Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

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Discussion

growlerowl

246 posts

4 months

Thursday 2nd April
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Sa Calobra said:
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.
Those of us that are employed and solvent will have to rebuild it. Time to spread the wealth.

gizlaroc

14,912 posts

179 months

Thursday 2nd April
quotequote all
Vroomer said:
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.
Of course.

It is a big gamble.

The gamble is dump now and lose maybe 10-20% or wait and not lose a penny, maybe make a gain or lose 50-60%?


You have to remember that most are on stocking plans, dealerships PCP where they are paying the estimated depreciation, which can be £100,000s a month for some dealerships.
Those payments could be more than dumping and taking a 20% hit now.

HTP99

16,553 posts

95 months

Thursday 2nd April
quotequote all
growlerowl said:
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!
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.

People buy because they have to, not because they want to, they don't want to spend on new so they buy a used car, demand goes up, as do prices.


Edited by HTP99 on Thursday 2nd April 10:35

Sa Calobra

29,615 posts

166 months

Thursday 2nd April
quotequote all
HTP99 said:
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.
A recession is going to follow this Summer.

the-photographer

1,620 posts

131 months

Thursday 2nd April
quotequote all
gizlaroc said:
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.
Sorry, I meant CAR brands, not the dealer names

JakeT

3,253 posts

75 months

Thursday 2nd April
quotequote all
growlerowl said:
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!
I knew my 14 year old 3 series was worth 10 grand!!!!! nuts

Joking aside, I think sub 5k stuff will be fine, as that stuff always shifts. Cash waiting mate and all that rubbish.

Anything expensive, toy like or requiring finance will be the iffy one. Sports bikes, 911s et al will be in trouble. Moreso the 'collector' stuff where people bought it as it was safer than money in the bank.

Vroomer

Original Poster:

1,486 posts

135 months

Thursday 2nd April
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CRA1G said:
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
Very surprised. I think some people will be wondering what they've done in a couple of weeks.

the-photographer

1,620 posts

131 months

Thursday 2nd April
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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.
Is the VWFS discussion in the PCP payment holiday thread or a separate one?
https://www.pistonheads.com/gassing/topic.asp?h=0&...

Deep Thought

26,718 posts

152 months

Thursday 2nd April
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Fezzaman said:
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?
Probably very few, if anyone, but several points relative to the rest of your post :-
  • People may be phoning up to do a VT however i'd say finance companies are doing their damnedest to give people other options - payment holidays, etc right down to delaying the process as long as they can by issuing paperwork that takes 7 days to be generated, etc. Not saying they ARE, but certainly thats what i'd be doing if i was them - looking at all options to stop VTs or at worst delay them.
  • Technically, they dont need to dispose of the assets right now - they can hold on to them for a few months, possibly in storage, or at auction sites, or whatever
  • They may well struggle to get the assets picked up anyway, given they normally go via BCA employees to auction.

Deep Thought

26,718 posts

152 months

Thursday 2nd April
quotequote all
HTP99 said:
growlerowl said:
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!
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.

People buy because they have to, not because they want to, they don't want to spend on new so they buy a used car, demand goes up, as do prices.


Edited by HTP99 on Thursday 2nd April 10:35
Worth notinh we havent even hit the recession yet, let alone thinking of "after". We might have some semblance of normal life in 3-6 months time but there will be a recession by that point, quite possibly a depression, that could easily last a year maybe longer.

So "after the recession" could be 2022.

Fezzaman

514 posts

148 months

Thursday 2nd April
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ghost83 said:
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
And there's the rub - how are the used cars bought off the main dealer? Cash rich buyers are not going to pay current market prices as they may need the savings buffer in case they fear losing their job (assuming if they have been made redundant they're not going to be buying at all). Similarly people who would buy the used cars on PCP/HP that may have/lost their jobs can't buy them as it's built on the assumption that they have a monthly income from which to make the payments. The irony being NHS staff are probably the only ones with the financial means to do either method, but are the ones potentially with the greatest risk of catching Covid whilst working on the frontlines.

Bit crap all round really.

Auto810graphy

571 posts

47 months

Thursday 2nd April
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Earthdweller said:
The first thing that will go is the fancy car .. and the last thing to come back

Anecdotally, I was having a chat with a friend last night, who has just been offered an M4 for what it owes the guy who has it .. he’s a small businessman and his entire cash flow has gone

It’s a fire sale to keep a roof over his head

I very much doubt he’s alone
To be fair as a finance broker we have been offered quite a few cars and vans in the last 10 days. Normally we would jump at the chance but we have nowhere to go with them and don’t want the risk of having them just in case the market does suffer badly.

So

18,332 posts

177 months

Thursday 2nd April
quotequote all
Auto810graphy said:
Earthdweller said:
The first thing that will go is the fancy car .. and the last thing to come back

Anecdotally, I was having a chat with a friend last night, who has just been offered an M4 for what it owes the guy who has it .. he’s a small businessman and his entire cash flow has gone

It’s a fire sale to keep a roof over his head

I very much doubt he’s alone
To be fair as a finance broker we have been offered quite a few cars and vans in the last 10 days. Normally we would jump at the chance but we have nowhere to go with them and don’t want the risk of having them just in case the market does suffer badly.
Assuming your response is typical, that suggests that prices will take a bath quite soon.

gizlaroc

14,912 posts

179 months

Thursday 2nd April
quotequote all
the-photographer said:
Sorry, I meant CAR brands, not the dealer names
Same thing.

One of the German groups.

Already mentioned they are facing huge financial exposure.

JulianHJ

8,278 posts

217 months

Thursday 2nd April
quotequote all
growlerowl said:
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!
This was also mentioned in the CAP HPI briefing.

Auto810graphy

571 posts

47 months

Thursday 2nd April
quotequote all
the-photographer said:
Could you say which brands are doing this?
Am intrigued which dealer group as hardly anybody is buying or selling within the trade and to take bids would be pointless.

growlerowl

246 posts

4 months

Thursday 2nd April
quotequote all
HTP99 said:
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.

People buy because they have to, not because they want to, they don't want to spend on new so they buy a used car, demand goes up, as do prices.


Edited by HTP99 on Thursday 2nd April 10:35
It wasn't clear to you that I was kidding?

Well for the sake of clarity: I was kidding when I suggested used car dealers were behind a conspiracy to unleash a global pandemic in order to shut down new car production and cause used car prices to rise.

So

18,332 posts

177 months

Thursday 2nd April
quotequote all
growlerowl said:
HTP99 said:
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.

People buy because they have to, not because they want to, they don't want to spend on new so they buy a used car, demand goes up, as do prices.


Edited by HTP99 on Thursday 2nd April 10:35
It wasn't clear to you that I was kidding?

Well for the sake of clarity: I was kidding when I suggested used car dealers were behind a conspiracy to unleash a global pandemic in order to shut down new car production and cause used car prices to rise.
If used cars were an index, I'd not be going long on it at the moment.

HTP99

16,553 posts

95 months

Thursday 2nd April
quotequote all
growlerowl said:
HTP99 said:
Nothing to do with "scheming used car dealers", prices of used car rose after the recession, its supply and demand.

People buy because they have to, not because they want to, they don't want to spend on new so they buy a used car, demand goes up, as do prices.


Edited by HTP99 on Thursday 2nd April 10:35
It wasn't clear to you that I was kidding?

Well for the sake of clarity: I was kidding when I suggested used car dealers were behind a conspiracy to unleash a global pandemic in order to shut down new car production and cause used car prices to rise.
I read it as scheming used car dealers keeping values high during/after the current issues.


Edited by HTP99 on Thursday 2nd April 11:24

gizlaroc

14,912 posts

179 months

Thursday 2nd April
quotequote all
Auto810graphy said:
Am intrigued which dealer group as hardly anybody is buying or selling within the trade and to take bids would be pointless.
Brand owned by VAG.

Well sealed bids.
So wouldn’t be surprised if they suddenly turn up again in a few months.

No reserve is BS surely?