Will Coronavirus hit used car prices? (Vol 2)
Discussion
Pommy said:
It's as easy as normal, you just need to meet deposit and affordability criteria...but they're trickier as ultimately they'll build in for even high rate rises and can you afford those
Houses tend to get valued lower than buyers expect/want so that becomes stressful at process time.
Flipside is there might be some distress sales to be had.
If I remember correctly, during the 2008 episode - first time buyers were worst hit as high LTV mortgages disappeared overnight. Houses tend to get valued lower than buyers expect/want so that becomes stressful at process time.
Flipside is there might be some distress sales to be had.
This is what concerns me. Am on track to have to deposit I need (aiming for 10%) in around 10/12 months time. But a recession is a double edged sword for me. Hoping house prices cool significantly, but also hoping it won't be too difficult to get a mortgage neither.
MuddyK said:
Pommy said:
It's as easy as normal, you just need to meet deposit and affordability criteria...but they're trickier as ultimately they'll build in for even high rate rises and can you afford those
Houses tend to get valued lower than buyers expect/want so that becomes stressful at process time.
Flipside is there might be some distress sales to be had.
If I remember correctly, during the 2008 episode - first time buyers were worst hit as high LTV mortgages disappeared overnight. Houses tend to get valued lower than buyers expect/want so that becomes stressful at process time.
Flipside is there might be some distress sales to be had.
This is what concerns me. Am on track to have to deposit I need (aiming for 10%) in around 10/12 months time. But a recession is a double edged sword for me. Hoping house prices cool significantly, but also hoping it won't be too difficult to get a mortgage neither.
I think there is a rhetoric to feel more sympathy with 1st time buyers at the moment being squeezed out of the market but the impact to those people is they can't buy a house so a goal has been impacted. Imagine however families in houses where their costs are rising, their fixed costs are rising and they have no escape from their debt. At least a 1st home buyer can simply change their goal which is sad for them, but they can repoint what they do - families in houses with fixed costs are stuck. To me that worse than a goal having to be delayed.
Some of the same cars for sale of the type I’m considering (used, up to 3 years old, been looking since November 2021) are still up for sale with the same dealers, (some of who have reduced their prices for those particular cars) no doubt some cars are selling well, others are not, faced with the current economic situation will people rush out to buy a new / newer used car (or anything else) if they have hard choices to make on where their money goes. I”d like to consider myself relatively sensible when it comes to the financial choices I make, I’d rather look after something so I have the option of getting more use out of it than replace it with the latest and greatest gadget every year, I’m certainly having to make decisions (about where my money is spent) I’ve not had to make in a long time, increased costs in all areas pus (most) wages not rising to meet them will have an effect on (new and) used car prices, the manufacturers seem to be making the assumption that people will continue to buy regardless of changing circumstances, it will be interesting to see how that works out in the next 6 to 8 months
RUSTILLDOWN said:
I’ve been ABSOLUTELY smashing my mortgage overpayments and it’s incredible how much I’ve paid off over the last 2+ years.
I can’t be the only one!
Same here! I’ve paid 17k off this year above my monthly payments already! Mortgage currently at 76k I’m hoping it will be at 50k at end of this year and at 10-15k at end of 2023 paid off 2024! Was either that or buy a Mclaren, think the house is a better investment atmI can’t be the only one!
Only one car obviously but I've been keeping an eye on Cupras and made enquiries about this ten days ago. Lopped over a grand off since then and it's a tidy example having had the video walkaround.
Near 300bhp hatches aren't going to be flavour of the month right now. I also keep an eye on Lexus RCF coupes. Normally only two or three in the approved Lexus system... Currently 8 and they've just taken 5 grand off a stunning red carbon edition I was debating. No doubt rising cost of fuel is going to put paid to any big engine cars at the moment.
carparkno1 said:
How's things looking at the moment? VW seem quite bullish that things are picking up soon... I assume Ukraine isn't the only place that makes wiring harnesses.
Thanks for the insight
We're doing well. We don't just supply automotive though, we have customers in a range of sectors. Diversification is key! The automotive side is strong though. Lots of business and interest from the new players in EV, especially from the States.Thanks for the insight
Some people don't understand that we're in disruptive times. BMW don't just have to worry about VAG and Mercedes. They have to worry about Tesla, Lucid, Kia, Hyundai, emerging Chinese players, and so on. There is huge over capacity in the world auto industry (not in battery production, but that's relatively new), consumer spending power is falling and fuel costs are rising.
It's more vital than ever that car companies get it right, every time. If the i4 isn't up to scratch, people will take a Model 3 instead. Likewise if they are faced with silly waiting times. The auto industry is ruthless, and has been for a long time. Brand loyalty isn't what it was, and electric is shaking things up in a way we haven't really seen before.
There are so many reasons why the "low volume, high margin" model just won't work.
av185 said:
You could always research how Tesco as a retailer failed spectacularly in America trying to adopt the UK retail model of sales.
amongst many others.
Citing that as having any relevance to used car markets is silly. Tesco tried to enter the fresh food convenience food market, but struggled establishing a new brand in a market where there's cut throat competition from huge players such as Walmart, who have vast resources and expertise of their home market. It was a brave move, but a bridge too far.amongst many others.
Falling US car prices goes against the narrative of global component shortages pushing prices up where ever possible. Interestingly, the sub-prime crisis began in the States...
Fusion777 said:
av185 said:
You could always research how Tesco as a retailer failed spectacularly in America trying to adopt the UK retail model of sales.
amongst many others.
Citing that as having any relevance to used car markets is silly. Tesco tried to enter the fresh food convenience food market, but struggled establishing a new brand in a market where there's cut throat competition from huge players such as Walmart, who have vast resources and expertise of their home market. It was a brave move, but a bridge too far.amongst many others.
Falling US car prices goes against the narrative of global component shortages pushing prices up where ever possible. Interestingly, the sub-prime crisis began in the States...
ghost83 said:
RUSTILLDOWN said:
I’ve been ABSOLUTELY smashing my mortgage overpayments and it’s incredible how much I’ve paid off over the last 2+ years.
I can’t be the only one!
Same here! I’ve paid 17k off this year above my monthly payments already! Mortgage currently at 76k I’m hoping it will be at 50k at end of this year and at 10-15k at end of 2023 paid off 2024! Was either that or buy a Mclaren, think the house is a better investment atmI can’t be the only one!
Now I'm not sure whether to pay off the last 5k and clear it, or start a 10yr fix.
Fusion777 said:
There are so many reasons why the "low volume, high margin" model just won't work.
I imagine there will be a point where critical mass may have to be reached again. I reckon manufacturers spend a lot of resources finding the sweetspot between margin and volume for a particular supply/demand situation. I imagine that kind of fine yield management is more about progressive modulation than turning an on/off switch though. Which in turn may mean that whatever happens to prices will be quite progressive rather than brutal. ghost83 said:
jimPH said:
Mine is all but paid off, but I've kept it going just incase I need another loan.
Now I'm not sure whether to pay off the last 5k and clear it, or start a 10yr fix.
I’m going to pay mine off and then look at remortgaging and buying commercial propertyNow I'm not sure whether to pay off the last 5k and clear it, or start a 10yr fix.
carparkno1 said:
I find it interesting that with all this talk of a recession (or something close to it), there is a view that car manufacturers are going to continually drive up new car prices and reduce financial support and discounts. If people have less money to spend, how likely are they to spend more than ever before for a 3 series?
I just don't see it myself, even when all the supply chain issues calm down. Next 18 months are going to be very interesting!
Even those that still have a decent amount of money to spend are unlikely to spend more than ever before... family member has a 3 Series on PCP, it went in for its first MOT the other month and they took the opportunity to run some numbers on a potential replacement. Turns out ordering the same spec again (actually a slightly worse spec due to chip shortages/BMW cutting features!) would be £100pcm more than their current deal even with a reasonably high amount of equity thanks to current used values. They considered going EV but i4's and iX3's are on ridiculous lead times and much more expensive, thought about changing to an X3 but diesel isn't suitable and petrol models also have ridiculous lead times... and although they're pretty set on BMW they'd likely have the same issues with other manufacturers anyway.I just don't see it myself, even when all the supply chain issues calm down. Next 18 months are going to be very interesting!
They're pretty well insulated from the cost of living issues but just can't stomach paying so much more for a fundamentally identical car on a newer reg, and can't really think of anything out there that would justify the cost of changing. So the conclusion for the time being is to let the PCP run it's course, buy the car out with savings/a personal loan and just ride it out. I can't imagine they're the only person coming to the end of a PCP and reaching a similar conclusion...
Edited by Sofa on Sunday 8th May 13:56
ghost83 said:
Well it will be residential or commercial it’s whatever gives the best tax incentives but also I don’t know what the rules are with residential buy to lets taxation stamp duty etc etc
I rent my old flat out and the tax is horrid. Would be better if you weren't employed already, especially if a higher band earner. You basically pay tax on the gross and cannot claim any mortage or such before tax. Its fine as a long term investment but hard to make any money short term, and I've got 50% equity. Side note, Autotraders algorithm must have updated in the past few days as a car which was showing 'great price' 4 days ago is now 'fair price'. (same amount)
mrdanbartlett said:
I rent my old flat out and the tax is horrid. Would be better if you weren't employed already, especially if a higher band earner. You basically pay tax on the gross and cannot claim any mortage or such before tax. Its fine as a long term investment but hard to make any money short term, and I've got 50% equity.
Side note, Autotraders algorithm must have updated in the past few days as a car which was showing 'great price' 4 days ago is now 'fair price'. (same amount)
I believe commercial property is much better from a tax point of viewSide note, Autotraders algorithm must have updated in the past few days as a car which was showing 'great price' 4 days ago is now 'fair price'. (same amount)
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