Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

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Discussion

gizlaroc

14,927 posts

179 months

Thursday 2nd April
quotequote all
JulianHJ said:
This seems an entirely rational position to me - the market is merely paused (along with many non-automotive markets) for a number of weeks.
Did they start with "Our fantasy scenario would be..........."


Because that is what it is.


I think reality has suddenly hit home to some of the main dealers with the news that over 30% of SMEs have said if this lasts 60 days or more they will not be there.
This is going to be apocalyptic for nearly everyone.

Mr Sunak's loans are non accessible, banks seem to be going for asset grabs, and estimates are starting to come in at 10-15,000,000 unemployed, that gap of tax intake plus the welfare needed will have to be paid for by those still in work.



Why did I say the main dealers are starting to realise things are going south fast?
Because someone I sell a few cars for called me 10 minutes ago to say one of the main dealers texted him yesterday to say that they are taking bids on all stock cars they have. Highest bid gets it, no reserve.

That to me tells me they are starting to get just how bad this could be.

So

18,345 posts

177 months

Thursday 2nd April
quotequote all
gizlaroc said:
JulianHJ said:
This seems an entirely rational position to me - the market is merely paused (along with many non-automotive markets) for a number of weeks.
Did they start with "Our fantasy scenario would be..........."


Because that is what it is.


I think reality has suddenly hit home to some of the main dealers with the news that over 30% of SMEs have said if this lasts 60 days or more they will not be there.
This is going to be apocalyptic for nearly everyone.

Mr Sunak's loans are non accessible, banks seem to be going for asset grabs, and estimates are starting to come in at 10-15,000,000 unemployed, that gap of tax intake plus the welfare needed will have to be paid for by those still in work.



Why did I say the main dealers are starting to realise things are going south fast?
Because someone I sell a few cars for called me 10 minutes ago to say one of the main dealers texted him yesterday to say that they are taking bids on all stock cars they have. Highest bid gets it, no reserve.

That to me tells me they are starting to get just how bad this could be.
Interesting stuff.

vikingaero

4,831 posts

124 months

Thursday 2nd April
quotequote all
JulianHJ said:
I’ve not read through this thread, so forgive me if this has already been mentioned.

I listened to a CAP HPI trade briefing earlier this week and their stance (IIRC) is basically a freeze on values for the duration of the lockdown. They don’t see a comparison with 2008 as this isn’t a credit issue. Emotional purchases such as supercars might decline slightly, but business will carry on.

This seems an entirely rational position to me - the market is merely paused (along with many non-automotive markets) for a number of weeks.
The market may be paused but there's going to be a huge adjustment when it restarts. Look on the VWFS thread and someone is saying that every other call Skoda FS are taking is about VTing cars. Even people who can afford it are realising that they have a car on the drive not being driven and they may as well VT and save hundreds each month.

gizlaroc

14,927 posts

179 months

Thursday 2nd April
quotequote all
Could be the right thing to do, could be a big mistake.


The fact is no one knows what will happen.


The only thing we know is uncertainty, which no one likes regardless of outcome.



Deep Thought

26,725 posts

152 months

Thursday 2nd April
quotequote all
vikingaero said:
JulianHJ said:
I’ve not read through this thread, so forgive me if this has already been mentioned.

I listened to a CAP HPI trade briefing earlier this week and their stance (IIRC) is basically a freeze on values for the duration of the lockdown. They don’t see a comparison with 2008 as this isn’t a credit issue. Emotional purchases such as supercars might decline slightly, but business will carry on.

This seems an entirely rational position to me - the market is merely paused (along with many non-automotive markets) for a number of weeks.
The market may be paused but there's going to be a huge adjustment when it restarts. Look on the VWFS thread and someone is saying that every other call Skoda FS are taking is about VTing cars. Even people who can afford it are realising that they have a car on the drive not being driven and they may as well VT and save hundreds each month.
Thats very interesting. I guess if people are paying several hundred a month for one or more car then VTing one in these uncertain times could make sense, particularly if they're within their rights to do so and have hit the 50% marker anyway.

I hear a lot of people are SORNing their cars too. Not an issue if your car is in the £30 a year bracket but if its £240 - £550 a year there may be some merit in it. Not, again, because they "need" the money necessarily, but if the car is otherwise not being used why not.

Fezzaman

514 posts

148 months

Thursday 2nd April
quotequote all
https://www.classiccarauctions.co.uk/cca-march-202...

May be more pertinent to those looking for modern classics but worth checking. Some of the lots have been given buy now prices

swisstoni

9,080 posts

234 months

Thursday 2nd April
quotequote all
The only hope I can see is that, if the current pretty hard lockdown is a success
(ie the ICU capacity is kept sufficient during the expected peak of the epidemic in the next couple of weeks, and death rates start to go down, AND new easily available testing allows us to see who’s had it, who’s got it, etc)

then restrictions can start to be lifted and some return to business can happen.

classicaholic

681 posts

25 months

Thursday 2nd April
quotequote all
Not quite car related but similar, we have just sent a forklift back off hire yesterday and the driver collecting said he had picked 10 up already this week, normally less than 1 a week.

V8fan

3,426 posts

223 months

Thursday 2nd April
quotequote all
Fezzaman said:
https://www.classiccarauctions.co.uk/cca-march-202...

May be more pertinent to those looking for modern classics but worth checking. Some of the lots have been given buy now prices
I was due to go to that auction (originally planned for Practical Classic show in NEC, then reverted to Leamington Spa) but it got turned into a 10 ish cars a day 12 hour bidding bizarre thing. No last minute sniping, any bid in the last 2 mins extends it another 2 mins.

The 'contact us' prices are for cars that failed to meet their reserve.

gizlaroc

14,927 posts

179 months

Thursday 2nd April
quotequote all
classicaholic said:
Not quite car related but similar, we have just sent a forklift back off hire yesterday and the driver collecting said he had picked 10 up already this week, normally less than 1 a week.
This is what people are not understanding, it doesn't matter what industry you are in, every week this continues we will see people simply run out of money. Products get dumped onto the market, over saturation reduces prices.




CRA1G

4,217 posts

150 months

Thursday 2nd April
quotequote all
V8fan said:
I was due to go to that auction (originally planned for Practical Classic show in NEC, then reverted to Leamington Spa) but it got turned into a 10 ish cars a day 12 hour bidding bizarre thing. No last minute sniping, any bid in the last 2 mins extends it another 2 mins.

The 'contact us' prices are for cars that failed to meet their reserve.
Suprised to see how many actually sold....rolleyes

Fezzaman

514 posts

148 months

Thursday 2nd April
quotequote all
gizlaroc said:
This is what people are not understanding, it doesn't matter what industry you are in, every week this continues we will see people simply run out of money. Products get dumped onto the market, over saturation reduces prices.
Ok so to 'follow the money' so to speak:
People may have started to VT financed cars (guessing the lease/finance companies will start taking care of the logistics behind this).

The outright cash owners looking to free up capital can't really sell as main dealers/WBAC have shut up shop and private sales are not feasible in the lockdown environment.

What happens/where do the VT'd/PCP hand back cars go? To auction? And who dares to place a bid in a market that is about to have increased supply (granted new cars aren't in production)?

Main dealers aren't going to buy used stock unnecessarily as their business model is primarily based on new cars and part exchanges that come in are incidental to that. Only circumstance under which main dealers start showing more interest in the used cars/nearly new VT'd PCP hand backs is if new car production is at 0 and they need stock to sell (this is a way off until: lockdown measures are lifted, they have shifted their existing stock on hand, they have an idea of customer demand and values for used/nearly new based on stock on hand depletion rate).

Which leaves independent dealers who buy/sell stock - they still have stock on hand to move on so will not be buying any of the increased supply that is potentially going to arrive in the market.

It makes sense that all dealers have(need) to shift stock on hand.... but who's buying right now?

Caddyshack

2,199 posts

161 months

Thursday 2nd April
quotequote all
I have been looking on Facebook at supermoto bike sales adverts and quite a few say "only selling due to virus, need the money" so I think some of the cheap and easy to shift non essential toys will be sold off.


the-photographer

1,620 posts

131 months

Thursday 2nd April
quotequote all
gizlaroc said:
JulianHJ said:
Why did I say the main dealers are starting to realise things are going south fast?
Because someone I sell a few cars for called me 10 minutes ago to say one of the main dealers texted him yesterday to say that they are taking bids on all stock cars they have. Highest bid gets it, no reserve.

That to me tells me they are starting to get just how bad this could be.
Could you say which brands are doing this?

Sa Calobra

29,615 posts

166 months

Thursday 2nd April
quotequote all
the-photographer said:
gizlaroc said:
JulianHJ said:
Why did I say the main dealers are starting to realise things are going south fast?
Because someone I sell a few cars for called me 10 minutes ago to say one of the main dealers texted him yesterday to say that they are taking bids on all stock cars they have. Highest bid gets it, no reserve.

That to me tells me they are starting to get just how bad this could be.
Could you say which brands are doing this?
Plenty of big dealers are just treading water. No cash flow and they are in serious trouble.

growlerowl

267 posts

4 months

Thursday 2nd April
quotequote all
crosseyedlion said:
Correct. Its completely dillusional to think this is a pause on activities and that values will fall slightly.
Looking at industry websites, some are even saying used prices will *increase* due to lack of supply of new cars due to factory shutdown. I always suspected those scheming used car dealers were behind all of this!

ghost83

3,868 posts

145 months

Thursday 2nd April
quotequote all
My mate works at a big dealer (vw) he said the problem they’re going to have is all their used stock is pretty much bought off customers to get a car sold and there’s next to no money to be made anyway

Now added that this virus has shut them down in 3-4 months time they’re not selling any new cars (taking orders for September) and the used stock will have depreciated a further 4 months and with a recession no one will want to buy anyway so he reckons all the used stock is going to be an absolute nightmare to shift,

The next 3-4 month will be telling and then in autumn on the run to Christmas will be a selling frenzy I reckon as ppl need money to keep up their lifestyle and buying gifts etc etc,

A lot of ppl will have been paid in March so money will start to dry up come end of April and into may

Sa Calobra

29,615 posts

166 months

Thursday 2nd April
quotequote all
How can they go up when people will have maxed out credit or have no jobs or their employers are struggling?

It's not like coming out of a recession. We are decimating our economy and then entering a recession that'll follow covid.

Vroomer

Original Poster:

1,486 posts

135 months

Thursday 2nd April
quotequote all
GT72 said:
The reason prices are frozen at the moment and for the duration is that there's no market, they can't actually work out what the impact is.
Exactly right. Only when the market re-opens will we see the real impact on prices.

gizlaroc

14,927 posts

179 months

Thursday 2nd April
quotequote all
the-photographer said:
Could you say which brands are doing this?
No.

Sorry.

People on here no where I am from and will then work out who it is and then people will start to say "oooh, look that group is in trouble".

I think they are probably just playing it clever, many dealers are still saying this is a blip, a pause, so while they are thinking that, let's bid them out now and stand a chance of a fair return.