Will Coronavirus hit used car prices? (Vol 2)
Discussion
Deep Thought said:
Tomanybikes said:
Deep Thought said:
Agreed.
I take your point RE: it being a bad idea to pay overs on something like that.
A friend of my sons sells BMWs and we were talking a little while ago about the price of some of the BMW high end stuff. He commented it was quite usual for people to come in and spend 6 figure sums on BMWs now. Not every day, but it did happen regularly. Things like top end X5, X7. Stuff i'd normally associate with heart stopping depreciation.
He said generally they were bought through these peoples companies or "the monthlies" paid for through the companies and they werent normally concerned or bothered by the depreciation. Maybe they were rich enough not to care or could write a lot of the depreciation off to tax.
I have never understood the Company pays the monthlies so not bothered, what about the BIK that has to be paid on top?I take your point RE: it being a bad idea to pay overs on something like that.
A friend of my sons sells BMWs and we were talking a little while ago about the price of some of the BMW high end stuff. He commented it was quite usual for people to come in and spend 6 figure sums on BMWs now. Not every day, but it did happen regularly. Things like top end X5, X7. Stuff i'd normally associate with heart stopping depreciation.
He said generally they were bought through these peoples companies or "the monthlies" paid for through the companies and they werent normally concerned or bothered by the depreciation. Maybe they were rich enough not to care or could write a lot of the depreciation off to tax.
Edited by Deep Thought on Sunday 14th August 12:45
Deep Thought said:
time waster said:
Depends if VW or BMW is a client.
Neither sell used cars.What do you think happens to revenue from financing when less people are financing vehicles?
jsf said:
Pommy said:
You do realise their financing arms generate massive revenues on vehicles sales (new and used)? You do, don't you?
What do you think happens to revenue from financing when less people are financing vehicles?
Depends what happens to the spread.What do you think happens to revenue from financing when less people are financing vehicles?
Pommy said:
So you don't think economic conditions will change financing costs?
Financing costs to whome?It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
jsf said:
Pommy said:
So you don't think economic conditions will change financing costs?
Financing costs to whome?It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
So retail used cars I would have thought.
Pommy said:
jsf said:
Pommy said:
You do realise their financing arms generate massive revenues on vehicles sales (new and used)? You do, don't you?
What do you think happens to revenue from financing when less people are financing vehicles?
Depends what happens to the spread.What do you think happens to revenue from financing when less people are financing vehicles?
Deep Thought said:
No one is saying that there isnt turbulence coming and that they are going to be unaffected.
Its how that is going to impact used car prices that is the point of discussion.
It is worth remembering that it is not "the poor" who are buying brand new cars and fresh used cars, its primarily what would be defined as the middle class / middle earners, who as per Fusion777's comments are a lot less likely to be badly affected.
What proportion of the population do you think would be classed as "the poor"Its how that is going to impact used car prices that is the point of discussion.
It is worth remembering that it is not "the poor" who are buying brand new cars and fresh used cars, its primarily what would be defined as the middle class / middle earners, who as per Fusion777's comments are a lot less likely to be badly affected.
As a guide, 12% of English households are estimated to be at fuel poverty status. 25% for Scotland.
Source : house of commons library document.
Some projections for this to increase by 50%, so expect 18% by the end of the year in England.
So lots of people will be spending much higher proportion of their income on fuel and reduced amount on other things. Some of those impact the jobs of "middle class" folks and so on. ..a downward spiral.
A recession is pretty much a given used car volumes and prices are already falling. New car registrations will suffer as it always does in a recession. Only an idiot enters a PCP deal, when they are worried about their job!
The high end sector in auto is not representative of the vast majority of the market, so just ignore the counter intuitive behaviour there..it will follow at some point.
Tomanybikes said:
What is the thread about?
So retail used cars I would have thought.
It still applies.So retail used cars I would have thought.
If a business chooses to subsidise the finance cost to get a sale on a car with a higher cost, they still make a profit on the sale.
People pay too much all the time because the finance rate looks low. They don't do the maths. Many business models are based on this.
The issue isn't the credit cost, it's if the liquidity is there to be able to cover it.
jsf said:
Financing costs to whome?
It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
Can't extract an answer from this.It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
Finance costs go up with interest rates, surely.
If not, please explain.
911hope said:
What proportion of the population do you think would be classed as "the poor"
As a guide, 12% of English households are estimated to be at fuel poverty status. 25% for Scotland.
Source : house of commons library document.
Some projections for this to increase by 50%, so expect 18% by the end of the year in England.
So lots of people will be spending much higher proportion of their income on fuel and reduced amount on other things. Some of those impact the jobs of "middle class" folks and so on. ..a downward spiral.
A recession is pretty much a given used car volumes and prices are already falling. New car registrations will suffer as it always does in a recession. Only an idiot enters a PCP deal, when they are worried about their job!
The high end sector in auto is not representative of the vast majority of the market, so just ignore the counter intuitive behaviour there..it will follow at some point.
Crazily, my energy provider will be paying me £7/month for 6 months after October because of the £400 government subsidy. I pay £60 DD for my combined gas and electric.As a guide, 12% of English households are estimated to be at fuel poverty status. 25% for Scotland.
Source : house of commons library document.
Some projections for this to increase by 50%, so expect 18% by the end of the year in England.
So lots of people will be spending much higher proportion of their income on fuel and reduced amount on other things. Some of those impact the jobs of "middle class" folks and so on. ..a downward spiral.
A recession is pretty much a given used car volumes and prices are already falling. New car registrations will suffer as it always does in a recession. Only an idiot enters a PCP deal, when they are worried about their job!
The high end sector in auto is not representative of the vast majority of the market, so just ignore the counter intuitive behaviour there..it will follow at some point.
I fixed for 2 years just before the energy spike.
911hope said:
jsf said:
Financing costs to whome?
It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
Can't extract an answer from this.It depends on the business model of the seller.
You can't answer the question with something that applies to every business, because they all serve different markets with different models of getting market share.
This applies at any time.
Finance costs go up with interest rates, surely.
If not, please explain.
It's clear that financing costs are going to rise. That's a fact. There is no cheap money in the system.
They rise > rates rise > rates rise > cost of purchase goes up > cost to purchase goes up demand goes down > demand goes down > demand goes down used car prices go down.
Add in cost of living pressures...
They rise > rates rise > rates rise > cost of purchase goes up > cost to purchase goes up demand goes down > demand goes down > demand goes down used car prices go down.
Add in cost of living pressures...
Tomanybikes said:
Deep Thought said:
Tomanybikes said:
Deep Thought said:
Agreed.
I take your point RE: it being a bad idea to pay overs on something like that.
A friend of my sons sells BMWs and we were talking a little while ago about the price of some of the BMW high end stuff. He commented it was quite usual for people to come in and spend 6 figure sums on BMWs now. Not every day, but it did happen regularly. Things like top end X5, X7. Stuff i'd normally associate with heart stopping depreciation.
He said generally they were bought through these peoples companies or "the monthlies" paid for through the companies and they werent normally concerned or bothered by the depreciation. Maybe they were rich enough not to care or could write a lot of the depreciation off to tax.
I have never understood the Company pays the monthlies so not bothered, what about the BIK that has to be paid on top?I take your point RE: it being a bad idea to pay overs on something like that.
A friend of my sons sells BMWs and we were talking a little while ago about the price of some of the BMW high end stuff. He commented it was quite usual for people to come in and spend 6 figure sums on BMWs now. Not every day, but it did happen regularly. Things like top end X5, X7. Stuff i'd normally associate with heart stopping depreciation.
He said generally they were bought through these peoples companies or "the monthlies" paid for through the companies and they werent normally concerned or bothered by the depreciation. Maybe they were rich enough not to care or could write a lot of the depreciation off to tax.
Edited by Deep Thought on Sunday 14th August 12:45
There could be various reasons why it would be preferential on a tax cost basis for someone to have the company pay for a car, or have a monthly lease payment come out of the company account.
Pommy said:
It's clear that financing costs are going to rise. That's a fact. There is no cheap money in the system.
They rise > rates rise > rates rise > cost of purchase goes up > cost to purchase goes up demand goes down > demand goes down > demand goes down used car prices go down.
Add in cost of living pressures...
That kind of thinking doesn't apply in the real world.They rise > rates rise > rates rise > cost of purchase goes up > cost to purchase goes up demand goes down > demand goes down > demand goes down used car prices go down.
Add in cost of living pressures...
Supply of money and supply capability of goods matters more than the rate of interest shown on what the purchaser pays.
There is zero evidence the fundermentals of the market are changing in the foreseeable, the most impactfull change would drive prices up, not down. (Taiwan).
911hope said:
What proportion of the population do you think would be classed as "the poor"
As a guide, 12% of English households are estimated to be at fuel poverty status. 25% for Scotland.
Source : house of commons library document.
Some projections for this to increase by 50%, so expect 18% by the end of the year in England.
So lots of people will be spending much higher proportion of their income on fuel and reduced amount on other things. Some of those impact the jobs of "middle class" folks and so on. ..a downward spiral.
A recession is pretty much a given used car volumes and prices are already falling. New car registrations will suffer as it always does in a recession. Only an idiot enters a PCP deal, when they are worried about their job!
The high end sector in auto is not representative of the vast majority of the market, so just ignore the counter intuitive behaviour there..it will follow at some point.
So typically the poorest 20% of society. Those not typically buying brand new cars, i'd have thought.As a guide, 12% of English households are estimated to be at fuel poverty status. 25% for Scotland.
Source : house of commons library document.
Some projections for this to increase by 50%, so expect 18% by the end of the year in England.
So lots of people will be spending much higher proportion of their income on fuel and reduced amount on other things. Some of those impact the jobs of "middle class" folks and so on. ..a downward spiral.
A recession is pretty much a given used car volumes and prices are already falling. New car registrations will suffer as it always does in a recession. Only an idiot enters a PCP deal, when they are worried about their job!
The high end sector in auto is not representative of the vast majority of the market, so just ignore the counter intuitive behaviour there..it will follow at some point.
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