJohn said:
The last time I part exchanged my old car against a new was in 1970.
Different people, different circumstances. I'd say 80% of people trade in. Maybe it costs them £1000 over what they "might" get privately, but there are lots of reasons why that might suit to do so to offset that cost.Most people in day to day life need the money from the old car to trade into the new car. They will already be stretching themselves towards the new vehicle.
As for a lease and having nothing to show for it I do hear this spouted wuite frequently. It's never a statement I have understood.
As for a lease and having nothing to show for it I do hear this spouted wuite frequently. It's never a statement I have understood.
When I bought my new fridge I picked an amount of money I wanted to spend, went to the nearest large electrical emporium and bought one. I could probably have bought a much better second hand fridge for the same money or gone to a different shop and got a better new fridge for the same price.
Most people buy cars like I bought my fridge because they have the same amount of interest in cars as I have in my fridge.
Most people buy cars like I bought my fridge because they have the same amount of interest in cars as I have in my fridge.
wolves_wanderer said:
When I bought my new fridge I picked an amount of money I wanted to spend, went to the nearest large electrical emporium and bought one. I could probably have bought a much better second hand fridge for the same money or gone to a different shop and got a better new fridge for the same price.
Most people buy cars like I bought my fridge because they have the same amount of interest in cars as I have in my fridge.
This does make sense, actually, and does explain the thought process of the majority of the car purchasing public.Most people buy cars like I bought my fridge because they have the same amount of interest in cars as I have in my fridge.
However.
£500-£1000 on a fridge, you're not bothered about how much it's worth when you come to replace it.
£15-£20,000 on a car for example, I'd be a little worried!
I do also find myself making sure I get the best fridge for the price though
Riknos said:
This does make sense, actually, and does explain the thought process of the majority of the car purchasing public.
However.
£500-£1000 on a fridge, you're not bothered about how much it's worth when you come to replace it.
£15-£20,000 on a car for example, I'd be a little worried!
I do also find myself making sure I get the best fridge for the price though
For most these days its not about the price of it, its about how much they're prepared to budget monthly for it.However.
£500-£1000 on a fridge, you're not bothered about how much it's worth when you come to replace it.
£15-£20,000 on a car for example, I'd be a little worried!
I do also find myself making sure I get the best fridge for the price though
Its like mobile phones. How many people would go out an spend £700 on a mobile phone, but are happy to spend £30 a month. Come "end of contract", they'll just see whos doing the best offer for them.
Riknos said:
£15-£20,000 on a car for example, I'd be a little worried!
On that note, i think BMW are at risk, relative to maintaining their business model. We looked at a new z4 Sdrive28i M Sport with some toys on it and a list price of £41,000. Now granted there were some big big discounts available but BMW were valuing it on the PCP deal at £12,000 after four years.It certainly makes you question the notion of "strong residuals" on german cars....
daemon said:
Riknos said:
This does make sense, actually, and does explain the thought process of the majority of the car purchasing public.
However.
£500-£1000 on a fridge, you're not bothered about how much it's worth when you come to replace it.
£15-£20,000 on a car for example, I'd be a little worried!
I do also find myself making sure I get the best fridge for the price though
For most these days its not about the price of it, its about how much they're prepared to budget monthly for it.However.
£500-£1000 on a fridge, you're not bothered about how much it's worth when you come to replace it.
£15-£20,000 on a car for example, I'd be a little worried!
I do also find myself making sure I get the best fridge for the price though
Its like mobile phones. How many people would go out an spend £700 on a mobile phone, but are happy to spend £30 a month. Come "end of contract", they'll just see whos doing the best offer for them.
Plus if things are fairly tight it is tempting to know that your car isn't going to throw any big bills or be off the road for an extended period (or if it is the dealer will sort a courtesy car)
wolves_wanderer said:
This.
Plus if things are fairly tight it is tempting to know that your car isn't going to throw any big bills or be off the road for an extended period (or if it is the dealer will sort a courtesy car)
If things are fairly tight then why on earth would you be buying/leasing a new car? I can't understand how everyone seems to afford it, I'm a single bloke on an engineers salary with no debts, no dependents and renting just a room but I couldn't bring myself to spunk that kind of money, how on earth does everyone with families and mortgages etc afford to do it? They can't all be minted given the national average salary is about £26k.Plus if things are fairly tight it is tempting to know that your car isn't going to throw any big bills or be off the road for an extended period (or if it is the dealer will sort a courtesy car)
Long may they continue obviously so there is a good supply of cheap used cars for me to pick from
.TurboHatchback said:
If things are fairly tight then why on earth would you be buying/leasing a new car? I can't understand how everyone seems to afford it, I'm a single bloke on an engineers salary with no debts, no dependents and renting just a room but I couldn't bring myself to spunk that kind of money, how on earth does everyone with families and mortgages etc afford to do it? They can't all be minted given the national average salary is about £26k.
Long may they continue obviously so there is a good supply of cheap used cars for me to pick from.
Not "everyone" buys new. Those who do and use a PCP deal are usually fairly confident of their finances and are happy to have their significant motoring costs wrapped up in one monthly payment.Long may they continue obviously so there is a good supply of cheap used cars for me to pick from
.Just because you chose not to, doesnt mean others cant "afford" it.
nickfrog said:
what simpleton would manage to lose 50% on a second hand car in 3 years ?
50% depreciation in 3 years is a 'rule of thumb' depreciation curve - no, it's not a completely accurate measure for every individual car, but as a guesstimate of future value across 30,000,000 cars, it's not a bad indicator.r11co said:
nickfrog said:
The only way to make lease work is to compare to buying at list.
It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
This, over and over! There'll be those who have signed up to leases and are burying the 'renter's remorse', or willfully spunk the extra cash away because they are comfortable with waste or simply don't understand the principle of equity.It doesn't matter how many comparisons I make, lease works out at 20% more than cash. Again, when bought properly and compared realistically.
They will defend their decision in here until they are blue in the face (always a case of 'they doth protest too much') but the figures speak for themselves.
t. It's a figure made up to support one side of an Internet argument.As a maths nerd, I'd love to see how the representative figures are calculated if anyone can provide?
The not surprising but still quite remarkable figure is Alfa Romeo with 5,000 cars sold. Albeit they have not had the best reputation for decades now, they still have the perception of being a relatively well-known and mainstream brand. I suppose when you look at their product range now, so far as anyone wanting a normal car, it's a Guilietta or a Mito, isn't it? Neither class-leaders when new but quite desirable products in their own ways, but evidently invisible in the marketplace now. Although it would be getting a bit old now, the madness of axing the 159 with no replacement seems bonkers - it's looks and a bit of marketing would have kept it selling in reasonable numbers I'm sure. Replacements axed for not looking 'Alfa' enough; their replacements axed for not being RWD; the new MX5-based Spyder now going to be an Abarth (pretty much a meaningless brand if Fiat itself is invisible); meanwhile the Guilietta and Mito soldier on, getting older and more outdated with every passing moment...
When you look at the Fiat group, so far as cars are concerned, in Europe all they have is the 500, otherwise they'd be invisible too. The Punto is two facelifts overdue a replacement, does the Bravo still exist, and their MPV crossover sort of things are anonymous and invisible in the market. On those terms you have to look at Mr Macaroni and conclude that all he's been doing for the past five years is shuffling future share options and spilling soup down his jumper. Where's the product?
When you look at the Fiat group, so far as cars are concerned, in Europe all they have is the 500, otherwise they'd be invisible too. The Punto is two facelifts overdue a replacement, does the Bravo still exist, and their MPV crossover sort of things are anonymous and invisible in the market. On those terms you have to look at Mr Macaroni and conclude that all he's been doing for the past five years is shuffling future share options and spilling soup down his jumper. Where's the product?
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