Will Coronavirus hit used car prices?

[Deep Thought]

Bigus said:

1700 UK Job losses announced at Airbus today which would probably put the brakes on the remaining 14000 employees rushing out to buy new or even replacement used motors, nothing to see here no doubt,and no implications for the car market .

Conversely, how many of those 14,000 were about to rush out to buy new or a replacement car anyway?

If they're still working and are due / need a change for whatever reason, are they not likely to change anyway, given they likely need their car for work and family duties?

[paddy1970]

Condi said:

Suspect he would have probably taken 62 in the first place?




So... after 200 pages of salivating and wking over cheaper cars, plus some schadenfreude from some members, have we actually worked out whether car prices are going up, going down, or not doing anything at all?

Ok, I have looked at last week selling price for the following cars (0-60<=5s, mileage<100k, more than 10 new listings or modified listings in the last week on autotrader) and compared it to the selling price from 17th May when the lockdown started to ease.

[Earthdweller]

paddy1970 said:

Ok, I have looked at last week selling price for the following cars (0-60<=5s, mileage<100k, more than 10 new listings or modified listings in the last week on autotrader) and compared it to the selling price from 17th May when the lockdown started to ease.

Best will in the world, but all those cars are niche and not big sellers

The number of people looking for <5s 0-62 expensive cars is tiny as is the supply relatively speaking

I wouldn’t take a list of high value RS/AMG/M cars as representing the U.K. car market

[nickrex]

Earthdweller said:

Yet, Mexman’s business is so bouyant he’s putting up the price of all his used cars by hundreds of pounds

It’s a strange world where 10’s thousands of people losing their jobs boosts the used car trade

It is odd, I agree. I can't blame dealers for trying to make hay at the moment though, I'd probably do the same because the storm clouds on the horizon will be hitting the industry very hard at some point, imo.

From my personal point of view, my c£50k weekend car budget remains in my account. Prices seem to be generally firm and in some cases higher! I honestly believe the government funded BBLs etc are fueling a binge on expensive toys at the moment and I'm not willing to put my very hard earned into what I see as a market bubble which will shortly burst.

[moonigan]

Prices for FK2 Type-R's have increased on pre-lockdown asking prices with some 2016 low mileage cars now being offered at the same price low mileage 2017 car were 4 months ago. Looks like I'll be shedding until the end of the year.

[V8RX7]

Earthdweller said:

And who’ll be buying these expensive cars in an area where thousands have just lost their jobs and those still with jobs are looking over their shoulders ?

Assuming most will be financed/leased they are more likely to be repo’d or if the contracts allow handed back .. lots of people are going to feel the pain

People who were going to buy a new car but can't as there is limited availability or people who have come into an inheritance

My point being that there are always buyers at different stages of their life looking for cars

[93DW]

paddy1970 said:

I really hope by the time i've got to 50 i've got a good hobby

[anonymous-user]

Currently there are 9.3 Million people on furlough and 2.6 million people on the Self-Employment Income Support Scheme (SEISS). Lets just think about those figures for a second, just under 12 million people being paid by the government to stay at home.

Now the papers are painting a picture of these people having a jolly old time drinking in the garden, going to the beach, saving loads of money on commuting and just waiting to be called back to work to their job that definitely will still exist. The reality is that a large percentage of these people will have taken a large drop in salary and I am sure a large percentage are very worried about having a job to go back to.

I just find it hard to believe that all of these 12 million people are thinking "I know, with no idea of when/if we are going back to work now would be an excellent time to buy a new car". Plus is it even possible to get finance when you are furloughed, or this being Pistonheads does everybody have a six figure slush fund sitting in a bank account somewhere?

Plus now we are getting several reports a day of companies getting rid of thousands of staff with a five minute Zoom call. If you are currently on furlough you have to be wondering if you are next.

12 million people unsure they have a job = increased car sales just doesn't compute to me, at least not long term.

[Throttlebody]

nickrex said:

Earthdweller said:

Yet, Mexman’s business is so bouyant he’s putting up the price of all his used cars by hundreds of pounds

It’s a strange world where 10’s thousands of people losing their jobs boosts the used car trade

It is odd, I agree. I can't blame dealers for trying to make hay at the moment though, I'd probably do the same because the storm clouds on the horizon will be hitting the industry very hard at some point, imo.

From my personal point of view, my c£50k weekend car budget remains in my account. Prices seem to be generally firm and in some cases higher! I honestly believe the government funded BBLs etc are fueling a binge on expensive toys at the moment and I'm not willing to put my very hard earned into what I see as a market bubble which will shortly burst.

I’m also taking my time with a £1K budget for a specific shed. Reckon there will be plenty of bargains with some distressed selling once the deep recession really bites.

[Bemmer]

Earthdweller said:

Yet, Mexman’'business is so bouyant he’s putting up the price of all his used cars by hundreds of pounds

It’s a strange world where 10’s thousands of people losing their jobs boosts the used car trade

But it's not just Mexmans business is it? The used car industry across the board are ALL experiencing a up turn in demand. Autotrader increasing used
stock values, Auctions quoting high residuals way above CAP Clean because of a shortage of stock, so therefore dealers are putting up the price of some stock. I don't find it strange? It's a fact....

[93DW]

Throttlebody said:

I’m also taking my time with a £1K budget for a specific shed. Reckon there will be plenty of bargains with some distressed selling once the deep recession really bites.

From my experience in the industry that end of the market has never EVER struggled. If a recession does bite hard, how many people do you think will be selling their 6/7k Golf for a £1000 - £1500 car to free up some cash?

[Sevenon]

HTP99 said:

Yep, had a young lady buy a £6k car from me yesterday. Sunday morning she made the appointment for Monday evening, Sunday afternoon I had an Internet enquiry on the same car, rang her, she just said she wanted it based on the photos, propped her on finance late in the day.

Monday morning she was declined with zero chance of pushing it through, in the meantime had another internet enquiry on the car that had come through late Sunday, rang it told her that there was an appointment that evening but if she wanted to come in before it she could, she felt morally that she shouldn't as there was another appointment on it.

The girl who bought it said she had only been looking a couple of days and every car they had come up had been sold within hours of being advertised.

I can 100% believe this. Cars sub £10k are definitely getting snapped up quickly. I've been looking for a £4-6k Honda Jazz for my grandad and each time I rung up, they have been sold. This is within days of them being advertised. If I drag my feet for a few days, then I ring back, they are also sold. Cars are definitely being sold in this price point and I also believe for strong money. Some car prices have crept up too since lockdown began.

I would imagine used cars above £15k will be a lot harder to shift. They are kinda in no mans land. Not cheap enough for cash or credit card, and not new or expensive enough for PCP type deals.

[Deep Thought]

V8RX7 said:

Earthdweller said:

And who’ll be buying these expensive cars in an area where thousands have just lost their jobs and those still with jobs are looking over their shoulders ?

Assuming most will be financed/leased they are more likely to be repo’d or if the contracts allow handed back .. lots of people are going to feel the pain

People who were going to buy a new car but can't as there is limited availability or people who have come into an inheritance

My point being that there are always buyers at different stages of their life looking for cars

+1

There may be a change of emphasis in terms of buying of used cars. I think there will be some winners in that and some losers. I think losers will be stuff like Q5s and their ilk - expensive and not much value add for most people in reality.

[growlerowl]

Joey Deacon said:

Currently there are 9.3 Million people on furlough and 2.6 million people on the Self-Employment Income Support Scheme (SEISS). Lets just think about those figures for a second, just under 12 million people being paid by the government to stay at home.

Now the papers are painting a picture of these people having a jolly old time drinking in the garden, going to the beach, saving loads of money on commuting and just waiting to be called back to work to their job that definitely will still exist. The reality is that a large percentage of these people will have taken a large drop in salary and I am sure a large percentage are very worried about having a job to go back to.

I just find it hard to believe that all of these 12 million people are thinking "I know, with no idea of when/if we are going back to work now would be an excellent time to buy a new car". Plus is it even possible to get finance when you are furloughed, or this being Pistonheads does everybody have a six figure slush fund sitting in a bank account somewhere?

Plus now we are getting several reports a day of companies getting rid of thousands of staff with a five minute Zoom call. If you are currently on furlough you have to be wondering if you are next.

12 million people unsure they have a job = increased car sales just doesn't compute to me, at least not long term.

So hard to know as the government seem comfortable with turning on the taps but surely there's a point where diminishing returns and/or hyperinflation kicks in. I can see us needing to have government employment schemes sooner or later, and to me that type of situation does not seem compatible with current levels of car ownership. I can't see how we can avoid forced belt tightening on a mass scale. I mentioned keeping the lights on and people fed as being the priority at a certain point and was mocked but these unemployment figures are pretty historic in magnitude. I'll bet these types of scenarios are being examined in the treasury and big business etc.
But where that causes used car prices to go is anyone's guess. So many variables to consider and unknowns in terms of there being actors that will change their behaviour as the picture unfolds. I mean manufacturers will no doubt get special bailouts and may drop their prices etc. And used dealers will obviously have their own strategies in response. As will punters. And money printing could inflate the ticket price whilst the true value is diminished. In the end it seems like a classic unmodellable social science problem to me. But in broad economic terms I think we are f******, sadly.

[Deep Thought]

93DW said:

Throttlebody said:

I’m also taking my time with a £1K budget for a specific shed. Reckon there will be plenty of bargains with some distressed selling once the deep recession really bites.

From my experience in the industry that end of the market has never EVER struggled. If a recession does bite hard, how many people do you think will be selling their 6/7k Golf for a £1000 - £1500 car to free up some cash?

+1

I think its totally reading the market wrongly to think we're going to see a price crash at the circa £1K market. Its what performs even stronger in a recession. Granted theres always the odd bargain that can be (and usually is) snapped up quickly, but wholly wrong to think that area of the market will be swimming in bargains and a leisurely approach can be taken.

[Scootersp]

So what we might be seeing a is combination of all view points expressed.

We have a degree of pent up demand (arguable more than at anytime previously in history)
Many people are and/or feel secure in their jobs and were always planning to buy in March-May.
An element of some secure (and perhaps some not so secure) buyers treating themselves as a pandemic brings out a degree of lolo?

Buying activity increases as some look to downsize (perhaps new car sales are suffering a slow down (is the level of trade consistent with the amount beign caught up form a normal 3 month with no sales (I suspect that's unlikely?)
Credit might start to squeeze and slow the amount of potential buyers
The current surge of buyers may wane as they have their new ones in this rosey period but less may be waiting in the wings as the months go by?

Dealers have to adapt to market conditions if the demand is high and stocks low then they are forced to high price and buyers forced to pay, they can't wait on maybe's or sentiment they have to do with the here and now and move cars all the time....they can't control demand really, they have to adapt to perhaps attract/entice buyers later if it drops and the fear/economic indicators all point to it being worse and that it will. So an element of making hay while the sunshines and then rolling with the punches if/when the negative side comes?

[Deep Thought]

Bemmer said:

Earthdweller said:

Yet, Mexman’'business is so bouyant he’s putting up the price of all his used cars by hundreds of pounds

It’s a strange world where 10’s thousands of people losing their jobs boosts the used car trade

But it's not just Mexmans business is it? The used car industry across the board are ALL experiencing a up turn in demand. Autotrader increasing used
stock values, Auctions quoting high residuals way above CAP Clean because of a shortage of stock, so therefore dealers are putting up the price of some stock. I don't find it strange? It's a fact....

Agreed. It IS happening. Its an odd (and broadly unpredicted) phenomenon but it IS happening.

Theres a definite firming up of prices and a shortage of good used stock.

Looping back to the thread title, currently we're not seeing a drop in prices. It might happen in the future, but for someone looking for a bargain, now is n ot the right time to buy.

Edited by Deep Thought on Wednesday 1st July 11:32

[cedrichn]

And what could be the impact of the MOT reintroduction from August 1st....?

https://www.bbc.co.uk/news/business-53221512

[Scootersp]

Joey Deacon said:

Currently there are 9.3 Million people on furlough and 2.6 million people on the Self-Employment Income Support Scheme (SEISS). Lets just think about those figures for a second, just under 12 million people being paid by the government to stay at home.


12 million people unsure they have a job = increased car sales just doesn't compute to me, at least not long term.

The thing with these schemes is that once 'out there' and known about then people actively try and (legitimately) join the bandwagon. It hits the finance and top management staff radar immediately as it's effectively free money and whilst we'll all pay for it in the end, that in some ways means why people are especially keen to claim something!


So arguable a business can't run at 100% employee efficiency. You've got some slack built in and if things have slumped a tad you might have too much......but redundancies in normal times are costly too so perhaps you wait for a return in business levels when you again utilise everyone as again recruitment isn't cheap either and staff you get might be worse etc etc. Along comes furlough and almost everyone's business has suffered and at the very least any current employee surplus can be claimed for (that the company would normal self fund/cover) it's normally these staff and more being furloughed due to the significant turnover drop but I just wanted to point out that the furlough number shouldn't overly surprise us and that it's very hard to know the % of jobs that are safe/unsafe.

[Throttlebody]

93DW said:

Throttlebody said:

I’m also taking my time with a £1K budget for a specific shed. Reckon there will be plenty of bargains with some distressed selling once the deep recession really bites.

From my experience in the industry that end of the market has never EVER struggled. If a recession does bite hard, how many people do you think will be selling their 6/7k Golf for a £1000 - £1500 car to free up some cash?

Don’t worry, I’m not expecting to get a £7k car for £1k. Realism is my bag.