Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

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Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
928 GTS said:
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.
Not all rental companies target tourists. Enterprise is the biggest replacement car provider to the insurance industry. If your car in a body shop over lockdown, especially for a non fault accident there’s a good chance you are you are in one of their cars.



jamoor

11,701 posts

169 months

Friday 22nd May
quotequote all
Auto810graphy said:
928 GTS said:
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.
Not all rental companies target tourists. Enterprise is the biggest replacement car provider to the insurance industry. If your car in a body shop over lockdown, especially for a non fault accident there’s a good chance you are you are in one of their cars.
I'm pretty sure vehicle claims are at an all time low.

Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
928 GTS said:
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.
Let’s name 20,50,100 rental companies on the U.K? (not forgetting lots of small ones are licensed by United Rentals etc).

kevinon

10 posts

14 months

Friday 22nd May
quotequote all


I was intrigued to learn that Pendragon's revenue is over £ 4 billion.
But investors have suffered for years. The share price has dropped from £116 before the Financial Crisis, to £41 in 2016, and now down to £7 a share.

You could buy Pendragon for £109 million today. Surely the stock alone would be worth many times that? Am I missing something?

Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
Earthdweller said:
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
Airports are a problem for rental firms at the moment as they pay a lot to even be there which is the bigger problem, as for the cars, they just relocate the fleet around the country and maybe defleet some older stuff. Don’t forget lots of their new fleet will be delayed.


Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
jamoor said:
I'm pretty sure vehicle claims are at an all time low.
New claims but what about the cars mid repair during lockdown. These people will often be in hire despite some insurance companies trying to get cars off hired.

928 GTS

60 posts

49 months

Friday 22nd May
quotequote all
Auto810graphy said:
Let’s name 20,50,100 rental companies on the U.K? (not forgetting lots of small ones are licensed by United Rentals etc).
Airlines, hotels etc. They all need rescue money to keep afloat. Banks can do only so much. Which is best asset to have, empty hotels, 16.000 cars or 1.000 airplanes?

Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
kevinon said:


I was intrigued to learn that Pendragon's revenue is over £ 4 billion.
But investors have suffered for years. The share price has dropped from £116 before the Financial Crisis, to £41 in 2016, and now down to £7 a share.

You could buy Pendragon for £109 million today. Surely the stock alone would be worth many times that? Am I missing something?
They were in merger talks with Lookers who are not looking great.

928 GTS

60 posts

49 months

Friday 22nd May
quotequote all
Auto810graphy said:
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.
Who is going to buy them? In what part of the world they do not have enough busses, cars, planes and diggers at the moment?

Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
928 GTS said:
Who is going to buy them? In what part of the world they do not have enough busses, cars, planes and diggers at the moment?
Sorry, are we talking rental companies or any business?

928 GTS

60 posts

49 months

Friday 22nd May
quotequote all
Auto810graphy said:
Sorry, are we talking rental companies or any business?
Every business. Rental companies do not live in bubble. Banks will have to make hard choices which assets they will try to save. I'm not betting on rental car companies being at top of any list. Market share is only thing in them worth saving. During time when no one is renting fleet is not needed for it.

Thankyou4calling

7,857 posts

127 months

Friday 22nd May
quotequote all
Auto810graphy said:
Airports are a problem for rental firms at the moment as they pay a lot to even be there which is the bigger problem, as for the cars, they just relocate the fleet around the country and maybe defleet some older stuff. Don’t forget lots of their new fleet will be delayed.
Yes there would under normal circumstances be 10,000 vehicles for rent at LHR.

The site rent to be there is massive.

Of course some cars can be moved to other sites but they aren’t as those sites are de fleeting too.

Drivers, cleaners, all the repairs And maintenance related to has gone as well.

This is the sharp end of the CV crisis.

Auto810graphy

488 posts

46 months

Friday 22nd May
quotequote all
928 GTS said:
Who is going to buy them? In what part of the world they do not have enough busses, cars, planes and diggers at the moment?
Most countries, especially developing ones, especially if the exchange rate is in their favour.

I doubt I could list the end destinations for vehicles we have sold in the last couple of years there have been so many.

BenjiA

171 posts

164 months

Friday 22nd May
quotequote all
kevinon said:


I was intrigued to learn that Pendragon's revenue is over £ 4 billion.
But investors have suffered for years. The share price has dropped from £116 before the Financial Crisis, to £41 in 2016, and now down to £7 a share.

You could buy Pendragon for £109 million today. Surely the stock alone would be worth many times that? Am I missing something?
Revenue doesn't work all that well as a measure in the motor trade as it's inflated by the price of the goods - you'll get ~£500 (or less) on a new car whether it's £5k or £50k - the money (used to be, when I was in the industry) in the kick backs.

We used to do 150 rental cars for no margin, which would up revenue massively, but the profit would come back in bonus for having registrations. The used stock will all be financed, by manufactuer schemes, the shareholders don't own it.
I suspect Pendragon has huge debt on it's balance sheet (mostly to the OEM's) and actually, the net assets are 168m as of the end of dec last year- under the value of "goodwill" in the business - so if you bought a Pendragon share now - all you get is the name - if you think the name is worth the same now as it was in Dec, (172m) and that the stock has not lost money whilst liabilities have gone down....it's a definate buy...

There's no cash declared on the balance sheet at the end of 2019....they must have used it to pay down debt to reduce the ratios...\ accountant mode off

928 GTS

60 posts

49 months

Friday 22nd May
quotequote all
Auto810graphy said:
Most countries, especially developing ones, especially if the exchange rate is in their favour.

I doubt I could list the end destinations for vehicles we have sold in the last couple of years there have been so many.
Last couple of years is not same as today or near future.

Blakewater

3,486 posts

111 months

Saturday 23rd May
quotequote all
Someone else shared this Financial Times article on the ask a salesman thread which indicates a bottled up demand for cars and people being interested in buying cars as soon as possible as lockdown restrictions are eased.

People are turning away from public transport and ride sharing apps as they fear they're unsafe and young people who've never had cars before are now considering buying them.

https://www.ft.com/content/488d5886-c6af-4e80-a479...

BananaSlug

15 posts

2 months

Saturday 23rd May
quotequote all
Throttlebody said:
Just ditch him. Sell yours privately, source a better and cheaper Q7, it will soon be a great buyers market - and then call in and let the dealer know what a great favour he did you.
Would they even remember you and if they did, would they really care?

Fusion777

7 posts

2 months

Saturday 23rd May
quotequote all
kevinon said:


I was intrigued to learn that Pendragon's revenue is over £ 4 billion.
But investors have suffered for years. The share price has dropped from £116 before the Financial Crisis, to £41 in 2016, and now down to £7 a share.

You could buy Pendragon for £109 million today. Surely the stock alone would be worth many times that? Am I missing something?
They've made a loss for the past two years. Revenue is vanity, profit is sanity, as the cliche goes wink

the-photographer

1,594 posts

130 months

Saturday 23rd May
quotequote all
928 GTS said:
Auto810graphy said:
Let’s name 20,50,100 rental companies on the U.K? (not forgetting lots of small ones are licensed by United Rentals etc).
Airlines, hotels etc. They all need rescue money to keep afloat. Banks can do only so much. Which is best asset to have, empty hotels, 16.000 cars or 1.000 airplanes?
Hotels = no
Cars = no
Airplanes (passenger) = no

Urban warehousing = yes
Light commercial = yes
Airplanes (cargo) = yes

the-photographer

1,594 posts

130 months

Saturday 23rd 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.
Factual reality at last!