Will Coronavirus hit used car prices? (Vol 2)
Discussion
Teebs said:
I've had a look on Cazoo and some of the prices they're asking are bananas. Fair play if people will pay that but it looks like a complete disaster waiting to happen.
The disaster is under £200 profit per unit as an average and god awful prep coming back and biting them in the arse. I saw a post on Facebook and someone had sold them their car, and it was up for sale with only a £300 mark up!av185 said:
Meanwhile stock markets are up again as UK economic growth gathered pace in October underpinned by the services sector despite the manufacturing sector being hit by supply chain issues.
BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
I'm no financial expert but I'm pretty sure that what stock markets are doing isn't much of a guide to what is happening in the real economy, nevermind what is going to happen in one narrow sector (car retail). BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
Fast Bug said:
The disaster is under £200 profit per unit as an average and god awful prep coming back and biting them in the arse. I saw a post on Facebook and someone had sold them their car, and it was up for sale with only a £300 mark up!
£300 wouldn't cover the admin of buying, prepping, advertising and selling the car. I know they're loss-making at the moment but when do the expect to turn a profit?Teebs said:
£300 wouldn't cover the admin of buying, prepping, advertising and selling the car. I know they're loss-making at the moment but when do the expect to turn a profit?
When they control the entire second hand car market and have managed to put every other car dealer out of business.So never, but do companies even need to make a profit anymore look at Uber or Tesla.
ThePrincipal said:
I bought a 2018 Jaguar XF Sportbrake in April 2021 with 12k miles for £18700, sold it earlier this week to Mr Clark for £23,250 with 20k miles. I’ve just checked the valuation today and it’s gone up again to £25,800!
The dealer has now listed the car for £27,498, £4,000 mark up. I’m surprised they were willing to pay £25,800 a week after I sold it as it wouldn’t leave much meat on the bone. Teebs said:
£300 wouldn't cover the admin of buying, prepping, advertising and selling the car. I know they're loss-making at the moment but when do the expect to turn a profit?
Does seem ridiculous but maybe they are making a big amount on the finance part, I have NO idea really about these things but don't you easily end up paying a fair whack of interest as they are usually way higher than a loan rate? Im sure I read some things where people said never mention you are paying cash (i.e outfight payment) until you agree the price of the car)- or buy it on finance and pay it off the next day etc.Implus1 said:
Interesting data point from using web archive to track total supply on Autotrader the first of every month (or closest available to that date) up to June 2019 (earliest available). Would have been nice to get a full year of 2019 and even 2018 to get a picture of what a normal year looks like though.
To help support the idea that the market is stalling, below is a 7 day rolling average (to account for stock on AT being higher on Fridays then coming off after the weekend) which shows that the supply has been steadily increasing since the low at the end of September.
Implus1 said:
Implus1 said:
Interesting data point from using web archive to track total supply on Autotrader the first of every month (or closest available to that date) up to June 2019 (earliest available). Would have been nice to get a full year of 2019 and even 2018 to get a picture of what a normal year looks like though.
To help support the idea that the market is stalling, below is a 7 day rolling average (to account for stock on AT being higher on Fridays then coming off after the weekend) which shows that the supply has been steadily increasing since the low at the end of September.Earthdweller said:
Chicken Chaser said:
Market is still rising though, something I looked at a month ago which the dealer said was price firm is still up for sale. He reckoned it would fly out because of its condition. It was classed as a higher price on AT but its now a good price despite being the same price.
That doesn’t make sense It didn’t sell, it hasn’t sold and is still for sale which says the market has no appetite to pay what is being asked for it surely ?
Why didn’t you buy it a month ago, because you thought it was too expensive perhaps ?
av185 said:
Meanwhile stock markets are up again as UK economic growth gathered pace in October underpinned by the services sector despite the manufacturing sector being hit by supply chain issues.
BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
I don’t think you can link global stock markets, nor growth back towards a level still below pre pandemic much of which can be attributed to things reopening to consumer confidence. Let’s not forget that before every major crash they have been at record highs, 1929/2008 for instance BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
Sales of big ticket items like furniture/electronics fell off a cliff last month and consumer confidence is down -18 points
People in the street are very different from brokers in Wall St and ultimately if they stop buying that’s a problem and right now their confidence is lower than at any time in the last five years and falling fast
That is a problem for anyone in retail, particularly of expensive goods, if they’d rather keep their money in their pocket than spend it
Watch the people not the stocks
Auto810graphy said:
Cazoo will be all about the turnover figure as they need high turnover for funding. I heard they were buying and then advertising/selling mid range £30k stuff at a loss prior to their flotation on the New York stock exchange just to boost the value of the business.
I suspect you are right about them hunting turnover for a float.They picked my car up 2 weeks ago and i'm still looking for it to re-appear to see out of interest how much it gets listed for. Not on their site and not on AT with anyone else yet. Have to say their service and price paid was excellent.
I think the level of supply in the market (such as number of cars for sale on AutoTrader) is a better indicator of where prices are going, because it can take a while for prices to adjust to meet the new market conditions.
The dealers aren't THAT sophisticated, they need stock so they buy.
What brings down prices is cars going up for sale and no one buying, forcing the seller to reduce the price until it sells, other sellers see this new cheaper price and reduce their prices too. This process can take weeks/months to determine the new prices, I suspect it will be much slower for prices to go down as sellers are more stubborn as they don't want to lose money, but are happy to increase the price at the possibility of making more.
The dealers aren't THAT sophisticated, they need stock so they buy.
What brings down prices is cars going up for sale and no one buying, forcing the seller to reduce the price until it sells, other sellers see this new cheaper price and reduce their prices too. This process can take weeks/months to determine the new prices, I suspect it will be much slower for prices to go down as sellers are more stubborn as they don't want to lose money, but are happy to increase the price at the possibility of making more.
mrdanbartlett said:
Teebs said:
£300 wouldn't cover the admin of buying, prepping, advertising and selling the car. I know they're loss-making at the moment but when do the expect to turn a profit?
Does seem ridiculous but maybe they are making a big amount on the finance part, I have NO idea really about these things but don't you easily end up paying a fair whack of interest as they are usually way higher than a loan rate? Im sure I read some things where people said never mention you are paying cash (i.e outfight payment) until you agree the price of the car)- or buy it on finance and pay it off the next day etc.They listen to people saying you need a £2k mark up on a clean retail ready car to make a £500 net profit, mentioning things like admin costs. They say f
k that.I can rent a cheap car for a few days for less than £200, pre covid that was less than £100, which includes insurance and vat. They are able to put people into a car for a few days without the admin and logistics costs turning it into a massive loss making exercise.
Lil_Red_GTV said:
av185 said:
Meanwhile stock markets are up again as UK economic growth gathered pace in October underpinned by the services sector despite the manufacturing sector being hit by supply chain issues.
BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
I'm no financial expert but I'm pretty sure that what stock markets are doing isn't much of a guide to what is happening in the real economy, nevermind what is going to happen in one narrow sector (car retail). BCA and Mannheim auction prices still way over book and WBAC A Clark and Cazoo in particular are still bidding record highs for most stock most likely reflecting used car supply will typically dwindle in the coming months.
Worth noting btw that whilst used car prices obviously took a hit in the 2008 crisis their recovery was equally as quick into 2009 and anyone panic selling in the early stages of the crisis lost out hugely buying back in a matter of months later. High end stuff was particularly badly hit but the rate of price recovery and more was extremely rapid as many found out to their considerable cost.
Also interesting to note that the UKs retail sales figures showed only a 0.2 percent fall in September furthermore private sector growth is at its highest rate for three months despite the headwinds from supply chain covid and staff shortages.
Edited by av185 on Monday 25th October 10:26
Edited by av185 on Monday 25th October 10:27
nickfrog said:
Cazoo have lost the plot. They offered me £22,100 for the Kia that I bought new for £20,400 4 months ago.
Quite a business model... But perhaps there are punters who would pay even more than that or are not aware of the discount levels.
I wish I had bought more than one.
Quite a business model... But perhaps there are punters who would pay even more than that or are not aware of the discount levels.
I wish I had bought more than one.
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