Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

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ValleyRed

74 posts

73 months

Friday 27th March 2020
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Seems a lot of folks on here are suffering from Car Owner Virus wink


....I'll get me 'at clap

So

21,029 posts

186 months

Friday 27th March 2020
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ValleyRed said:
Seems a lot of folks on here are suffering from Car Owner Virus wink


....I'll get me 'at clap
Hah, very good. Have a slow hand clap on me.biggrin

xcentric

594 posts

183 months

Friday 27th March 2020
quotequote all
ValleyRed said:
Seems a lot of folks on here are suffering from Car Owner Virus wink


....I'll get me 'at clap
oh very good.....




Matty3

764 posts

48 months

Friday 27th March 2020
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Who really cares? - bigger fish to fry at the moment.

Condi

11,560 posts

135 months

Saturday 28th March 2020
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321boost said:
Condi said:
There seems to be some perverse thrill on here about prices coming down, either from those who want to buy something fun at silly cheap money, or those who are taking pleasure from someone else's expensive car now being worth less.

Chances are that used car prices will not move that far. This isn't 2008, people on the whole haven't run out of cash, they're just not spending it now.
Or you’re just scared that your car will be worth less.
Me personally? Couldn't care less. It's done 165,000 miles in 10 years and owes nothing. Still on the original clutch, mind. biggrin

NelsonM3

1,477 posts

135 months

Saturday 28th March 2020
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In my mind there are three things to consider;

- New car supply has been short for some time due to WLTP etc. It only just began to return to normal Q1 this year. This means anything already built or nearly new will sell quick when things return to normal. It might require loosing a bit of extra margin to do though.

- All factories are now closed and will be for at least 4-5 weeks looking at the way things are panning out. As above, no supply means people look at what is already built or used cars.

- The cost of 95RON fuel has nosedived over the last month to under £1, diesel isn’t far behind. Anything considered interesting or iconic (naturally aspirated, “the last of” etc) that is near its lowest price point may suddenly become popular or even increase in demand as they did in 2008. Also, I think the sales of diesel will increase in the short term.

Obviously, all speculation as no one knows what will happen. But I think those wishing for a massive price crash will be dissapointed.

Deep Thought

28,742 posts

161 months

Saturday 28th March 2020
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NelsonM3 said:
In my mind there are three things to consider;

- New car supply has been short for some time due to WLTP etc. It only just began to return to normal Q1 this year. This means anything already built or nearly new will sell quick when things return to normal. It might require loosing a bit of extra margin to do though.

- All factories are now closed and will be for at least 4-5 weeks looking at the way things are panning out. As above, no supply means people look at what is already built or used cars.

- The cost of 95RON fuel has nosedived over the last month to under £1, diesel isn’t far behind. Anything considered interesting or iconic (naturally aspirated, “the last of” etc) that is near its lowest price point may suddenly become popular or even increase in demand as they did in 2008. Also, I think the sales of diesel will increase in the short term.

Obviously, all speculation as no one knows what will happen. But I think those wishing for a massive price crash will be dissapointed.
Agreed, though i think we will see a gradual return to (the new) normal, so it wont be an instant demand, with cars not available. I think manufacturers will be able to ramp up production in line with the gradual increase in demand.

I hope there wont be a massive price crash - personally i'd just like to see stability in prices - and 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.

V8fan

3,852 posts

232 months

Saturday 28th March 2020
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It's always nice to get cheaper fuel and it's something you notice every time you go to the pump (well I do anyway, many probably don't), but depreciation far outstrips it. Some owners justify a new frugal car by highlighting it's consumption.

At 1000 miles per month, a car will consume 100 litres at 10 miles / litre (45.4 mpg), and 200 litres at 5 miles per litre (22.7 mpg)

2 weeks ago (let's say £1.20 per litre), the costs would have been about £120 and £240.

Now the costs (£1 per litre, if the price stays down) are £100 and £200.

So the frugal car will save £20 per month, the gas guzzler £40. smilewobble


CRA1G

4,745 posts

159 months

Saturday 28th March 2020
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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....

Deep Thought

28,742 posts

161 months

Saturday 28th March 2020
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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.

hyphen

19,576 posts

54 months

Saturday 28th March 2020
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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.
As with any assets at this time, owners are hoping to maintain the price valuation.

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

gizlaroc

16,482 posts

188 months

Saturday 28th March 2020
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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.



rm163603

590 posts

212 months

Saturday 28th March 2020
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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.

Pommy

11,648 posts

180 months

Saturday 28th March 2020
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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.
Will be interesting given I (think) that CAP prices are based on auction prices and most dealers I would think would a) have a lot of current stock that simply got not sold due to the shutdown and b) are people going to go out and buy cars when this end given the lasting financial impact leading to a lower level of need for businesses to buy from auction.

All this would lead to lower CAP pricing and then its a downwards spiral.

Auto810graphy

731 posts

56 months

Saturday 28th March 2020
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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.

av185

13,242 posts

91 months

Saturday 28th March 2020
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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.
Yep, someone posted some time back that effectively a huge pause button had been pressed which aligns with this.

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.

V8RX7

21,503 posts

227 months

Saturday 28th March 2020
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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 dealers

I follow actual / ebay sales / Autotrader prices, CAP, as it says, is merely a National guide, there has always been Regional variation as well.

suffolk009

4,203 posts

129 months

Saturday 28th March 2020
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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.

Vroomer

Original Poster:

1,542 posts

144 months

Saturday 28th March 2020
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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.
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.
Up again to 534k cars today. Presumably indicates nothing selling and more cars be added in desperation.

Going out to look at cars (or collect if bought online) is not one of the Government's reasons for leaving home.
538k cars today on Autotrader – what is going on?

Ferodocastrol

4,579 posts

189 months

Saturday 28th March 2020
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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 dealers

I follow actual / ebay sales / Autotrader prices, CAP, as it says, is merely a National guide, there has always been Regional variation as well.
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.
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