Will Coronavirus hit used car prices?
Discussion
Deep Thought said:
CRA1G said:
After listening to the CAP video conference and the analysis and data held it's very interesting that they have stated there will be no CAP valuation changes in the next three months mainly because no vehicles can be bought or sold so values become static,which makes sense to me imo....
Interesting, and a fair point.It's why for example, Properly Investment Funds have been suspended, as the only valuation you could give to most things is much lower than it was a month ago.
Edited by hyphen on Saturday 28th March 09:22
Deep Thought said:
....part of the reason for the big car price crash around 2009 was that a lot of people couldnt get finance. I dont think that will be the case in the new normal.
I think getting finance will be harder than we have ever seen before. Speaking to my account manager at Lombard he asked if I wanted a 6 month payment holiday on my 5 series as I was asking for a settlement figure. Said would it be better to keep the £10000 in the bank at the moment.
All interest frozen.
I said what about if I give you £3 or 4k and do the agreement as straight repayment over 60 months instead.
£100 a month, won't notice that and only ever owe what I can afford to pay off.
He said that currently they are not starting new agreements, rates of 3-4% apr that I have been getting will be long gone, and going forward it looks like all new agreements will be done seeing the last set of accounts and they are talking about needing confirmation from your bank that you can meet affordability.
He said they are already in talks with the credit check agencies about making it much tighter.
He said balloon payments will be much lower, deposits will need to be far higher, interest rates higher and with the price of new cars now they are expecting a big shift in the market going forward as most will not be eligible for finance or simply won't want to be paying £800 a month for a car they had been paying £400 for last time.
Now obviously, they are in the middle of all this and he said it could be panic mode at the moment, but they have been bombarded with people wanting/needing to do something currently which has shown them just how vulnerable they and the customer are.
This of course may mean we see price drops from the manufacturers as they need to shift metal.
I would if we will see smaller ranges, less discounting but more realistic retail pricing?
The current model of artificial RRP pricing with 20% discount helps no one.
It pushes many cars into the higher tax brackets, it pushes BIK tax far higher than it needs to be, and it makes the depreciation look far, far higher than it really is as it is calculated based on what the real price should be.
Who knows where we will be after this? But finance will not be as easy as it has been for many.
CRA1G said:
After listening to the CAP video conference and the analysis and data held it's very interesting that they have stated there will be no CAP valuation changes in the next three months mainly because no vehicles can be bought or sold so values become static,which makes sense to me imo....
It makes sense as presumably they have no data to base their valuations on.I guess all it means is that they will see a correction when prices start filtering through again.
rm163603 said:
CRA1G said:
After listening to the CAP video conference and the analysis and data held it's very interesting that they have stated there will be no CAP valuation changes in the next three months mainly because no vehicles can be bought or sold so values become static,which makes sense to me imo....
It makes sense as presumably they have no data to base their valuations on.I guess all it means is that they will see a correction when prices start filtering through again.
All this would lead to lower CAP pricing and then its a downwards spiral.
The CAP comment is interesting as I still can’t believe how many traders just buy and sell on CAP figures rather than look at the actual market.
Before the auctions shut Monday I watched a couple of online sales and nothing was selling as they were starting at CAP average, as pointed out already on this thread the market will be priced based on who needs to sell rather than who wants to. Besides this not many trade or private buyers will want to be basically underwriting a used car purchase by agreeing to buy now but collect whenever in case the market turns.
As normally returns it will be interesting to see who blinks first, buyers or sellers.
As a side, I am finding the Autotrader market data is becoming more relevant for sale prices as they are comparing more like for like but the trade prices they often show, if I could buy at them I would be a rich man.
Before the auctions shut Monday I watched a couple of online sales and nothing was selling as they were starting at CAP average, as pointed out already on this thread the market will be priced based on who needs to sell rather than who wants to. Besides this not many trade or private buyers will want to be basically underwriting a used car purchase by agreeing to buy now but collect whenever in case the market turns.
As normally returns it will be interesting to see who blinks first, buyers or sellers.
As a side, I am finding the Autotrader market data is becoming more relevant for sale prices as they are comparing more like for like but the trade prices they often show, if I could buy at them I would be a rich man.
Deep Thought said:
CRA1G said:
After listening to the CAP video conference and the analysis and data held it's very interesting that they have stated there will be no CAP valuation changes in the next three months mainly because no vehicles can be bought or sold so values become static,which makes sense to me imo....
Interesting, and a fair point.CAP is of course only a guide and the main issue with static book prices for the next three months traditionally going into Summer is we normally experience a summer lull and although whilst cars will obviously be ageing (particularly affecting sub 12 month old stock) the mileages will be static which will tend to support prices ££.
The other aspect to this is perhaps shown by the projected pent up demand expected for holidays when restrictions on travel are lifted and some semblance of normality to the world is restored following restrictions of lockdown. This will be huge.
A similar pent up demand COULD also be experienced for both new and used cars in time the only uncertainty will be time scales and whether lockdowns are extended.
Auto810graphy said:
The CAP comment is interesting as I still can’t believe how many traders just buy and sell on CAP figures rather than look at the actual market.
^^^ That's why many of my best buys have been from dealersI follow actual / ebay sales / Autotrader prices, CAP, as it says, is merely a National guide, there has always been Regional variation as well.
I've just found this thread. It's interesting skimming it from the start. Predictions have fairly quickly become more extreme - whatever your angle.
I've long wondered what will happen to the price of vintage/pre-war cars. These cars appeal to an almost entirely older generation. I occasionally go along to a monthly get together at a local pub. 99% of the owners are well into their retirement, have generally owned their cars for many years and don't really want to sell or buy another one. It's their weekend fun - they might own an old Merc SL and a Range Rover as well. Eventually an estate sale will find the cars a new owner. There's fairly little market churn on them. Very sadly those estate sales may now be happening sooner, given the demographics of the victims of this virus.
I think the prices of the super rare cars will hold up(ish). There are only so many GTOs, F1s, DB4GTs. Ordinary Ferraris, Aston, Lambos etc will fall in real terms. A few very special Porsches might survive, the majority will crash (which is a shame as my wife has a very ordinary Porsche). Many of those cars are in an investment bubble fuelled by loans. If you buy a car 20% down, then you'll not want to get into negative equity on them.
More ordinary classics, old Lotus, MGs, ordinary Fords, etc., in the £10k to 40k price range are more likely to be owned outright and people might have two or more. They'll be sold if the owner needs to raise cash. Many will.
This recession, like others, will mean a tightening of credit for most, and a shortage of cash. Both those lead to distress sales - at lower prices.
Of course, all this talk of falling prices is likely to just be relative. The amount of money that central banks around the world are printing and shoving into the economy will be a huge inflationary pressure on even the most carefully managed economy. We may well get to see across the board inflation rates not seen since the 70s.
But I have no idea really. I'm not a specialist. Please don't take my advice.
I've long wondered what will happen to the price of vintage/pre-war cars. These cars appeal to an almost entirely older generation. I occasionally go along to a monthly get together at a local pub. 99% of the owners are well into their retirement, have generally owned their cars for many years and don't really want to sell or buy another one. It's their weekend fun - they might own an old Merc SL and a Range Rover as well. Eventually an estate sale will find the cars a new owner. There's fairly little market churn on them. Very sadly those estate sales may now be happening sooner, given the demographics of the victims of this virus.
I think the prices of the super rare cars will hold up(ish). There are only so many GTOs, F1s, DB4GTs. Ordinary Ferraris, Aston, Lambos etc will fall in real terms. A few very special Porsches might survive, the majority will crash (which is a shame as my wife has a very ordinary Porsche). Many of those cars are in an investment bubble fuelled by loans. If you buy a car 20% down, then you'll not want to get into negative equity on them.
More ordinary classics, old Lotus, MGs, ordinary Fords, etc., in the £10k to 40k price range are more likely to be owned outright and people might have two or more. They'll be sold if the owner needs to raise cash. Many will.
This recession, like others, will mean a tightening of credit for most, and a shortage of cash. Both those lead to distress sales - at lower prices.
Of course, all this talk of falling prices is likely to just be relative. The amount of money that central banks around the world are printing and shoving into the economy will be a huge inflationary pressure on even the most carefully managed economy. We may well get to see across the board inflation rates not seen since the 70s.
But I have no idea really. I'm not a specialist. Please don't take my advice.
Vroomer said:
gizlaroc said:
Vroomer said:
Interesting statistic:
At around 10.00am today their were 531k cars listed on Autotrader.
At around 2.30pm today there were 532k cars listed on Autotrader.
So that's an increase of 1,000 cars in just over 4 hours at a time when people aren't meant't to be making inessential journeys.
What do you make of that?
I would guess that with dealerships closed and online sales only allowed we should see the numbers on autotrader grow like mad. At around 10.00am today their were 531k cars listed on Autotrader.
At around 2.30pm today there were 532k cars listed on Autotrader.
So that's an increase of 1,000 cars in just over 4 hours at a time when people aren't meant't to be making inessential journeys.
What do you make of that?
Many main dealers don't put all their stock on autotrader.
BMW often have dozens of a certain model on their AUC site that are not listed on Autotrader.
I bet now they are throwing money at the online side far more.
Going out to look at cars (or collect if bought online) is not one of the Government's reasons for leaving home.
V8RX7 said:
Auto810graphy said:
The CAP comment is interesting as I still can’t believe how many traders just buy and sell on CAP figures rather than look at the actual market.
^^^ That's why many of my best buys have been from dealersI follow actual / ebay sales / Autotrader prices, CAP, as it says, is merely a National guide, there has always been Regional variation as well.
Ferodocastrol said:
CAP book and brick mobile was the life I wanted back then at Measham BCA, I was envious of those with a 'bricky n cap' (Just coined that) but even then I may have a had a better idea than the CAP book from autotrader alone, much better eaiser now to get an idea of the mkt online and of course bid online.
BCA Measham,those were the days.... I can go back further "Glass's and pager" and Tom Hartley at every sale swanking about....Condi said:
This isn't 2008, people on the whole haven't run out of cash, they're just not spending it now.
This crisis will be far bigger economically than 2008.Just look at bailout figures, the numbers signing on, the sheer lockdown of the economy at every level.
Watch the number of businesses starting to file for administration in the coming weeks... starting with the airlines and travel industry.
As for new cars. Outside of this forum it will be far down the list of priorities for most, so dealers are in for a rough ride, and this will be reflected in prices when they start licking their wounds and trying to make numbers back up.
Deep Thought said:
CRA1G said:
After listening to the CAP video conference and the analysis and data held it's very interesting that they have stated there will be no CAP valuation changes in the next three months mainly because no vehicles can be bought or sold so values become static,which makes sense to me imo....
Interesting, and a fair point.gizlaroc said:
I think getting finance will be harder than we have ever seen before.
Speaking to my account manager at Lombard he asked if I wanted a 6 month payment holiday on my 5 series as I was asking for a settlement figure. Said would it be better to keep the £10000 in the bank at the moment.
All interest frozen.
I said what about if I give you £3 or 4k and do the agreement as straight repayment over 60 months instead.
£100 a month, won't notice that and only ever owe what I can afford to pay off.
He said that currently they are not starting new agreements, rates of 3-4% apr that I have been getting will be long gone, and going forward it looks like all new agreements will be done seeing the last set of accounts and they are talking about needing confirmation from your bank that you can meet affordability.
He said they are already in talks with the credit check agencies about making it much tighter.
He said balloon payments will be much lower, deposits will need to be far higher, interest rates higher and with the price of new cars now they are expecting a big shift in the market going forward as most will not be eligible for finance or simply won't want to be paying £800 a month for a car they had been paying £400 for last time.
Now obviously, they are in the middle of all this and he said it could be panic mode at the moment, but they have been bombarded with people wanting/needing to do something currently which has shown them just how vulnerable they and the customer are.
This of course may mean we see price drops from the manufacturers as they need to shift metal.
I would if we will see smaller ranges, less discounting but more realistic retail pricing?
The current model of artificial RRP pricing with 20% discount helps no one.
It pushes many cars into the higher tax brackets, it pushes BIK tax far higher than it needs to be, and it makes the depreciation look far, far higher than it really is as it is calculated based on what the real price should be.
Who knows where we will be after this? But finance will not be as easy as it has been for many.
I would say right now thats the case, and the current thinking - who'd want to give finance to somebody who might not have a job in 3 or 6 months time? But when we're out the other side of this and in to the "new normal", then i think we'll see relative normality for lending. After all, the bulk of new car lending is done by the manufacturers finance division, so they'll want to shift metal.Speaking to my account manager at Lombard he asked if I wanted a 6 month payment holiday on my 5 series as I was asking for a settlement figure. Said would it be better to keep the £10000 in the bank at the moment.
All interest frozen.
I said what about if I give you £3 or 4k and do the agreement as straight repayment over 60 months instead.
£100 a month, won't notice that and only ever owe what I can afford to pay off.
He said that currently they are not starting new agreements, rates of 3-4% apr that I have been getting will be long gone, and going forward it looks like all new agreements will be done seeing the last set of accounts and they are talking about needing confirmation from your bank that you can meet affordability.
He said they are already in talks with the credit check agencies about making it much tighter.
He said balloon payments will be much lower, deposits will need to be far higher, interest rates higher and with the price of new cars now they are expecting a big shift in the market going forward as most will not be eligible for finance or simply won't want to be paying £800 a month for a car they had been paying £400 for last time.
Now obviously, they are in the middle of all this and he said it could be panic mode at the moment, but they have been bombarded with people wanting/needing to do something currently which has shown them just how vulnerable they and the customer are.
This of course may mean we see price drops from the manufacturers as they need to shift metal.
I would if we will see smaller ranges, less discounting but more realistic retail pricing?
The current model of artificial RRP pricing with 20% discount helps no one.
It pushes many cars into the higher tax brackets, it pushes BIK tax far higher than it needs to be, and it makes the depreciation look far, far higher than it really is as it is calculated based on what the real price should be.
Who knows where we will be after this? But finance will not be as easy as it has been for many.
I really really would like to see the artificial RRPs done away with. 20+% discount has now become the normal for a lot of brands and its just got silly. No need for it. Dacia have proven that honest pricing and practically no discounts is easily accepted by UK buyers.
Deep Thought said:
I really really would like to see the artificial RRPs done away with. 20+% discount has now become the normal for a lot of brands and its just got silly. No need for it. Dacia have proven that honest pricing and practically no discounts is easily accepted by UK buyers.
Quite.Discounting is bad news for everyone imo and most intelligent buyers see through it.
Always took the view that a heavily discounted car was still too expensive as it is discounted for a reason and further hefty depreciation is inevitable. Net result is it that it is actually an expensive car in the long run and way more expensive in terms of depreciation than a non discounted car.
av185 said:
Deep Thought said:
I really really would like to see the artificial RRPs done away with. 20+% discount has now become the normal for a lot of brands and its just got silly. No need for it. Dacia have proven that honest pricing and practically no discounts is easily accepted by UK buyers.
Quite.Discounting is bad news for everyone imo and most intelligent buyers see through it.
Always took the view that a heavily discounted car was still too expensive as it is discounted for a reason and further hefty depreciation is inevitable. Net result is it that it is actually an expensive car in the long run and way more expensive in terms of depreciation than a non discounted car.
And with the £40k tax bracket now in place it’s even more daft.
Always annoyed me on company cars of the past to get tax calculated as a % of a list price nobody pays, especially on white goods fleet fodder that are heavily bulk discounted.
gizlaroc said:
Deep Thought said:
....part of the reason for the big car price crash around 2009 was that a lot of people couldnt get finance. I dont think that will be the case in the new normal.
I think getting finance will be harder than we have ever seen before. Speaking to my account manager at Lombard he asked if I wanted a 6 month payment holiday on my 5 series as I was asking for a settlement figure. Said would it be better to keep the £10000 in the bank at the moment.
All interest frozen.
I said what about if I give you £3 or 4k and do the agreement as straight repayment over 60 months instead.
£100 a month, won't notice that and only ever owe what I can afford to pay off.
He said that currently they are not starting new agreements, rates of 3-4% apr that I have been getting will be long gone, and going forward it looks like all new agreements will be done seeing the last set of accounts and they are talking about needing confirmation from your bank that you can meet affordability.
He said they are already in talks with the credit check agencies about making it much tighter.
He said balloon payments will be much lower, deposits will need to be far higher, interest rates higher and with the price of new cars now they are expecting a big shift in the market going forward as most will not be eligible for finance or simply won't want to be paying £800 a month for a car they had been paying £400 for last time.
Now obviously, they are in the middle of all this and he said it could be panic mode at the moment, but they have been bombarded with people wanting/needing to do something currently which has shown them just how vulnerable they and the customer are.
This of course may mean we see price drops from the manufacturers as they need to shift metal.
I would if we will see smaller ranges, less discounting but more realistic retail pricing?
The current model of artificial RRP pricing with 20% discount helps no one.
It pushes many cars into the higher tax brackets, it pushes BIK tax far higher than it needs to be, and it makes the depreciation look far, far higher than it really is as it is calculated based on what the real price should be.
Who knows where we will be after this? But finance will not be as easy as it has been for many.
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