Will Coronavirus hit used car prices?

Will Coronavirus hit used car prices?

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CRA1G

4,735 posts

159 months

Saturday 28th March 2020
quotequote all
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....

Sim75

501 posts

103 months

Saturday 28th March 2020
quotequote all
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.




Sim75

501 posts

103 months

Saturday 28th March 2020
quotequote all
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.
If every car was a private sale, i'd agree.

Deep Thought

28,684 posts

161 months

Saturday 28th March 2020
quotequote all
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.

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.



CRA1G

4,735 posts

159 months

Saturday 28th March 2020
quotequote all
Sim75 said:
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
I will listen to a more educated analysis than "licking their wounds" .....rofl

av185

13,187 posts

91 months

Saturday 28th March 2020
quotequote all
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.

gizlaroc

16,417 posts

188 months

Saturday 28th March 2020
quotequote all
Vroomer said:
538k cars today on Autotrader – what is going on?
More are being added but less are selling.

The private sales dropped below 100k the other day.

Now down to 32000.



GT3Manthey

753 posts

13 months

Saturday 28th March 2020
quotequote all
gizlaroc said:
More are being added but less are selling.

The private sales dropped below 100k the other day.

Now down to 32000.
The world is on standstill simples so either you can view so you cant buy or you think may as well sell as I cant use it.

THIS WILL CHANGE

Plate spinner

14,925 posts

164 months

Saturday 28th March 2020
quotequote all
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.
Totally agree.
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.

Smacko

218 posts

39 months

Saturday 28th March 2020
quotequote all
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.
Good luck to Lombard doing any business operating like this.

gizlaroc

16,417 posts

188 months

Saturday 28th March 2020
quotequote all
Smacko said:
Good luck to Lombard doing any business operating like this.
It sounded like it was something they were not keen on from the way he was talking. Like it was being pushed onto them from their lenders.

Time will tell.

But I agree.


To be honest, we all know that those in charge will want to show they are protecting Joe public when we come out of this, and we all know that within 6 months any stricter lending will be out of the window.




RB5_245

72 posts

177 months

Saturday 28th March 2020
quotequote all
gizlaroc said:
It sounded like it was something they were not keen on from the way he was talking. Like it was being pushed onto them from their lenders.

Time will tell.

But I agree.


To be honest, we all know that those in charge will want to show they are protecting Joe public when we come out of this, and we all know that within 6 months any stricter lending will be out of the window.
They're not going to have a choice in this. Balloon payments have to reduce as the used car market volatility increases. They're on the hook for the guaranteed future value, if they mess up that metric they'll be buying back customer cars at above market value.

Deposit and APR are just a factor of risk appetite. Low deposits mean more negative equity in the vehicles that they'll have to swallow with defaults and repossessions. That can only really get back on track once some semblance of stability returns.

Vroomer

Original Poster:

1,542 posts

144 months

Saturday 28th March 2020
quotequote all
gizlaroc said:
More are being added but less are selling.

The private sales dropped below 100k the other day.

Now down to 32000.
Yup, private 32K. So why do dealers think it is worth putting up cars that nobody is allowed to travel to see and most showrooms are shut down anyway?

R.Sole

11,985 posts

170 months

Saturday 28th March 2020
quotequote all
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.
The heavy discounting usually comes with conditions to lure people into PCP finance!

So

20,970 posts

186 months

Saturday 28th March 2020
quotequote all
Smacko said:
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.
Good luck to Lombard doing any business operating like this.
We had an asset finance agreement with Lombard due to be issued two weeks ago. They had quoted, we had accepted and they just wouldn't or couldn't issue the documents. In the end we called it off.

hungry_hog

1,312 posts

152 months

Saturday 28th March 2020
quotequote all
Vroomer said:
Yup, private 32K. So why do dealers think it is worth putting up cars that nobody is allowed to travel to see and most showrooms are shut down anyway?
beauty parade

want to show their stock, especially if a desirable car

100

410 posts

40 months

Saturday 28th March 2020
quotequote all
used prices will fall

MG CHRIS

7,720 posts

131 months

Saturday 28th March 2020
quotequote all
Well my mk1 mx5 vr ltd jap import will be up for sale when we back from a lock down was actually planning on selling in april to raise funds for a mortgage later on in the year this couldn't have come at a worse time. Will just have to see what happens when its all over.

CRA1G

4,735 posts

159 months

Saturday 28th March 2020
quotequote all
100 said:
used prices will fall
Oh..Ok that's that then...rofl

Jibaro

202 posts

145 months

Saturday 28th March 2020
quotequote all
Vroomer said:
gizlaroc said:
More are being added but less are selling.

The private sales dropped below 100k the other day.

Now down to 32000.
Yup, private 32K. So why do dealers think it is worth putting up cars that nobody is allowed to travel to see and most showrooms are shut down anyway?
AT are offering traders payment holidays and stock listing offers as incentive to carry on advertising
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