Will Coronavirus hit used car prices? (Vol 2)

[Deep Thought]

Seraph14 said:

This is what I mean by cartel-like behaviour. Not saying you were doing anything wrong, it was an informal gentleman's agreement type thing in your case, and I assume there was nothing stopping members of the public upsetting things if they chose to turn up and bid, or indeed another dealer who wasn't in your clique. But the current arrangements seem anti-competitive to me. And when supply is as pathetically low as it is now, I would be surprised if it isn't having an impact.

The other side of that is - why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?

I cant go in to my local cash and carry and buy a single bottle of coke at its trade price, to save me a % over buying one in my local corner shop.

If you dont want to pay dealer prices, buy privately or take your chances in one of the many other car auctions that let the public in - but dont be surprised if you end up paying near retail price and / or its got hidden faults. Unfortunately you cant have your cake and eat it.

[nickfrog]

Seraph14 said:

And my opinion is that people selling 10-12 year old cars for a few grand less than they were brand new, is greedy, and they can only do this because of extremely tight supply, which restricting who can attend car auctions is helping to sustain.

The price new is irrelevant. Their margin is based on what they paid for the car. It is a competitive market. The price is simply the reflection of the balance between supply and demand. If you think the cars will be substantially cheaper (beyond depreciation) then you are quite right to wait but that doesn't make anyone particularly greedy.

[Seraph14]

Deep Thought said:

The other side of that is - why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?

I cant go in to my local cash and carry and buy a single bottle of coke at its trade price, to save me a % over buying one in my local corner shop.

If you dont want to pay dealer prices, buy privately or take your chances in one of the many other car auctions that let the public in - but dont be surprised if you end up paying near retail price and / or its got hidden faults. Unfortunately you cant have your cake and eat it.

Competition is good for the consumer. Of course I see why the trade's cosy club doesn't want any more of it, because it would push prices lower. Can't have a part time trader with lower overheads, buying and selling the odd car and undercutting the Arthur Daley types.

It's also a myth that buying from a dealer means you are protected if the car goes wrong. Some dealers will honour their legal obligations but many do not. We all know that.

Seem to be a lot of car dealer defenders here, to me it is a profession lower than estate agents, they add nothing of value to society and just cream off big profits for acting as gatekeepers to the car supply - there should be no reason end users can't buy the cars direct from the original sellers.

Edited by Seraph14 on Sunday 18th September 14:03

[buyer&seller]

Seraph14 said:

Competition is good for the consumer. Of course I see why the trade's cosy club doesn't want any more of it, because it would push prices lower. Can't have a part time trader with lower overheads, buying and selling the odd car and undercutting the Arthur Daley types.

You need to knock that anti motor trade chip off your shoulder and try getting some sensible perspective, either that or you're just here to troll.

[911hope]

Seraph14 said:

Competition is good for the consumer. Of course I see why the trade's cosy club doesn't want any more of it, because it would push prices lower. Can't have a part time trader with lower overheads, buying and selling the odd car and undercutting the Arthur Daley types.

It's also a myth that buying from a dealer means you are protected if the car goes wrong. Some dealers will honour their legal obligations but many do not. We all know that.

Seem to be a lot of car dealer defenders here, to me it is a profession lower than estate agents, they add nothing of value to society and just cream off big profits for acting as gatekeepers to the car supply - there should be no reason end users can't buy the cars direct from the original sellers.

Edited by Seraph14 on Sunday 18th September 14:03

Can't see why it is in the interest of the auctioneers and sellers to have consumers bidding. It would drive auction achieved prices higher.

There must be some other practical reason why it is prohibited.

[Niguy]

Deep Thought said:

Seraph14 said:

This is what I mean by cartel-like behaviour. Not saying you were doing anything wrong, it was an informal gentleman's agreement type thing in your case, and I assume there was nothing stopping members of the public upsetting things if they chose to turn up and bid, or indeed another dealer who wasn't in your clique. But the current arrangements seem anti-competitive to me. And when supply is as pathetically low as it is now, I would be surprised if it isn't having an impact.

The other side of that is - why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?

I cant go in to my local cash and carry and buy a single bottle of coke at its trade price, to save me a % over buying one in my local corner shop.

If you dont want to pay dealer prices, buy privately or take your chances in one of the many other car auctions that let the public in - but dont be surprised if you end up paying near retail price and / or its got hidden faults. Unfortunately you cant have your cake and eat it.

This. Plus factor in dealers overheads (rent service charge rates and utilities costs) plus warranties insurance etc, then you can see why they need to turn a profit. They will also likely have a number of staff who depend on their employer to put food on their families tables. A lot more to it than dealers being ‘greedy’.

[Seraph14]

[quote=buyer&seller]

You need to knock that anti motor trade chip off your shoulder and try getting some sensible perspective, either that or you're just here to troll.

[/quote]

I don't need to do anything mate, it's my experience.

[ClouderOver12]

The most loaded topic since the beginning of 2020 is the topic about the epidemic. How did she change our world, that even on automotive forums this topic is the most discussed. Just some kind of macroeconomic collapse. Personally, it seems to me that prices will not rise, but rather decrease, because people's incomes are falling, many cannot maintain cars, and many cannot even support themselves, so cars are in their throats and they want to sell them very quickly. Here new cars will rise in price due to the fact that in some countries the industry is not currently working in such volumes as it would be necessary to keep the prices of raw materials.

[Deep Thought]

Seraph14 said:

Competition is good for the consumer. Of course I see why the trade's cosy club doesn't want any more of it, because it would push prices lower. Can't have a part time trader with lower overheads, buying and selling the odd car and undercutting the Arthur Daley types.

There is competition in the marketplace. You cant sell something for more than the market is prepared to pay. Dealers reprice their cars almost constantly to ensure they are among the cheapest to get the phone to ring.

Seraph14 said:

It's also a myth that buying from a dealer means you are protected if the car goes wrong. Some dealers will honour their legal obligations but many do not. We all know that.

Its not a myth at all. Its a statement of fact. An element of traders may try and avoid those responsibilites but as a consumer you have legal rights which can be enforced if required, through a court of law.

You're also not just getting a warranty when you buy from a dealer. You're getting a trade in capability, a car that you can expect to prepared to a certain standard, and a car free from faults. Now, you will no doubt say "ah but...", but the reality is there are millions of transactions every year with car dealers and 99.9% of them are handled as the consumer would expect.

Dont be fooled in to thinking a dealer makes thousands on every car, just because the trade price varies from the sticker price - they've to cover their rent, rates, electric, staffing costs, prep, servicing, repairs, warranty, advertising costs (either a 3rd party warranty or a set aside for self warranting), and not least VAT from their gross margin, and then tax.

And if you think selling without a shiny glass palace is easier, then have a look at Cazoos profit margins - £143 per car sold.

https://cardealermagazine.co.uk/publish/cazoos-fil...

Seraph14 said:

Seem to be a lot of car dealer defenders here, to me it is a profession lower than estate agents, they add nothing of value to society and just cream off big profits for acting as gatekeepers to the car supply - there should be no reason end users can't buy the cars direct from the original sellers.

The do add value because they supply a service to consumers - that service being the capability to buy a well prepared and presented car from a choice of cars on their forecourt, in a warm and dry showroom, and offer facilities such as trade in, finance, and warranty.

Thats what you're paying the extra for.

You can indeed buy cars direct from the original sellers - there are hundred of thousands of private sales per year in the UK where you can buy direct from the previous owner. You can also buy at auction such as ebay, collecting cars, or local car auctions.

[Tomanybikes]

Prices are set by buyers not sellers.

[john41901]

Never seen much value in a dealer, massive mark ups for minimal service. May as well buy under warranty from an auction at trade price, much cheaper.

Last dealer car I looked at was marked up at an insane ten grand above wbac and the trade in was under wbac by a good few k also. Nice try but I’m not funding a charity. Needless to say that deal didn’t go ahead and the car’s still sitting on the lot three months later. Will just wait for the crash…

[buyer&seller]

Seraph14 said:

I don't need to do anything mate, it's my experience.

You do need to do something, get some more "worthwhile" experience as currently you haven't enough.

[AlexMG]

bencollins4 said:

That’s a lovely table but what exactly are you hoping it will help you with? We all know prices are historically very high but I’m not sure what help that will give you predicting future depreciation in what is a totally unique set of circumstances right now.

I've lots of "the used car market is madness" online.

But I wanted to take some real world examples and boil it down to a cost per mile so we can actally see how high they are.

I've had the same alerts on Autotrader for years. I had a lul for the last 2 years and now things are coming back to the old prices from what I can remember.

If the market crashes I wanted to be able to understand if I buy into the bubble now, how much am I going to lose.

[911hope]

Seraph14 said:

This is what I mean by cartel-like behaviour. Not saying you were doing anything wrong, it was an informal gentleman's agreement type thing in your case, and I assume there was nothing stopping members of the public upsetting things if they chose to turn up and bid, or indeed another dealer who wasn't in your clique. But the current arrangements seem anti-competitive to me. And when supply is as pathetically low as it is now, I would be surprised if it isn't having an impact.

One of my regular Auto Trader searches which I check several times a day is for a Ford Focus 1.6 Zetec, 2011 onwards, 100bhp plus (to avoid the odd 2011 older shape 99bhp), under 90,000 miles (I wouldn't buy one over 70,000 in fact, but I look at the others just to keep an idea of what's available, what the prices are and how quickly they sell), manual, petrol.

Currently within 55 miles there are ten, most of these have been up for months. If I increase it to 60 miles it's 15. (Auto Trader seems to use some sort of 'as the crow flies' measure for distance as well, so '60 miles' is more like 80 or 90 in reality). This area encompasses millions of people and this is one of the most popular and common cars on the road but there's only a handful for sale.

A few of these cars look fine but the prices are so preposterous I would rather crawl over broken glass than pay them, even though I do have the cash sitting in my bank. But why should I give it to some greedy dealer, no I don't think so.

If cars are not shifting at these high prices, then it is fair to say the price is too high. They will eventually come down, or no sale will happen.

I have seen a VW golf R for sale on auto trader at £99,999. Obviously the seller must be mad.

There are many other over the top asking prices out there. Don't let anyone tell you this is the "market".. it is some trying to take advantage of unwise buyers.

[johnnyBv8]

Deep Thought said:

The other side of that is - why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?

I cant go in to my local cash and carry and buy a single bottle of coke at its trade price, to save me a % over buying one in my local corner shop.

If you dont want to pay dealer prices, buy privately or take your chances in one of the many other car auctions that let the public in - but dont be surprised if you end up paying near retail price and / or its got hidden faults. Unfortunately you cant have your cake and eat it.

The ‘volume discount’ approach is already established in the fee structure - if you don’t buy many cars you pay more. Members of the public buying pre-covid paid the non-account rate which was set very high. If they restart selling to the public then no doubt they’d revert to this approach, so there hasn’t been and there would continue not to be a scenario where a member of the public buying a single car would get it for the same price as trade.

In reality, the non-account BCA fees are so high that it’s usually cheaper to buy privately. I think if you ask pretty much anyone buying from auction whether they knew there was a risk of hidden faults they’d say yes.

Edited by johnnyBv8 on Sunday 18th September 15:46

[Deep Thought]

johnnyBv8 said:

Deep Thought said:

The other side of that is - why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?

I cant go in to my local cash and carry and buy a single bottle of coke at its trade price, to save me a % over buying one in my local corner shop.

If you dont want to pay dealer prices, buy privately or take your chances in one of the many other car auctions that let the public in - but dont be surprised if you end up paying near retail price and / or its got hidden faults. Unfortunately you cant have your cake and eat it.

The ‘volume discount’ approach is already established in the fee structure - if you don’t buy many cars you pay more. Members of the public buying pre-covid paid the non-account rate which was set very high. If they restart selling to the public then no doubt they’d revert to this approach, so there hasn’t been and there would continue not to be a scenario where a member of the public buying a single car would get it for the same price as trade.

In reality, the non-account BCA fees are so high that it’s usually cheaper to buy privately. I think if you ask pretty much anyone buying from auction whether they knew there was a risk of hidden faults they’d say yes.

Edited by johnnyBv8 on Sunday 18th September 15:46

They may not be getting it at the same end price as the trade but they are still bidding on the same car as the trade. I doubt too many private buyers think about the big fee they're about to pay.

And yes, whilst they may well be aware they may be hidden faults, they may not realise how many cars - particularly older ones - end up there because they've an issue.

[clockworks]

[quote=buyer&seller]

BCA have no intention of opening for physical auctions again or to allow "retail" buyers to bid on line.

I used to go to the auctions everyday of the week and it was actually quite rare to see retail buyers there, easily spotted by their blue catalogue, they were usually like a rabbit caught in headlights as they hadn't a clue what they were doing and quite often had their bids trotted up and that usually ended with them paying too much money.

If anything the authorities should be vetting the trade buyers and licencing them and only letting those with a licence to buy at auction, which I understands happens in other countries.

As for a cartel-like behaviour, nothing could be further from the truth, auctions were/are hugely competitive and the only people likely to be rigging it are the auctions themselves and, maybe, some of the big sellers but it certainly is not the buyers.
[/quote]


Are car auctions different to antique auctions then?

A few of my friends and customers frequent the local antique auctions, mostly looking for clocks. We regularly tell each other if there's something any of us are interested in buying, and we don't bid on each other's items. Helps to keep the price down, although of course someone else outside our group might be bidding too.

It happened on Friday. A regular customer told me he was thinking of buying an item, and could I tell him what I thought, and how much it would cost for me to service it. If he hadn't spoken to me I'd have been bidding on it myself. Guide price £500 to £800. I'd have happily bid £900 for it, but my customer got it for £700. Bargain.
At least I'll make a few hundred fixing it for him.

[johnnyBv8]

Deep Thought said:

They may not be getting it at the same end price as the trade but they are still bidding on the same car as the trade. I doubt too many private buyers think about the big fee they're about to pay.

And yes, whilst they may well be aware they may be hidden faults, they may not realise how many cars - particularly older ones - end up there because they've an issue.

Your question was “ why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?”. The answer is “they can’t”.

[Deep Thought]

johnnyBv8 said:

Deep Thought said:

They may not be getting it at the same end price as the trade but they are still bidding on the same car as the trade. I doubt too many private buyers think about the big fee they're about to pay.

And yes, whilst they may well be aware they may be hidden faults, they may not realise how many cars - particularly older ones - end up there because they've an issue.

Your question was “ why should some member of the public be able to walk in and buy a single car at trade price, when these trade buyers are maybe buying hundreds of cars a year?”. The answer is “they can’t”.

You're quoting me out of context. The original context was in relation to Seraph14 thinking there was some sort of Cartel preventing him from buying cars at trade price and it was a rhetorical question.

Edited by Deep Thought on Sunday 18th September 16:35

[911hope]

johnnyBv8 said:

The ‘volume discount’ approach is already established in the fee structure - if you don’t buy many cars you pay more. Members of the public buying pre-covid paid the non-account rate which was set very high. If they restart selling to the public then no doubt they’d revert to this approach, so there hasn’t been and there would continue not to be a scenario where a member of the public buying a single car would get it for the same price as trade.

In reality, the non-account BCA fees are so high that it’s usually cheaper to buy privately. I think if you ask pretty much anyone buying from auction whether they knew there was a risk of hidden faults they’d say yes.

Edited by johnnyBv8 on Sunday 18th September 15:46

What do the fees amount to for a trade vs. individual buyer. % or absolute amount?

I assume this is how the auctioneers make their money.