Used cars not selling?

Author
Discussion

Sa Calobra

37,010 posts

210 months

Sunday 12th August 2018
quotequote all
Even though credit is dirt cheap for the finance industry they still want top dollar. My bank thinks offering me 10.5% apr is competitive when the base rate is peanuts.

I hope the banks suffer in the next crash.

swamp

991 posts

188 months

Sunday 12th August 2018
quotequote all
Sa Calobra said:
Even though credit is dirt cheap for the finance industry they still want top dollar. My bank thinks offering me 10.5% apr is competitive when the base rate is peanuts.

I hope the banks suffer in the next crash.
Look elsewhere! Cheapest unsecured personal loan right now is 2.8%, usually capped at £15k. Considering interest rates have just gone up that's dirt cheap money.


Hub

6,413 posts

197 months

Sunday 12th August 2018
quotequote all
Deep Thought said:
Manufacturers want to sell new cars, and are hugely competitive at it - they use finance contributions and subsidised interest rates to make PCP dealers appealing and can offer leasing companies big bulk discounts which make leasing deals competitive.

I dont think they'll ever increase the deals just to appease used car sellers down the food chain (who they dont really care about)

I think the used car market is suffering heavily - its very hard to make a used car deal competitive in terms of monthly payments. Even a £6K loan over 3 years is nigh on £200 a month. People can lease a brand new car for that, rather than maybe an out of warranty five year old one.
But if the used car market dies and depreciation increases significantly, won't the price of leasing and/or PCP have to go up to cover the increased depreciation? I suppose it depends if the depreciation stays the same for the first 2/3 years or increases further down the line.

lornemalvo

2,167 posts

67 months

Sunday 12th August 2018
quotequote all
Deep Thought said:
The O/P is trade?
I understand that. I was commenting on the difficulties for private buyers of selling a used car

lornemalvo

2,167 posts

67 months

Sunday 12th August 2018
quotequote all
jeremyh1 said:
PCP will eventually implode It wont go away but if you can really afford it you will always be able to run a car that way .

The many that cant really afford what they have will soon go back to buying decent used cars
I wonder how many people pay the balloon payment and keep the car. Is PCP just a lease plan by another name?

Deep Thought

35,724 posts

196 months

Sunday 12th August 2018
quotequote all
swamp said:
Sa Calobra said:
Even though credit is dirt cheap for the finance industry they still want top dollar. My bank thinks offering me 10.5% apr is competitive when the base rate is peanuts.

I hope the banks suffer in the next crash.
Look elsewhere! Cheapest unsecured personal loan right now is 2.8%, usually capped at £15k. Considering interest rates have just gone up that's dirt cheap money.
+1

2.8% APR is easily achievable on a bank loan.

lornemalvo

2,167 posts

67 months

Sunday 12th August 2018
quotequote all
As a potential cash buyer within the next few months, it's disappointing that cash is no longer king. I know lease deals make sense for some people, but I can't stand the thought of monthly payments going out for something I'll never own. It used to stress me out back when HP was my only option, I'm totally averse to being in debt, although most people seem to embrace it quite happily, and to ridiculous levels of risk (insane in my opinion and part of the reason so many people are 2 or 3 pay cheques away from ruin). I have the cash to buy a car, and because of crap savings rates it makes sense to use it to buy a car, but being what I consider to be responsible with money (and saving) it is actually a disadvantage when negotiating

Deep Thought

35,724 posts

196 months

Sunday 12th August 2018
quotequote all
Hub said:
Deep Thought said:
Manufacturers want to sell new cars, and are hugely competitive at it - they use finance contributions and subsidised interest rates to make PCP dealers appealing and can offer leasing companies big bulk discounts which make leasing deals competitive.

I dont think they'll ever increase the deals just to appease used car sellers down the food chain (who they dont really care about)

I think the used car market is suffering heavily - its very hard to make a used car deal competitive in terms of monthly payments. Even a £6K loan over 3 years is nigh on £200 a month. People can lease a brand new car for that, rather than maybe an out of warranty five year old one.
But if the used car market dies and depreciation increases significantly, won't the price of leasing and/or PCP have to go up to cover the increased depreciation? I suppose it depends if the depreciation stays the same for the first 2/3 years or increases further down the line.
Yes, i think we're seeing that already. PCP residual values are particularly crap now. I think its only the low APR and "incentives" that are hiding that.


Mexman

2,442 posts

83 months

Sunday 12th August 2018
quotequote all
If something is not selling, it's either price or condition.
Simple.

Sheepshanks

32,531 posts

118 months

Sunday 12th August 2018
quotequote all
rallycross said:
Even dealer PCP/lease sales have dropped off a cliff since Q1, friend of mine just left a VW main dealer having been one of their top retail sales guys for the past 36 months, can't hit his targets in 2018.
VW UK sales are up 6.5% YTD over 2017.

Dan W.

1,196 posts

77 months

Sunday 12th August 2018
quotequote all
never really understood the cash is king in car sales rule.

All the farmer types and older customers who think saying If I pay cash can I get a grand off it.......

they only felt like that because in the *good old days* people couldn't look online and check the prices nationwide and see what was a fair value so they would go to a local dealer and say knock a grand off I will have it, little knowing the dealer had 4k across it because well how would a customer know.

where as now autotrader and such has made it pretty much impossible to have such margin so cash is still good but the margin isn't there now to do that sort of discount.

roadsmash

2,622 posts

69 months

Sunday 12th August 2018
quotequote all
Deep Thought said:
roadsmash said:
one must ask how long the cheap deals can last for if no one is buying the used cars after we give them back!
Manufacturers want to sell new cars, and are hugely competitive at it - they use finance contributions and subsidised interest rates to make PCP dealers appealing and can offer leasing companies big bulk discounts which make leasing deals competitive.

I dont think they'll ever increase the deals just to appease used car sellers down the food chain (who they dont really care about)

I think the used car market is suffering heavily - its very hard to make a used car deal competitive in terms of monthly payments. Even a £6K loan over 3 years is nigh on £200 a month. People can lease a brand new car for that, rather than maybe an out of warranty five year old one.
Agreed Deep Thought.

Although my point was that brand new deals may increase in cost on the basis that the resell value will decrease, not just to appease the used car dealers. biggrin

If no one wants the lease cars after we give them back then that must affect the deals on offer for new cars moving forward.

I guess time will tell.

Wooda80

1,743 posts

74 months

Sunday 12th August 2018
quotequote all
Bring on the "crash"!

Despite what Gordon Brown hoped, there will never be an end to boom and bust, it's just a question of being prepared for it.

Those who have preserved their capital, rather than spunking it away flashing cash for shiny new cars, will be in a position to snap up some real bargains, just as they were able to in 2008.

Those who have cars on PCP will be insulated from the resultant drop in used car values by the option to hand it back.

swamp

991 posts

188 months

Sunday 12th August 2018
quotequote all
If you think things are bad now (for 2nd hand market), wait until the ULEZ arrives in 2021 and millions of Londoners have to upgrade their cars!

Wooda80

1,743 posts

74 months

Sunday 12th August 2018
quotequote all
Sheepshanks said:
rallycross said:
Even dealer PCP/lease sales have dropped off a cliff since Q1, friend of mine just left a VW main dealer having been one of their top retail sales guys for the past 36 months, can't hit his targets in 2018.
VW UK sales are up 6.5% YTD over 2017.
You are probably both right. I'm guessing they put his target up by 10% so even though he's selling more cars he's earning less money. One of the main reasons that there is churn even amongst good sales people.

Sir Bagalot

6,463 posts

180 months

Sunday 12th August 2018
quotequote all
Drive Blind said:
from what I see nobody wants a 12 year old car.

Nobody in my street has a 12 year old car and I think I'd struggle to find a vehicle of that age in the works car park.
I'd buy a 12 year old MX5. I just wouldn't buy one from a dealer.

Deep Thought

35,724 posts

196 months

Sunday 12th August 2018
quotequote all
Dan W. said:
never really understood the cash is king in car sales rule.

All the farmer types and older customers who think saying If I pay cash can I get a grand off it.......

they only felt like that because in the *good old days* people couldn't look online and check the prices nationwide and see what was a fair value so they would go to a local dealer and say knock a grand off I will have it, little knowing the dealer had 4k across it because well how would a customer know.

where as now autotrader and such has made it pretty much impossible to have such margin so cash is still good but the margin isn't there now to do that sort of discount.
Cash hasnt been king for decades, but some people do still think they should be treated "better" / given bigger discounts for producing cash.

Very odd.

Deep Thought

35,724 posts

196 months

Sunday 12th August 2018
quotequote all
roadsmash said:
Agreed Deep Thought.

Although my point was that brand new deals may increase in cost on the basis that the resell value will decrease, not just to appease the used car dealers. biggrin

If no one wants the lease cars after we give them back then that must affect the deals on offer for new cars moving forward.

I guess time will tell.
Yes, i think you've hit the nail on the head - new car PCP / lease deals will increase in price if used prices continue to drop.


Deep Thought

35,724 posts

196 months

Sunday 12th August 2018
quotequote all
Wooda80 said:
Bring on the "crash"!

Despite what Gordon Brown hoped, there will never be an end to boom and bust, it's just a question of being prepared for it.

Those who have preserved their capital, rather than spunking it away flashing cash for shiny new cars, will be in a position to snap up some real bargains, just as they were able to in 2008.

Those who have cars on PCP will be insulated from the resultant drop in used car values by the option to hand it back.
It will be the banks this time who will be hit if theres a car market crash (but lets remember its a fraction of the size of the mortgage market).

People will as you say just be able to hand their cars back at the end of their PCP deal making it the finance companies problem.

I suspect its why used car PCP deals are at such a high interest rate. I think the big manufacturer finance houses are building a war chest for the coming storm....

Dan W.

1,196 posts

77 months

Sunday 12th August 2018
quotequote all
Deep Thought said:
Dan W. said:
never really understood the cash is king in car sales rule.

All the farmer types and older customers who think saying If I pay cash can I get a grand off it.......

they only felt like that because in the *good old days* people couldn't look online and check the prices nationwide and see what was a fair value so they would go to a local dealer and say knock a grand off I will have it, little knowing the dealer had 4k across it because well how would a customer know.

where as now autotrader and such has made it pretty much impossible to have such margin so cash is still good but the margin isn't there now to do that sort of discount.
Cash hasnt been king for decades, but some people do still think they should be treated "better" / given bigger discounts for producing cash.

Very odd.
I know its quite odd when a customers says but its cash.... and .....