Will Coronavirus hit used car prices? (Vol 2)

[av185]

SpamDisco said:

Earthdweller said:

Tomm3 said:

Some talk in the caravan/motorhome community of signs of the bubble ready to burst. How anyone can think this current/future financial st-show cannot affect prices is baffling. Maybe longer to hit all those Porsche buyers but it's coming. All IMHO of course ??

Watched a YouTube video yesterday from a caravan dealer who was walking around his stock

He was saying that demand has just evaporated.. gone

He was pointing out vans and saying things like “we’re fully stocked up, bought loads of stock in, it’s just died a death, hands on the head time”

Lots of expensive stock and nobody buying, vans that would have sold in hours .. no interest

Etc

https://youtu.be/7OAZ29EZDFY

His latest video from two days ago:

https://www.youtube.com/watch?v=twvVirRYKMo

Sales are back up, he's now searching for new stock and having to pay silly money.

That is truly hilarious.

So the caravan market has gone from bust to boom in a matter of weeks and now the caravan guy is experiencing 'big big' demand.

Can't wait to hear our caravan expert Earthdwellers explanation of that. :

[nickfrog]

time waster said:

Robust used prices won't happen.

Tell us more.

Are we looking at pre Covid levels again? Will used car values collapsed back to where they would have been now without COVID? When is it happening?

It would be good to have your more precise predictions as personally I have no idea where used values are going.

[time waster]

nickfrog said:

time waster said:

Robust used prices won't happen.

Tell us more.

Are we looking at pre Covid levels again? Will used car values collapsed back to where they would have been now without COVID? When is it happening?

It would be good to have your more precise predictions as personally I have no idea where used values are going.

What I don't do is look at WBAC. But everything at the moment is hitting the amount of money people have in their pocket (fuel, energy, food, interest rates). We are entering a period of stagflation (without the unemployment) where interest rates will continue to rise to try an pull inflation down. Consumers will really notice fuel costs this winter. We have sat in an extraordinary bubble of car prices - probably never seen before driven by the government bailing out the country. At some point that has to unwind - it always does with every asset bubble (or tell me one that hasn't). So I can only see it going one way (probably followed by houses when rates hit 5%.

[MaxFromage]

nickfrog said:

Those clients seem confident that those assets will bounce back in value, presumably.

I'm not sure about bounce back, but like the stock market, many assets are cyclical. The big question is how much these assets drop in value and how long will they take to regain their losses. You've got to put your money somewhere...

For example, some will see value in property (if it drops) that needs significant work. This sector always suffers when cash is squeezed.

[Earthdweller]

av185 said:

That is truly hilarious.

So the caravan market has gone from bust to boom in a matter of weeks and now the caravan guy is experiencing 'big big' demand.

Can't wait to hear our caravan expert Earthdwellers explanation of that. :

You’re the expert (apparently) …. I’m just relaying what he posted on the internet, and providing the link to it. I have no skin in the caravan game

Perhaps you could contact the caravan dealer and ask him to explain it and while you’re at it tell him in your expert opinion he was wrong to buy all those large expensive caravans, which he has now seemingly sold, because that’s what you told us

It bothers me not anyway

[av185]

time waster said:

What I don't do is look at WBAC. But everything at the moment is hitting the amount of money people have in their pocket (fuel, energy, food, interest rates). We are entering a period of stagflation (without the unemployment) where interest rates will continue to rise to try an pull inflation down. Consumers will really notice fuel costs this winter. We have sat in an extraordinary bubble of car prices - probably never seen before driven by the government bailing out the country. At some point that has to unwind - it always does with every asset bubble (or tell me one that hasn't). So I can only see it going one way (probably followed by houses when rates hit 5%.

Your points do stack up until the last paragraph.

What is different this time is the huge supply contraints on new cars and used which will take time to fix. Combine this with big price rises on new cars and componentry costs and the trickle down effect on robust used prices especially with restricted supply is quite clear. Yes SOME buyers will be squeezed economically so there will be a softening on the demand side but many buyers will not be hit and folks love buying cars for many reasons and the supply side is hugely constrained so hence the reduced demand will be very model specific e.g. we are clearly currently seeing this with gas guzzler used prices and new orders of these but many sectors are still up e.g. lower end higher end economical sports and niche.

Same essentially applies to the housing market there is a dearth of property especially new unlike previous housing cycles thats why prices have risen by c £25k on average this year to just under £300k average in England. Many have been incorrectly predicting the housing crash for a long time but surprise surprise its kept going up and with little prospect of cooling now simply because of the supply constraint issues.

[time waster]

Unfortunately I disagree:

1. People don't need to buy new cars - as soon as they decide to keep to what they have got on the drive, the market collapses. There seems to be a general view that the demand doesn't diminish.

2. Houses won't crash while interest rates are consistently falling. Its the same as owning a bond. Bank rates haven't increased for years , hence the housing market has been bailed out. Now interest rates are rising, and we haven't been in this situation for a long time. Look at the US future markets for a view of how high IR need to rise in the next 18 months.

[time waster]

Unfortunately I disagree:

1. People don't need to buy new cars - as soon as they decide to keep to what they have got on the drive, the market collapses. There seems to be a general view that the demand doesn't diminish.

2. Houses won't crash while interest rates are consistently falling. Its the same as owning a bond. Bank rates haven't increased for years , hence the housing market has been bailed out. Now interest rates are rising, and we haven't been in this situation for a long time. Look at the US future markets for a view of how high IR need to rise in the next 18 months.

[av185]

time waster said:

Unfortunately I disagree:

1. People don't need to buy new cars - as soon as they decide to keep to what they have got on the drive, the market collapses. There seems to be a general view that the demand doesn't diminish.

2. Houses won't crash while interest rates are consistently falling. Its the same as owning a bond. Bank rates haven't increased for years , hence the housing market has been bailed out. Now interest rates are rising, and we haven't been in this situation for a long time. Look at the US future markets for a view of how high IR need to rise in the next 18 months.

To keep the thread on track concerning cars not property and in response to your point 1 yes some do not HAVE to buy new cars but many do and this was discussed a few days ago on this very thread.

For those who don't have to buy new and those that don't choose to keep their existing vehicles but nevertheless have to/need to buy a car they will be forced to reengage with the used car market and coincidentally this point was covered by Stuart Pearson in BCAs latest market report.

[av185]

Interesting posted this afternoon from the Discovery rising prices thread.

[Earthdweller]

av185 said:

time waster said:

Unfortunately I disagree:

1. People don't need to buy new cars - as soon as they decide to keep to what they have got on the drive, the market collapses. There seems to be a general view that the demand doesn't diminish.

2. Houses won't crash while interest rates are consistently falling. Its the same as owning a bond. Bank rates haven't increased for years , hence the housing market has been bailed out. Now interest rates are rising, and we haven't been in this situation for a long time. Look at the US future markets for a view of how high IR need to rise in the next 18 months.

To keep the thread on track concerning cars not property and in response to your point 1 yes some do not HAVE to buy new cars but many do and this was discussed a few days ago on this very thread.

For those who don't have to buy new and those that don't choose to keep their existing vehicles but nevertheless have to/need to buy a car they will be forced to reengage with the used car market and coincidentally this point was covered by Stuart Pearson in BCAs latest market report.

As you like to quote what others are saying … elsewhere on pistonheads real owners are discussing their plans …which if i was a car dealer would concern me .

https://www.pistonheads.com/gassing/topic.asp?h=0&...


Some quotes:

Prices are getting silly now. I'm seriously thinking of keeping my car at the end of it's PCP.

Working from home, I just don't need to change something that sits there 5 days a week not moving.

• *

Same situation as you. Currently have a 2018 Audi SQ5 which I've had coming up to 3 years now on pcp and I get the call from Audi - great news your car has equity, come and speak to us for an upgrade. Thought I'd use this opportunity to downgrade as I'm WFH and don't need a fast SUV. Wanted to downgrade to a new S3 sportback, Mr Audi wants my SQ5 (WBAC and Motorway have offered more for it than Audi) and £5k of my hard earned pounds to keep the same monthies and advises spec like wireless charging and parking sensors will not be on the factory ordered S3 thanks to chip shortages. So a more expensive car and less spec? No chance - I'll be buying my highly specc'd SQ5 and coming off the pcp wheel.

I can see a lot of pcp'ers doing the same at the end of their term.

• **

We looked at 330e and 530e touring, but the prices were just ridiculous - especially as we didn't want to drop any spec (electric leather, heated, memory seats, electric memory steering column, Android Auto, Enhanced Sound, All round parking sensors, reversing camera, LED lights etc.). So we decided to jump off the PCP wagon and just paid the 6k balloon. I think a lot of people may do the same, especially as they realise they will have to both a.) add extra to the deposit and b.) up the monthlies to maintain spec.

• ***

Its nuts. I have a low mileage 2018 340i and am likewise about to get fleeced on the 4 year service (£600)

However there's absolutely nothing remotely to move into being a cash buyer. Previously my natural step up would have been a pre owned something with a £10-15k cost to change. No chance,. likewise the missus Mini. We're sticking for now, or probably the medium term.

• ***

It is indeed bonkers.

Mate of mine is an M140i which is coming in to the end of its PCP so the dealer is on his case to trade it in. He’s paying about £350 a month. They’ve offered him a 420 cab as a replacement at £550 a month! hehe He’s politely declined.

[SteBrown91]

I'm in the same boat, I want to move out of what was mean't to be a stop gap car (which I have ended up keeping 3 years!) into something else.

Looked at x3 30d's, 530d tourings, even Superb Sportline estaes, but I cannot justify the cost. Especially when you put the reg into total car check and it detects a previous advert when the car was 6 months old in 2019 for 6 grand less than its up for now with 40k on the clock.

My current 2016 GTD estate is starting to drop to bits with rattling trim, an increasingly noisy wheel bearing and a juddery clutch when hot, but its never actually let me down, has no finance against it, does 48-50mpg without trying and is only 30 quid to tax.

Setting myself up for finance on a 35k car that is becoming out of favour due to EVs, with the impending energy price cap increases and cost of living squeeze is making me just keep running what I have for now. And I think many other people I know are in a similar situation.

[Fusion777]

Love how WBAC and BCA are only cited as credible sources when the information they give supports a certain stance.

[av185]

Earthdweller said:

av185 said:

time waster said:

Unfortunately I disagree:

1. People don't need to buy new cars - as soon as they decide to keep to what they have got on the drive, the market collapses. There seems to be a general view that the demand doesn't diminish.

2. Houses won't crash while interest rates are consistently falling. Its the same as owning a bond. Bank rates haven't increased for years , hence the housing market has been bailed out. Now interest rates are rising, and we haven't been in this situation for a long time. Look at the US future markets for a view of how high IR need to rise in the next 18 months.

To keep the thread on track concerning cars not property and in response to your point 1 yes some do not HAVE to buy new cars but many do and this was discussed a few days ago on this very thread.

For those who don't have to buy new and those that don't choose to keep their existing vehicles but nevertheless have to/need to buy a car they will be forced to reengage with the used car market and coincidentally this point was covered by Stuart Pearson in BCAs latest market report.

As you like to quote what others are saying … elsewhere on pistonheads real owners are discussing their plans …which if i was a car dealer would concern me .

https://www.pistonheads.com/gassing/topic.asp?h=0&...


Some quotes:

Prices are getting silly now. I'm seriously thinking of keeping my car at the end of it's PCP.

Working from home, I just don't need to change something that sits there 5 days a week not moving.

• *

Same situation as you. Currently have a 2018 Audi SQ5 which I've had coming up to 3 years now on pcp and I get the call from Audi - great news your car has equity, come and speak to us for an upgrade. Thought I'd use this opportunity to downgrade as I'm WFH and don't need a fast SUV. Wanted to downgrade to a new S3 sportback, Mr Audi wants my SQ5 (WBAC and Motorway have offered more for it than Audi) and 5k of my hard earned pounds to keep the same monthies and advises spec like wireless charging and parking sensors will not be on the factory ordered S3 thanks to chip shortages. So a more expensive car and less spec? No chance - I'll be buying my highly specc'd SQ5 and coming off the pcp wheel.

I can see a lot of pcp'ers doing the same at the end of their term.

• **

We looked at 330e and 530e touring, but the prices were just ridiculous - especially as we didn't want to drop any spec (electric leather, heated, memory seats, electric memory steering column, Android Auto, Enhanced Sound, All round parking sensors, reversing camera, LED lights etc.). So we decided to jump off the PCP wagon and just paid the 6k balloon. I think a lot of people may do the same, especially as they realise they will have to both a.) add extra to the deposit and b.) up the monthlies to maintain spec.

• ***

Its nuts. I have a low mileage 2018 340i and am likewise about to get fleeced on the 4 year service ( 600)

However there's absolutely nothing remotely to move into being a cash buyer. Previously my natural step up would have been a pre owned something with a 10-15k cost to change. No chance,. likewise the missus Mini. We're sticking for now, or probably the medium term.

• ***

It is indeed bonkers.

Mate of mine is an M140i which is coming in to the end of its PCP so the dealer is on his case to trade it in. He’s paying about 350 a month. They’ve offered him a 420 cab as a replacement at 550 a month! hehe He’s politely declined.

Yep some will stick with what they have.

Some will buy new.

As I already posted the remainder will have to buy used.

[RUSTILLDOWN]

DT, stop chatting and start graphing!

[DeuceDeuce]

My two cents.

There’s obviously a number of factors influencing used car prices but the main headwind will be the availability of credit. When/if that starts to dry up that’s when significant falls will happen. Ignore all the noise, just keep an eye on default rates for the strongest indicator on where prices are going.

[AlexNJ89]

DeuceDeuce said:

My two cents.

There’s obviously a number of factors influencing used car prices but the main headwind will be the availability of credit. When/if that starts to dry up that’s when significant falls will happen. Ignore all the noise, just keep an eye on default rates for the strongest indicator on where prices are going.

Absolutely agree with this.

I have friends who are desperate for a property market crash so they can buy, little do they know they won't be able to get a mortgage if there were to be one.

[Macron]

av185 said:

Things are somewhat different this time

Ah, it's different this time. It always is.

av185 said:

What is different this time is

Ah, really different. So different it won't be like any boom and bust ever seen ever before. Good job Gordon Brown abolished that eh?

[Macron]

SteBrown91 said:

My current 2016 GTD estate is starting to drop to bits with rattling trim, an increasingly noisy wheel bearing and a juddery clutch when hot, but its never actually let me down, has no finance against it, does 48-50mpg without trying and is only 30 quid to tax.

"drop to bits"? You have a reliable 6 year old car with some consumables that need replacing mechanically and you may need to turn the stereo up or buy a trim fitting toolkit for a fiver on eBay. Or yeah, spend £? On a GT4S to keep AV"it's only ever sunny here"185 happy.

[Backtobasics]

“Used car stocking days are tracking at a 73 day average currently, up from 56 a few months ago.”

“The used car sector remained 12.2% down by volume, when compared to a pre-COVID 2019, in Q1, 2022.”

“It found that more lower quality cars. (<20) & (20-39) banded based on Autotrader rating bands are now ’over-priced’ rather than under; a reversal of the trend seen at the start of the year, creating a stock risk. Conversely, higher quality car bands (40-59) (60-79) (>80) are still weighted towards being under-priced.”

Edited by Backtobasics on Saturday 21st May 19:37