Will Coronavirus hit used car prices?

[Sim75]

av185 said:

jsf said:

zedstar said:

I think IIRC after the last recession used cars did increase in value, once the economy was improving/stabilising cars that had dramatically reduced in value did go back up to some margin. Plus remember that a period of very low new car sales inevitably leads to a period where there are less used/nearly new examples.

Only after a massive decline over a sustained period, and that was basically a liquidity issue fixed by nationalising bad bank debt, the underlying economy was sound.

The gfc started in 2007 and went properly tits up sept 2008, i bought my current car jan 2009 at a massive discount as nothing was selling.

Pre CV19 it was worth more than i paid for it 10 years earlier. It took years for that to happen as asset prices went on a rip due to huge money supply pumping via QE.

We are looking at a very different world now. I simply can't see where the narative for price rises is coming from, it's absurd when we face such a big hit to gdp and likely a shift in behaviour and income for large parts of the economy.

Don't let the true projections stand in the way of a good story.

GDP retraction of 14% 2020.

Followed by a bounceback of 15% 2021.

BOE figures.

Dude ‘True projections’ is an oxymoron.

As anyone who’s ever written a business plan will tell you.

[Justin Case]

Deep Thought said:

Please re-read what i said. I'm not talking about all cars - there may be a small number of specific cars that could be worth more.

For example, if Porsche said that due to production stopping it was going to take them a year to make some specific models, nearly new and / or year old examples might rise in price.

I don't think they are talking about Porsches. I think it more likely that if Ford for some reason can't get the Fiesta back into production, people who would have bought a new one might settle for a nearly new one, and if sufficient numbers do then the prices may rise. But of course this is all hedged with ifs and buts.

[Deep Thought]

Justin Case said:

Deep Thought said:

Please re-read what i said. I'm not talking about all cars - there may be a small number of specific cars that could be worth more.

For example, if Porsche said that due to production stopping it was going to take them a year to make some specific models, nearly new and / or year old examples might rise in price.

I don't think they are talking about Porsches. I think it more likely that if Ford for some reason can't get the Fiesta back into production, people who would have bought a new one might settle for a nearly new one, and if sufficient numbers do then the prices may rise. But of course this is all hedged with ifs and buts.

Yes, probably a better real world example.

Or Golf TDIs or similar.

And yes, all ifs and buts, but there are potential scenarios for it.

[Deep Thought]

Sim75 said:

av185 said:

Deep Thought said:

Please re-read what i said. I'm not talking about all cars - there may be a small number of specific cars that could be worth more.

For example, if Porsche said that due to production stopping it was going to take them a year to make some specific models, nearly new and / or year old examples might rise in price.

Correct.

Oh come on, that’s such a tiny comparison in the grand scheme of things, It would have to be SUCH a desirable niche model.

Ok, well as Justin gave an example of, what if Ford couldnt get specific models of Fiestas restarted for six months, or maybe VW didnt restart say, Golf 1.6TDI production because the engine factory hadnt built up sufficient volume.

MINI suddenly stopped making JCWs for a year there for type approval reasons and nearly new examples went up in price.

Plenty of real world examples could happen, not just high end stuff.

[av185]

Sim75 said:

av185 said:

Deep Thought said:

Please re-read what i said. I'm not talking about all cars - there may be a small number of specific cars that could be worth more.

For example, if Porsche said that due to production stopping it was going to take them a year to make some specific models, nearly new and / or year old examples might rise in price.

Correct.

Oh come on, that’s such a tiny comparison in the grand scheme of things, It would have to be SUCH a desirable niche model.

Doesn't take much to support or increase the residual value of used cars at any level and I'm not just talking certain Porsches in DTs example.

There was a relative if fluctuating rise in the value of certain 2 to 3 year Vauxhall Astras over the last 6 months caused by restrictions of new car production coupled with fleet users increased demand for other brands resulting in a fall in used Astra supply which increased prices ££.

[Deep Thought]

av185 said:

Doesn't take much to support or increase the residual value of used cars at any level and I'm not just talking certain Porsches in DTs example.

There was a relative if fluctuating rise in the value of certain 2 to 3 year Vauxhall Astras over the last 6 months caused by restrictions of new car production coupled with fleet users increased demand for other brands resulting in a fall in used Astra supply which increased prices ££.

[av185]

Sim75 said:

av185 said:

jsf said:

zedstar said:

I think IIRC after the last recession used cars did increase in value, once the economy was improving/stabilising cars that had dramatically reduced in value did go back up to some margin. Plus remember that a period of very low new car sales inevitably leads to a period where there are less used/nearly new examples.

Only after a massive decline over a sustained period, and that was basically a liquidity issue fixed by nationalising bad bank debt, the underlying economy was sound.

The gfc started in 2007 and went properly tits up sept 2008, i bought my current car jan 2009 at a massive discount as nothing was selling.

Pre CV19 it was worth more than i paid for it 10 years earlier. It took years for that to happen as asset prices went on a rip due to huge money supply pumping via QE.

We are looking at a very different world now. I simply can't see where the narative for price rises is coming from, it's absurd when we face such a big hit to gdp and likely a shift in behaviour and income for large parts of the economy.

Don't let the true projections stand in the way of a good story.

GDP retraction of 14% 2020.

Followed by a bounceback of 15% 2021.

BOE figures.

Dude ‘True projections’ is an oxymoron.

As anyone who’s ever written a business plan will tell you.

Think I'll attach more weight to the BOE figures than yours, 'dude'.

No offence. :

[Sim75]

Deep Thought said:

MINI suddenly stopped making JCWs for a year there for type approval reasons and nearly new examples went up in price.

Mine didn't.

Let's be honest, that won't really happen on the mainstream stuff, people will just switch brands.
A3 for Golf money. No one will pay over the odds, especially in a world wheer everyone is going to be incredibly price conscious.

[Deep Thought]

Sim75 said:

Deep Thought said:

MINI suddenly stopped making JCWs for a year there for type approval reasons and nearly new examples went up in price.

Mine didn't.

There was a timeframe of around 6 months that because there were no new cars being made, dealer stock cars didnt need to be discounted much or at all, and nearly new cars - demos, 6 month old stuff - was making more than it previously would have.

The net effect was that because of less discounting, the price of the remaining new ones went up, and dealers were getting more for the nearly new / ex demo cars.

I was market watching closely at the time.

Sim75 said:

Let's be honest, that won't really happen on the mainstream stuff, people will just switch brands.
A3 for Golf money. No one will pay over the odds, especially in a world wheer everyone is going to be incredibly price conscious.

They might, they might not. Maybe they'll get a little less discount than they would have on hard to get cars, the net effect being prices go up slightly.

All i'm saying is, i wouldnt "assume" that all cars will be worth less at a blanket X% less and some cars may be worth more. Supply and demand will apply.

[tertius]

av185 said:

Sim75 said:

av185 said:

jsf said:

zedstar said:

I think IIRC after the last recession used cars did increase in value, once the economy was improving/stabilising cars that had dramatically reduced in value did go back up to some margin. Plus remember that a period of very low new car sales inevitably leads to a period where there are less used/nearly new examples.

Only after a massive decline over a sustained period, and that was basically a liquidity issue fixed by nationalising bad bank debt, the underlying economy was sound.

The gfc started in 2007 and went properly tits up sept 2008, i bought my current car jan 2009 at a massive discount as nothing was selling.

Pre CV19 it was worth more than i paid for it 10 years earlier. It took years for that to happen as asset prices went on a rip due to huge money supply pumping via QE.

We are looking at a very different world now. I simply can't see where the narative for price rises is coming from, it's absurd when we face such a big hit to gdp and likely a shift in behaviour and income for large parts of the economy.

Don't let the true projections stand in the way of a good story.

GDP retraction of 14% 2020.

Followed by a bounceback of 15% 2021.

BOE figures.

Dude ‘True projections’ is an oxymoron.

As anyone who’s ever written a business plan will tell you.

Think I'll attach more weight to the BOE figures than yours, 'dude'.

No offence. :

You do know that even if those figures prove correct that a “retraction” of 14% followed by a bounce back of 15% results in a finish position that is worse than where you started? So we are looking at a minimum of 2 years of lower GDP until we are back to where we were in say January.

Not really a wholly positive outlook.

[Deep Thought]

tertius said:

You do know that even if those figures prove correct that a “retraction” of 14% followed by a bounce back of 15% results in a finish position that is worse than where you started? So we are looking at a minimum of 2 years of lower GDP until we are back to where we were in say January.

Not really a wholly positive outlook.

Who said it was going to be positive?

Clearly its going to be stty for a while.

[Drl22]

tertius said:

av185 said:

Sim75 said:

av185 said:

jsf said:

zedstar said:

I think IIRC after the last recession used cars did increase in value, once the economy was improving/stabilising cars that had dramatically reduced in value did go back up to some margin. Plus remember that a period of very low new car sales inevitably leads to a period where there are less used/nearly new examples.

Only after a massive decline over a sustained period, and that was basically a liquidity issue fixed by nationalising bad bank debt, the underlying economy was sound.

The gfc started in 2007 and went properly tits up sept 2008, i bought my current car jan 2009 at a massive discount as nothing was selling.

Pre CV19 it was worth more than i paid for it 10 years earlier. It took years for that to happen as asset prices went on a rip due to huge money supply pumping via QE.

We are looking at a very different world now. I simply can't see where the narative for price rises is coming from, it's absurd when we face such a big hit to gdp and likely a shift in behaviour and income for large parts of the economy.

Don't let the true projections stand in the way of a good story.

GDP retraction of 14% 2020.

Followed by a bounceback of 15% 2021.

BOE figures.

Dude ‘True projections’ is an oxymoron.

As anyone who’s ever written a business plan will tell you.

Think I'll attach more weight to the BOE figures than yours, 'dude'.

No offence. :

You do know that even if those figures prove correct that a “retraction” of 14% followed by a bounce back of 15% results in a finish position that is worse than where you started? So we are looking at a minimum of 2 years of lower GDP until we are back to where we were in say January.

Not really a wholly positive outlook.

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

[Deep Thought]

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

+1

[JoeBloggs1]

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

It would be a remarkable result considering unemployment is set to increase and earnings will stagnate at best but personal debt is at an all time high.

[tinyboytim]

av185 said:

Think I'll attach more weight to the BOE figures than yours, 'dude'.

No offence. :

Is that the same BOE economists that were predicting a massive economic contraction on the decision to leave the EU?

[Shnozz]

JoeBloggs1 said:

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

It would be a remarkable result considering unemployment is set to increase and earnings will stagnate at best but personal debt is at an all time high.

Can anyone explain to me how a recovery of any sorts would even be possible with the backdrop of unemployment and earnings drop? To say it sounds improbable to me is the understatement of the year.

[maz8062]

JoeBloggs1 said:

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

It would be a remarkable result considering unemployment is set to increase and earnings will stagnate at best but personal debt is at an all time high.

The projections assume a "V" shaped recovery. I'm not so sure. With the prospect of a no-deal Brexit, or the threat of it, I can see businesses continue to follow a wait and see approach to investment, employment etc. I can also see the public deficit increasing and the prospect of rising inflation a real threat.

My guess is a "U" shaped recovery, so a 15% recovery in 2021 is pie in the sky stuff.

[Deep Thought]

Shnozz said:

JoeBloggs1 said:

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

It would be a remarkable result considering unemployment is set to increase and earnings will stagnate at best but personal debt is at an all time high.

Can anyone explain to me how a recovery of any sorts would even be possible with the backdrop of unemployment and earnings drop? To say it sounds improbable to me is the understatement of the year.

Simple.

Firstly, we've had high unemployment before. It was very low pre the lockdown, if it moves to say 10% thats not unheard of in even the recent past.

Secondly i think the unemployment peak will be quite short term.

Thirdly, the rest of the country who arent unemployed wont not spend because some people are unemployed.

So yes there will be "a" recovery.

[JoeBloggs1]

Deep Thought said:

Shnozz said:

JoeBloggs1 said:

Drl22 said:

If those projections turn out to be true I think that’s a pretty good result given this situation. That’s only a 1.1% contraction so would likely be back to where we were by 2022. I’d take that.

It would be a remarkable result considering unemployment is set to increase and earnings will stagnate at best but personal debt is at an all time high.

Can anyone explain to me how a recovery of any sorts would even be possible with the backdrop of unemployment and earnings drop? To say it sounds improbable to me is the understatement of the year.

Simple.

Firstly, we've had high unemployment before. It was very low pre the lockdown, if it moves to say 10% thats not unheard of in even the recent past.

Secondly i think the unemployment peak will be quite short term.

Thirdly, the rest of the country who arent unemployed wont not spend because some people are unemployed.

So yes there will be "a" recovery.

Very optimistic and I hope you are right.

[ChocolateFrog]

don29 said:

ChocolateFrog said:

Speaking to my parents neighbour yesterday and the subject moved to cars.

He has an A4 40TDI, which I'd assumed is a top spec model but apparently not with their new naming convention. Anyway he's paying around £600 a month and has only used it once or twice in April to go to Tesco, which you can see from his house.

He's seriously resenting it at the moment.

Wow! I used to pay that for my C63 back in the day (2014-16). I don’t feel quite so frivolous.

I think he was inflating it a bit or adding in the tax and insurance to the monthly figure, still painful for a run of the mill car that will be scrap in 10-15 years.