Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

Author
Discussion

tinyboytim

45 posts

8 months

Friday 22nd May
quotequote all
Deep Thought said:
Ah right so you are just a Prophet of Doom who wont put a figure on where you think it will go to and when it will start to recover again.

Fair enough - at least we know now.

And no, i dont believe everything will be business as normal in a few months. Nobody does. But nor do most of us believe this is the Apocalypse from which noone can recover.

If you in your world do, then fine. Sorry its like that for you.
Sorry but I do not quite understand your preoccupation with the unemployment rate and when the recovery from the coming recession will occur. I would suggest post-furlough the unemployment rate will jump above 10% of the available workforce. The recession may go on for over 2 years - who knows?
But I do believe car prices are heading south as a whole. If that makes me 'apocalyptic' as opposed to rational in your eyes then fair enough.
Have you sold the Beemer yet?

tinyboytim

45 posts

8 months

Friday 22nd May
quotequote all
Butter Face said:
I was referencing the car market in general, not the rental market.

I went to Lanzarote there and a quick guess would place 25% of all the cars on the road there are rentals, They’re all parked up too, so you can just say that all rental markets worldwide are in a bit of st, that doesn’t mean that the actual car sales market has to be.
Is the car rental market not part of the car market in general then? (hint: the clue is in the word car).

Throttlebody

461 posts

7 months

Friday 22nd May
quotequote all
Deep Thought said:
Throttlebody said:
Not sure why you are quoting revenue. Pendragon in 2019 made huge and increasing losses on increased revenue. Reality DT.
I was quoting revenue to demonstrate how insignificant a £25 million write back of stock was.

I'm sure you're gleeful they're losing money. rolleyes
No, you just quoted turnover because you don’t understand the difference between revenue and the significance of company YOY profit/loss, particularly for Pendragon, carrying a significant 2019 loss. Realism, not your strength.

928 GTS

60 posts

48 months

Friday 22nd May
quotequote all
Butter Face said:
I was referencing the car market in general, not the rental market.

I went to Lanzarote there and a quick guess would place 25% of all the cars on the road there are rentals, They’re all parked up too, so you can just say that all rental markets worldwide are in a bit of st, that doesn’t mean that the actual car sales market has to be.
What happens to all rental cars which have no use as rentals since traveling is stopped now and likely going to be very small for few years? No travel, no rentals, sell cars just to stop money draining to ground as cars rust in some parking lot. What this does to newish car market? Normally those cars drip drip drip to market over full year. Who's going to buy them all if they are pushed into market all at once? Those people who have just lost their job or are next in line in fear of loosing theirs? Actual car sales market do not have to be in a bit of st. I just would like someone to explain how this can be the case knowing current situation everywhere, not just Lanzarote.

Butter Face

20,794 posts

113 months

Friday 22nd May
quotequote all
tinyboytim said:
Butter Face said:
I was referencing the car market in general, not the rental market.

I went to Lanzarote there and a quick guess would place 25% of all the cars on the road there are rentals, They’re all parked up too, so you can just say that all rental markets worldwide are in a bit of st, that doesn’t mean that the actual car sales market has to be.
Is the car rental market not part of the car market in general then? (hint: the clue is in the word car).
Well yes. But the combined number of pretty much all the big players (hertz, enterprise, national, Europcar and Avis) is about 200k cars.

As a reference. Motability alone has a fleet of 600k cars.

All the big rental companies aren’t going to go bust overnight and even if they did those cars will get parked up on old airfields and dribbled into the market as and when they sell to feed the creditors.

Butter Face

20,794 posts

113 months

Friday 22nd May
quotequote all
928 GTS said:
Butter Face said:
I was referencing the car market in general, not the rental market.

I went to Lanzarote there and a quick guess would place 25% of all the cars on the road there are rentals, They’re all parked up too, so you can just say that all rental markets worldwide are in a bit of st, that doesn’t mean that the actual car sales market has to be.
What happens to all rental cars which have no use as rentals since traveling is stopped now and likely going to be very small for few years? No travel, no rentals, sell cars just to stop money draining to ground as cars rust in some parking lot. What this does to newish car market? Normally those cars drip drip drip to market over full year. Who's going to buy them all if they are pushed into market all at once? Those people who have just lost their job or are next in line in fear of loosing theirs? Actual car sales market do not have to be in a bit of st. I just would like someone to explain how this can be the case knowing current situation everywhere, not just Lanzarote.
How can they be ‘pushed into the market’ if dealers don’t buy them? They can sit on airfields and compounds until they do get sold.

If hertz went bust, their car fleet of some 16,000 cars comprising of multiple brands and sizes and specs of vehicles would eventually find homes within dealers and be sold.

Earthdweller

4,871 posts

79 months

Friday 22nd May
quotequote all
I see that Shearing’s and National Holidays have just gone bust with 2500 job losses

That’s the UK’s two largest coach holiday operators gone and probably one heck of a lot of redundant buses

Do we think that will have an effect on second hand coaches prices or the market for new ones

Or do we think they will just be dripped into the market with a negligible effect on values ?

Edit:
google says shearing’s 140 coaches and 30 hotels

National holidays 240 coaches

Edited by Earthdweller on Friday 22 May 21:54

Butter Face

20,794 posts

113 months

Friday 22nd May
quotequote all
Earthdweller said:
I see that Shearing’s and National Holidays have just gone bust with 2500 job losses

That’s the UK’s two largest coach holiday operators gone and probably one heck of a lot of redundant buses

Do we think that will have an effect on second hand coaches prices or the market for new ones

Or do we think they will just be dripped into the market with a negligible effect on values ?
How big is the fleet?

How old is the fleet?

How many are end of life?

How many will actually be sold straight away into the market?

How many were due to be changed anyway?

Etc etc

Theorising that a large amount of vehicles will be dumped into a market and affect pricing is just a theory.

FWIWI, say hertz change their fleet once every 2 years, where do you think those 16,000 cars every 2 yeas go? Where in the life cycle of the change are all the cars they currently have? Would they have all/half/quarter of them been changed in the next 1/3/6 months anyway?

The theory that the market (circa 7.9 MILLION) used cars sold in the U.K. last year couldn’t swallow these cars is just strange.

Probably the same with coaches.

928 GTS

60 posts

48 months

Friday 22nd May
quotequote all
Butter Face said:
How can they be ‘pushed into the market’ if dealers don’t buy them? They can sit on airfields and compounds until they do get sold.

If hertz went bust, their car fleet of some 16,000 cars comprising of multiple brands and sizes and specs of vehicles would eventually find homes within dealers and be sold.
So there is somewhere some bank which is willing to keep on financing fleet of 16.000 cars on some disused airfield in this situation? How large percentage they hope to get back from value of this fleet? Is it certain having them drip drip is better business decision compared to just cutting their loses? How these banks choose do they support 16.000 car fleet or 1.000 airplane fleet parked at next runway? If this were just one Hertz or some other rental company going under drip drip would be sensible option and banks would have money to do such operation. Problem for them is that there can be 20, 50 or 100 Hertz's which all need same drip drip financing.

Earthdweller

4,871 posts

79 months

Friday 22nd May
quotequote all
Butter Face said:
How big is the fleet?

How old is the fleet?

How many are end of life?

How many will actually be sold straight away into the market?

How many were due to be changed anyway?

Etc etc

Theorising that a large amount of vehicles will be dumped into a market and affect pricing is just a theory.

FWIWI, say hertz change their fleet once every 2 years, where do you think those 16,000 cars every 2 yeas go? Where in the life cycle of the change are all the cars they currently have? Would they have all/half/quarter of them been changed in the next 1/3/6 months anyway?

The theory that the market (circa 7.9 MILLION) used cars sold in the U.K. last year couldn’t swallow these cars is just strange.

Probably the same with coaches.
You and both know that the rental fleets change over far more regularly than every two years . Probably most of your “nearly new” sales stock is ex rental

Those 16k cars over over two years are more realistically changes twice a year meaning 64k cars

Now it depends who owns them and the demand .. same for those 380 coaches, most of which seem to be high end and new

If they are now owned by a bank and liquidator are they going to drip them into a market that might not be there or just fire sale them ?

Neither you or I know that

It’s the same with Hertz. Their 16k fleet is probably 32k new sales for manufacturers per year and 32k used cars for you to retail

If they go pop and aren’t buying the new ones and depending on who has title to the ones on the fleet .. if they are leased from manufacturers maybe they could be retained/dripped into the market, but if they are owned by banks/creditors it could be messy surely ?

I genuinely don’t know how they are funded so I’m just guessing

Deep Thought

26,176 posts

150 months

Friday 22nd May
quotequote all
tinyboytim said:
Sorry but I do not quite understand your preoccupation with the unemployment rate and when the recovery from the coming recession will occur. I would suggest post-furlough the unemployment rate will jump above 10% of the available workforce. The recession may go on for over 2 years - who knows?
But I do believe car prices are heading south as a whole. If that makes me 'apocalyptic' as opposed to rational in your eyes then fair enough.
Have you sold the Beemer yet?
I'm in agreement with you. I think it will top out probably around 12% or so and then drop back over the subsequent two years to something more normal (bearing in mind pre-COVID it was abnormally low).

I think car prices will drop partially because there will be less buyers and partially "because COVID" and people will expect to pay less.

I think the car market will recover over time. Maybe we'll see an acceleration in the percentage of cars leased, but i do think new car deals will be better - at least in the short term.

Used cars - yeah probably a drop for 6-12 months, maybe some car types hit harder than others. Someone said earlier they were seeing stuff like Q5s etc in the £25k+ area being hit and i think that makes sense. Common or garden stuff? Probably relatively minor changes.

Stuff like M2s, M3s, M4s? Dont know. I'd like them to drop as its something like that i'd replace the 330i with. An M2 around £20K sounds like a good deal to me smile

Deep Thought

26,176 posts

150 months

Friday 22nd May
quotequote all
Butter Face said:
tinyboytim said:
Butter Face said:
I was referencing the car market in general, not the rental market.

I went to Lanzarote there and a quick guess would place 25% of all the cars on the road there are rentals, They’re all parked up too, so you can just say that all rental markets worldwide are in a bit of st, that doesn’t mean that the actual car sales market has to be.
Is the car rental market not part of the car market in general then? (hint: the clue is in the word car).
Well yes. But the combined number of pretty much all the big players (hertz, enterprise, national, Europcar and Avis) is about 200k cars.

As a reference. Motability alone has a fleet of 600k cars.

All the big rental companies aren’t going to go bust overnight and even if they did those cars will get parked up on old airfields and dribbled into the market as and when they sell to feed the creditors.
Yup, one or more the car rental companies here going pop would be a blip, but would have little effect on the used car market.

Thankyou4calling

7,857 posts

126 months

Friday 22nd May
quotequote all
I can give an insight as to how CV has hit the rental market.

The largest and busiest rental site of any brand in Europe is at Heathrow. On a normal day in May they would serve 350 rentals. That rises to 450 - 500 a day in July/August.

So that’s 450 a day going out, 450 a day coming in.

They are currently serving 20 rentals a day! The 2000 car fleet (all leased) has been reduced to 100.

100 of 120 staff furloughed all on 80% pay none getting a 20% top up 50% on minimum wage.

That site is on it’s knees. It’s totally reliant on LHR and operates 24/7.

The fleet won’t be increased to normal this year.

They are currently modelling there business on an anticipated 60 rentals a day in September.

That’s one site, one rental company.

1900 cars back to the distributor
100 staff gone.

Deep Thought

26,176 posts

150 months

Friday 22nd May
quotequote all
Earthdweller said:
You and both know that the rental fleets change over far more regularly than every two years . Probably most of your “nearly new” sales stock is ex rental

Those 16k cars over over two years are more realistically changes twice a year meaning 64k cars

Now it depends who owns them and the demand .. same for those 380 coaches, most of which seem to be high end and new

If they are now owned by a bank and liquidator are they going to drip them into a market that might not be there or just fire sale them ?

Neither you or I know that

It’s the same with Hertz. Their 16k fleet is probably 32k new sales for manufacturers per year and 32k used cars for you to retail

If they go pop and aren’t buying the new ones and depending on who has title to the ones on the fleet .. if they are leased from manufacturers maybe they could be retained/dripped into the market, but if they are owned by banks/creditors it could be messy surely ?

I genuinely don’t know how they are funded so I’m just guessing
Its never in a million years every six months. Its around a year and a bit, or when they hit a specific mileage. Its in noones interest to change them every six months.

If i were the bank / liquidator i'd be talking to the companies who were committed to buying them back and negotiating their disposal over their network over a period of several months. Theres ways and means. It'll never be 32,000 year old Golfs dropped in to your local BCA auction.

tinyboytim

45 posts

8 months

Friday 22nd May
quotequote all
Deep Thought said:
Ah right so you are just a Prophet of Doom who wont put a figure on where you think it will go to and when it will start to recover again.

Fair enough - at least we know now.

If you in your world do, then fine. Sorry its like that for you.
Best you do not read an article in today's Telegraph - you know that national newspaper:

Britain is sliding into a deflationary death spiral
Negative interest rates on Government debt are a harbinger of economic destruction on a vast scale.

It may upset your sensitivities to reality.

Deep Thought

26,176 posts

150 months

Friday 22nd May
quotequote all
tinyboytim said:
Best you do not read an article in today's Telegraph - you know that national newspaper:

Britain is sliding into a deflationary death spiral
Negative interest rates on Government debt are a harbinger of economic destruction on a vast scale.

It may upset your sensitivities to reality.
I'm not upset at all. Lets see how it pans out.

Sure if you get your way you can come back in a years time and go SEE i TOLD YOU SO!

Earthdweller

4,871 posts

79 months

Friday 22nd May
quotequote all
Thankyou4calling said:
I can give an insight as to how CV has hit the rental market.

The largest and busiest rental site of any brand in Europe is at Heathrow. On a normal day in May they would serve 350 rentals. That rises to 450 - 500 a day in July/August.

So that’s 450 a day going out, 450 a day coming in.

They are currently serving 20 rentals a day! The 2000 car fleet (all leased) has been reduced to 100.

100 of 120 staff furloughed all on 80% pay none getting a 20% top up 50% on minimum wage.

That site is on it’s knees. It’s totally reliant on LHR and operates 24/7.

The fleet won’t be increased to normal this year.

They are currently modelling there business on an anticipated 60 rentals a day in September.

That’s one site, one rental company.

1900 cars back to the distributor
100 staff gone.
So expanding that across all the rental companies at Heathrow that could easily be 10k cars ?

Then across all the other airports/companies .. that’s potentially a huge number of cars

jsf

16,607 posts

189 months

Friday 22nd May
quotequote all
Deep Thought said:
I'm not upset at all. Lets see how it pans out.

Sure if you get your way you can come back in a years time and go SEE i TOLD YOU SO!
get your way?

People are discusiing what they think the outcome is likely to be, i doubt any of us want to be living through this.

Justin Case

1,405 posts

87 months

Friday 22nd May
quotequote all
I have read/heard somewhere that redundancies are proportionately higher for younger employees, who are the ones least likely to own cars because of high insurance costs / using taxis, etc. I wouldn't like to see anyone prosper at the expense of someone else's redundancy, but could this mean a softer landing for the motor industry.

It is sad for Shearings 2500 employees, but people will still want to go on holiday when things get back to something like normal, probably more so, so hopefully more jobs in the tourist industry will be created to at least partially fill the vacuum.

/ glass half(ish) full

Auto810graphy

488 posts

45 months

Friday 22nd May
quotequote all
Earthdweller said:
I see that Shearing’s and National Holidays have just gone bust with 2500 job losses

That’s the UK’s two largest coach holiday operators gone and probably one heck of a lot of redundant buses

Do we think that will have an effect on second hand coaches prices or the market for new ones

Or do we think they will just be dripped into the market with a negligible effect on values ?

Edit:
google says shearing’s 140 coaches and 30 hotels

National holidays 240 coaches

Edited by Earthdweller on Friday 22 May 21:54
A couple of years ago a company called Palmer and Harvey went into administration. They had c.250 heavy commercials which were auctioned by the various finance companies and most went for export. I would expect the same for a large coach fleet as there are lots of countries who will convert the drive side or just keep them as they are.