Are the wheels about to fall of car finance?

Are the wheels about to fall of car finance?

Author
Discussion

daemon

35,724 posts

196 months

Tuesday 22nd August 2017
quotequote all
silentbrown said:
Lester H said:
Of course they are. It may affect company buyers less, but as soon as interest rates creep up, and they will, those who have bought - sorry - signed up for half a car for three years, with unrealistic mileage restrictions will be in deep dudu
Why? The interest rate isn't variable on PCPs. They are in no deeper doodoo than before. They may not be able to afford another identical car on PCP so may end up buying secondhand, but that's no different from someone who has yet to take out a PCP...
Thats exactly it.

I cant help but think some people want to see "retribution" and that clouds the reality of the situation for them.


daemon

35,724 posts

196 months

Tuesday 22nd August 2017
quotequote all
So lets have some predictions then?

Whats the market going to look like in two years?

According to some on here its going to be carnage and / or people are going to sell their homes just so they can keep "consuming" new cars...

So lets have some predictions so we can look back and see who was closest to being right? OR are those nay sayers happier making snide comments and criticising others rather than "putting their money where their mouth is" as it were?

smile

anonymous-user

53 months

Tuesday 22nd August 2017
quotequote all
DonkeyApple said:
Bookies, car salesmen, estate agents, recruitment consultants, penny share brokers, P2P lenders. In general, people who work on commission in areas of lax regulation are simply not going to have their customers' financial health as a concern.

And with regards to IG, there was an institutional arm which ran the clearing for funds and other brokers etc rather than the spread betting/ binary side.

And if you go back to the earliest mentions of binary betting on PH you'll find a Horse_Apple being as uncomplentary as dared at that time.

They are a pure bookmaker product and absolutely everyone who works with them knows full well they are specifically designed to rinse a client's account.
Couldnt agree more.

Which is why I found it amusing a bookie was chiding a car salesman on financial morality smile

As for IG and all things binary I absolutely get it but it's still out there in Google Land from a former life and sadly the one dimensional nature of such things doesn't reflect your obvious misgivings.







DonkeyApple

54,923 posts

168 months

Tuesday 22nd August 2017
quotequote all
Not sure I understand. I don't see any issue with working for one company and disagreeing with the products of another company?

Just because I work in finance doesn't mean that I agree with all financial products. I've been openly and regularly vociferous against the bulk of retail financial products oft mentioned on PH etc.

And I can safely say I've never worked for a bookmaker. I've competed against them for the last 20 years though.

4941cc

25,867 posts

205 months

Tuesday 22nd August 2017
quotequote all
DonkeyApple said:
I don't see any issue with working for one company and disagreeing with the products of another company?
I have worked in the retail motor trade selling new and used cars with attendant F&I add-ons, plus a spell in commercial and fleet sales and have had deep misgivings about the rise and rise of PCP and latterly leasing and contract hire to consumers for most of the last ten years.

The situations that customers bring to us daily and have done for a few years now, especially this last year or so are what I would personally consider "dire", were I in them. Yet the desire to change their car at a relative whim 18-24 months into their last (48 month) agreement, so currently in negative equity is unabated.

Manufacturer finance deposit contributions being used to over the negative equity, and now even separate, specifically designed negative equity loans - created to separate that last transaction from the present one (thus making the halves and thirds rules more easily applicable for the consumer later on) are very on the rise.

Are the wheels about to fall off? Possibly. More likely however that new financial instruments will be created by the manufacturer-owned and run banks/funding houses to maintain present sales volumes/market share etc.

Personally, I'd favour a return to simply outright purchase or straightforward Hire Purchase as the options. But that would create a massive problem with the current parc and see the "premium" - mostly German big 3 brand retailers drop their UK volumes from 200k back to the 60-70k they were at 20 years ago and a return to the mainstream popularity of Ford/Vauxhall/Citroen/Renault etc.

Conflict of morality, certainly. But I also have bills to pay and am only personally liable for one individual's financial decisions - my own. Don't think that we are all completely oblivious and uncaring. Most, maybe - but not all.

Whilst it'd be short-term painful, I'd very much welcome a huge overhaul and better regulation of our industry, to protect consumer's financial wellbeing and dis-incentivise unhealthy/long-term unsustainable behaviours...

DonkeyApple

54,923 posts

168 months

Tuesday 22nd August 2017
quotequote all
4941cc said:
DonkeyApple said:
I don't see any issue with working for one company and disagreeing with the products of another company?
I have worked in the retail motor trade selling new and used cars with attendant F&I add-ons, plus a spell in commercial and fleet sales and have had deep misgivings about the rise and rise of PCP and latterly leasing and contract hire to consumers for most of the last ten years.

The situations that customers bring to us daily and have done for a few years now, especially this last year or so are what I would personally consider "dire", were I in them. Yet the desire to change their car at a relative whim 18-24 months into their last (48 month) agreement, so currently in negative equity is unabated.

Manufacturer finance deposit contributions being used to over the negative equity, and now even separate, specifically designed negative equity loans - created to separate that last transaction from the present one (thus making the halves and thirds rules more easily applicable for the consumer later on) are very on the rise.

Are the wheels about to fall off? Possibly. More likely however that new financial instruments will be created by the manufacturer-owned and run banks/funding houses to maintain present sales volumes/market share etc.

Personally, I'd favour a return to simply outright purchase or straightforward Hire Purchase as the options. But that would create a massive problem with the current parc and see the "premium" - mostly German big 3 brand retailers drop their UK volumes from 200k back to the 60-70k they were at 20 years ago and a return to the mainstream popularity of Ford/Vauxhall/Citroen/Renault etc.

Conflict of morality, certainly. But I also have bills to pay and am only personally liable for one individual's financial decisions - my own. Don't think that we are all completely oblivious and uncaring. Most, maybe - but not all.

Whilst it'd be short-term painful, I'd very much welcome a huge overhaul and better regulation of our industry, to protect consumer's financial wellbeing and dis-incentivise unhealthy/long-term unsustainable behaviours...
Proper regulation is desperately needed. As someone who has worked in the regulated environment all their career when I look at how and who sells retail debt there is no credible regulation beyond the absolute AML and KYC basics. You can absolutely have it away without coming a regulatory cropper, hence why all the spanking operations have boomed over the last decade.

There was a big FCA review due that was going to make quite significant changes to how consumer debt was sold but Brexit has shelved this and the priority of the review now is to not rock the boat so we will see some superficial tinkering but not a significant change. The descision has been made to keep kicking the van down the road.

My personal opinion is that all retail debt selling should be removed from the product vendor. That's where the deception and abuse lies, the powerful profit incentives from price and customer manipulation. Consumers should arrange their finance at one location and make their purchases at another. At that point vendors such as car manufacturers have to compete on true price and quality of their product and not the smoke and mirrors of deceptive debt deals. Let car salesmen sell cars and properly regulated debt salesmen sell debt.

The whole way consumer debt is sold is at odds with all other regulated activity but it now seems unlikely that this will change given the latest rumours emanating from the FCA.

But, maybe the massive push through the media of scare stories will do its job and the industry will adjust ahead of being forced to by regulation?

4941cc

25,867 posts

205 months

Tuesday 22nd August 2017
quotequote all
DonkeyApple said:
Let car salesmen sell cars and properly regulated debt salesmen sell debt.
Which is at least theoretically what the role of Business/Transaction Managers was created for, after the salesperson has sold the features and benefits of their product vs. competitor offerings.

Yet even that part of our job has been transferred into the role of "Product Genius" (BMW) or "Star Expert" (Mercedes), I assume VAG have equivalents, leaving us to only get involved when customers start enquiring about finance offers/costs - which these days seems to be most often, the product bit only really coming into play at the handover stage. It's arse-about-face really.

My role only really exists now as a bridge between these two elements of the transaction. I'd love to spend much less time talking about payments, offers and budgets and more about the technology and taking people on test drives to demonstrate the benefits. But I'm a relative dinosaur, as I'm often reminded.

Despite our annual FCA accreditation training, the level of regulatory knowledge is generally very poor. It's only because its even poorer among most of the buying public that it persists. Priorities are simply low to nil deposit/wiping out of negative equity/retaining equity, an affordable tariff and lots of flexibility to get out early to change their cars relatively cost free at a whim. Zero investment and low commitment products rule the day.

mike13

715 posts

181 months

Tuesday 22nd August 2017
quotequote all
4941cc said:
I have worked in the retail motor trade selling new and used cars with attendant F&I add-ons, plus a spell in commercial and fleet sales and have had deep misgivings about the rise and rise of PCP and latterly leasing and contract hire to consumers for most of the last ten years.

The situations that customers bring to us daily and have done for a few years now, especially this last year or so are what I would personally consider "dire", were I in them. Yet the desire to change their car at a relative whim 18-24 months into their last (48 month) agreement, so currently in negative equity is unabated.

Manufacturer finance deposit contributions being used to over the negative equity, and now even separate, specifically designed negative equity loans - created to separate that last transaction from the present one (thus making the halves and thirds rules more easily applicable for the consumer later on) are very on the rise.

Are the wheels about to fall off? Possibly. More likely however that new financial instruments will be created by the manufacturer-owned and run banks/funding houses to maintain present sales volumes/market share etc.

Personally, I'd favour a return to simply outright purchase or straightforward Hire Purchase as the options. But that would create a massive problem with the current parc and see the "premium" - mostly German big 3 brand retailers drop their UK volumes from 200k back to the 60-70k they were at 20 years ago and a return to the mainstream popularity of Ford/Vauxhall/Citroen/Renault etc.

Conflict of morality, certainly. But I also have bills to pay and am only personally liable for one individual's financial decisions - my own. Don't think that we are all completely oblivious and uncaring. Most, maybe - but not all.

Whilst it'd be short-term painful, I'd very much welcome a huge overhaul and better regulation of our industry, to protect consumer's financial wellbeing and dis-incentivise unhealthy/long-term unsustainable behaviours...
Well written interesting read, i think you're spot on.

Granfondo

12,241 posts

205 months

Tuesday 22nd August 2017
quotequote all
4941cc said:
I have worked in the retail motor trade selling new and used cars with attendant F&I add-ons, plus a spell in commercial and fleet sales and have had deep misgivings about the rise and rise of PCP and latterly leasing and contract hire to consumers for most of the last ten years.

The situations that customers bring to us daily and have done for a few years now, especially this last year or so are what I would personally consider "dire", were I in them. Yet the desire to change their car at a relative whim 18-24 months into their last (48 month) agreement, so currently in negative equity is unabated.

Manufacturer finance deposit contributions being used to over the negative equity, and now even separate, specifically designed negative equity loans - created to separate that last transaction from the present one (thus making the halves and thirds rules more easily applicable for the consumer later on) are very on the rise.

Are the wheels about to fall off? Possibly. More likely however that new financial instruments will be created by the manufacturer-owned and run banks/funding houses to maintain present sales volumes/market share etc.

Personally, I'd favour a return to simply outright purchase or straightforward Hire Purchase as the options. But that would create a massive problem with the current parc and see the "premium" - mostly German big 3 brand retailers drop their UK volumes from 200k back to the 60-70k they were at 20 years ago and a return to the mainstream popularity of Ford/Vauxhall/Citroen/Renault etc.

Conflict of morality, certainly. But I also have bills to pay and am only personally liable for one individual's financial decisions - my own. Don't think that we are all completely oblivious and uncaring. Most, maybe - but not all.

Whilst it'd be short-term painful, I'd very much welcome a huge overhaul and better regulation of our industry, to protect consumer's financial wellbeing and dis-incentivise unhealthy/long-term unsustainable behaviours...
At last we have someone at the coal face telling us how it is! clap

ChasW

2,135 posts

201 months

Tuesday 22nd August 2017
quotequote all
+1

Some interesting insightful discussion here

anonymous-user

53 months

Tuesday 22nd August 2017
quotequote all
Granfondo said:
4941cc said:
I have worked in the retail motor trade selling new and used cars with attendant F&I add-ons, plus a spell in commercial and fleet sales and have had deep misgivings about the rise and rise of PCP and latterly leasing and contract hire to consumers for most of the last ten years.

The situations that customers bring to us daily and have done for a few years now, especially this last year or so are what I would personally consider "dire", were I in them. Yet the desire to change their car at a relative whim 18-24 months into their last (48 month) agreement, so currently in negative equity is unabated.

Manufacturer finance deposit contributions being used to over the negative equity, and now even separate, specifically designed negative equity loans - created to separate that last transaction from the present one (thus making the halves and thirds rules more easily applicable for the consumer later on) are very on the rise.

Are the wheels about to fall off? Possibly. More likely however that new financial instruments will be created by the manufacturer-owned and run banks/funding houses to maintain present sales volumes/market share etc.

Personally, I'd favour a return to simply outright purchase or straightforward Hire Purchase as the options. But that would create a massive problem with the current parc and see the "premium" - mostly German big 3 brand retailers drop their UK volumes from 200k back to the 60-70k they were at 20 years ago and a return to the mainstream popularity of Ford/Vauxhall/Citroen/Renault etc.

Conflict of morality, certainly. But I also have bills to pay and am only personally liable for one individual's financial decisions - my own. Don't think that we are all completely oblivious and uncaring. Most, maybe - but not all.

Whilst it'd be short-term painful, I'd very much welcome a huge overhaul and better regulation of our industry, to protect consumer's financial wellbeing and dis-incentivise unhealthy/long-term unsustainable behaviours...
At last we have someone at the coal face telling us how it is! clap
Bickering and personal animosity aside much of the above is what a number of people, including me believe it or not GF, have said at various stages throughout this thread.

If one strips out the views that people have towards individuals' propensity, need, desire, justification or otherwise to use debt products and instead looks at the original question then per 4941's response a number of people have expressed the view that the issue is a regulatory one and not a systemic issue akin to the CDO/CLO/MBS chicanery which contributed so significantly to the 2008 crash.






Edited by anonymous-user on Tuesday 22 August 14:26

Granfondo

12,241 posts

205 months

Tuesday 22nd August 2017
quotequote all
RSK21 said:
Bickering and personal animosity aside much of the above his what a number of people, including me believe it or not GF, have said at various stages throughout this thread.

If one strips out the views that people have towards individuals' propensity, need, desire, justification or otherwise to use debt products and instead looks at the original question then per 4941's responde a number of people have expressed the view that the issue is a regulatory one and not a systemic issue akin the the CDO/CLO/MBS chicanery which contributed so significantly to the 2008 crash.
It's nice that we all agree with 4941. wink

Edited by Granfondo on Tuesday 22 August 16:28

Donbot

3,892 posts

126 months

Monday 28th August 2017
quotequote all
Channel 4 dispatches program about new cars and finance on in 15 minutes which could be worth a watch.

andrew

9,952 posts

191 months

Monday 28th August 2017
quotequote all
Donbot said:
Channel 4 dispatches program about new cars and finance on in 15 minutes which could be worth a watch.
ta !

flibbage0

202 posts

140 months

Monday 28th August 2017
quotequote all
The guy with the red fiesta with a 1.0 ecoboost is calling it sporty and his dream car, paying £240 a month biglaugh

Donbot

3,892 posts

126 months

Monday 28th August 2017
quotequote all
To be fair my first car was a piece of crap by comparison. Though it only cost '3 monthly payments'.

SlimJim16v

5,617 posts

142 months

Monday 28th August 2017
quotequote all
Salesmen lying about PCH and pushing PCP.

tharriso

108 posts

124 months

Monday 28th August 2017
quotequote all
Wish my car dreams were that humble I'd have a lot more saving for sure!

Globs

13,841 posts

230 months

Tuesday 29th August 2017
quotequote all
I noticed that Tesla have set up shop in Cambridge's Grand Arcade shopping centre.
Apart from the fire risk and the fact they only have the old models there I noticed the finance available.

The small Tesla is a snip at £65k and available at only £700 per month, chump change really for us powerfully built company directors but I do wonder about how this will save the planet. I.e. the amount of CO2 someone has to use to generate £700 repayments instead of the alternate £150 pm for a Skoda must surely work against the Tesla.

They were very shiny though and lots of semi-reformed Hipsters were eyeing them up.
£700 a month still seems to be mortgage territory though, seems a bit steep for a car designed to leave you stranded.

Otispunkmeyer

12,557 posts

154 months

Wednesday 30th August 2017
quotequote all
Globs said:
I noticed that Tesla have set up shop in Cambridge's Grand Arcade shopping centre.
Apart from the fire risk and the fact they only have the old models there I noticed the finance available.

The small Tesla is a snip at £65k and available at only £700 per month, chump change really for us powerfully built company directors but I do wonder about how this will save the planet. I.e. the amount of CO2 someone has to use to generate £700 repayments instead of the alternate £150 pm for a Skoda must surely work against the Tesla.

They were very shiny though and lots of semi-reformed Hipsters were eyeing them up.
£700 a month still seems to be mortgage territory though, seems a bit steep for a car designed to leave you stranded.
That is nearly a third more than my mortgage!!!