Will Coronavirus hit used car prices? (Vol 2)
Discussion
Earthdweller said:
ghost83 said:
Gerradi said:
This sounds like De Ja Vu from 1990, exactly this where many, many people in negative equity. I remember when the place I worked closed the regional depot & many were overloaded as they had 2nd mortgages, large credit card debts....some even tried selling there new carpets , one chap god rest his soul took his life. Very hard times & I think this could easily be worse...
Scary reallyThe number of suicides in the forest was insane .. people gassing themselves in cars, hanging from trees etc as well as people at home hanging from bannisters, in garages and other gruesome ways .. the worst being stepping in front of tube/overground trains
Horse riders were forever coming across them on their morning rides
Added to that the number of burning cars in the forest, businesses catching fire etc
It was a time I really wouldn’t want to relive again
I think what many proffer, is that those who buy high end cars are wealthy and have a truck load of cash and whatever happens will be fine. It's just not true.
Most high end vehicles are financed (well most vehicles are financed) but if we look at the big stuff, let's say the £100k plus, no sane 'wealthy' person is using cash, when borrowing was sub 3% to finance a depreciating asset. So they end up financing everything because their cash, or rather their financial assets are generally built on a hill of sand, those being shares, dividend income, commerical property income and so on. Their wealth is generally not physical cash but derived from worth, worth that is heading south fairly quickly because the values are dependent on everything else staying strong. And with much more expensive borrowing costs appearing everything that can fund their lifestyle starts to becoming a lot more fragile. And so the slide begins and they rapidly have to get out of their financing obligations quickly before the whole lot landslides into having zero.
I've seen so many clients go from having $50-100m on paper, leveraged and geared to the hilt get their margin calls comes in rapidly, values written down and end up going to near bankruptcy in a heartbeat. And so the fire sales happen. And you only need a few firesales for the 'yeah, but this car isn't worth X because we're seeing them go for Y' and down you go.
It takes 6 months for the impact of interest rises to be felt so my estimation is that March to April will be when people really get a grasp of how bad things are. The only saving grace might be if in Feb, early March, they'll stop further rate rises and the market will go 'yay! Everything's back to good', the markets will bounce and give everyone a false sense of stability. The only counter is that there is no massive QE in the market and so the level of cheap cash we had doesn't exist anymore and 6-8% becomes the norm and those holding cash will be king and those needing to finance their toys will be absent.
I would say it is neither, to me it looks like it's not really for sale in any serious way.
It's furniture, it's like a wobbly man, it's there to get your attention so they can sell you a £5-15k car.
Either that or it gets occasionally used by the business owner, so is essentially tax avoidance.
It's furniture, it's like a wobbly man, it's there to get your attention so they can sell you a £5-15k car.
Either that or it gets occasionally used by the business owner, so is essentially tax avoidance.
I’ve been watching Bmw X5s F15 models over the last couple of weeks and have seen models with desirable spec within my price range sell fairly quickly i.e within days of being listed.
Last week there were 11 examples within my price range, this week there are only 4.
This has me questioning, are prices are still rising, or is it typical for less cars to be on sale over the Christmas period?
Any ideas
Last week there were 11 examples within my price range, this week there are only 4.
This has me questioning, are prices are still rising, or is it typical for less cars to be on sale over the Christmas period?
Any ideas
ChocolateFrog said:
Probably goes hand in hand with the people asking which are the best winter tyres a day after it actually snows.
My boss actually panicked as mine were bald anyway so asked the local garage to put winter tyres on my work car, obviously no snow whatsoever and the temp has warmed upEarthdweller said:
ghost83 said:
Gerradi said:
This sounds like De Ja Vu from 1990, exactly this where many, many people in negative equity. I remember when the place I worked closed the regional depot & many were overloaded as they had 2nd mortgages, large credit card debts....some even tried selling there new carpets , one chap god rest his soul took his life. Very hard times & I think this could easily be worse...
Scary reallyThe number of suicides in the forest was insane .. people gassing themselves in cars, hanging from trees etc as well as people at home hanging from bannisters, in garages and other gruesome ways .. the worst being stepping in front of tube/overground trains
Horse riders were forever coming across them on their morning rides
Added to that the number of burning cars in the forest, businesses catching fire etc
It was a time I really wouldn’t want to relive again
Now this time around there are many more people in debt than in 1989 and owing far more money but there are huge cultural and structural differences in 2022.
Defaulting no longer carries much, if any social stigma. And defaulting now occurs in many different ways.
Back in 1989/90 if someone defaulted it pretty much meant bankruptcy and the neighbours spitting on them and victimising them like backward savages. In 2022 are borrower can default very softly via IVAs and other agreements and the neighbours are more likely to cheer them as a braying mob of savages for sticking one over on the evil banks.
This is not to say that the next couple of years won't very, very sadly see an increase in the inevitable but it is far less likely to be linked to letters from Klarna begging them to pay something back, the landlord begging them to pay some rent or the bailiffs collecting the car.
menousername said:
Is it that there are not many for sale, or is your particular price range and spec/mileage requirements making choices limited?
Seems to be a good few out there until you go very low mileage
Yup. Not a lot of stock. A little bit due to Q4 habits but mostly because people are having to hang on to their old cars while the supply of new sorts itself out. Seems to be a good few out there until you go very low mileage
Personally, I think 2023 will be interesting. Manufacturers are going to all have to start discounting to find customers and that's going to lower used prices.
The market as a whole is almost entirely propped up by debt now and 2023 will see a very significant fall in buying power as a result so the more expensive stuff is going to get hung out as very few consumers in the U.K., regardless of income actually have any wealth, as in unleveraged buying power.
On top of the debt cost removing buying power 2023 will start to see the true impact of higher utility bills and food bills as well as mortgage and rent costs and the first place car owners will target for cost savings after dining out will be the second biggest debt cost they carry which is the cars.
Everything is pointing to the market splitting along some logical lines whereby, sensible and frugal to run cars hold up well but your big, wasteful wagons are very likely to fall harder.
We are transitioning from a decade when consumers spent everything and borrowed more and more back to historic normality where money is valued and held onto only to be parted with prudently. That means the car market which is now built upon borrowing next year's income and hurling it in the bin will fundamentally change back over the next couple of years.
This'll be distorted by the fears over the shift to EV in the next decade but fundamentally money talks and talks loudest and most people who were renting cars for £500/month will be slashing that as that money now goes on food, heating and rent/mortgage.
I suspect you'll see things like a Honda Jazz being quite resilient while glamour wagons like big, thirsty SUVs which the historic owners couldn't afford to buy and had to rent may come right back down.
For those who haven't shopped themselves into poverty over the last decade and don't need to grovel to nylon suits in order to obtain use of an oversized, profligate wagon then things are looking potentially very good right now.
For most PHers we're going to start seeing some genuine opportunities to get some good kit over the next couple of years.
I offloaded my newer cars earlier in the year when it became apparent dealers were willing to turn up that day and pay me more than I'd paid for cars that I didn't particularly like. I've a pair of sheds and the classics and I'm sitting with a shopping list for a couple of cars that will run me to 2035 without much trouble.
BMWs always seem to win for me. Nicer than the comparable Ford or French thing but no unfounded premium like Mercs Audis. They're pretty idiot proof tech wise and until recently haven't tried to be too clever. I'm currently wondering if a 535D estate, nicely loaded but just old enough to not be wobbling the steering wheel when you drive near a shrubbery might make a solid family chore wagon over the next decade?
An i3 as a local hack is also quite interesting and I can see EVs softening as they've been seriously blighted by the debt monkey consumer segment who are now going to struggle with the higher financing rates etc.
One can imagine Tesla's plummeting but I really can't be bothered with all that highly irritating screen stuff regardless of how cheap the cars became.
When I was looking at cars at the end of the summer (because I anticipated the ULEZ expansion going ahead) I set up some autotrader alerts. I bought the car in October, but I haven’t cancelled the alerts. They’re set up to capture things like larger engined 3/5 series, E classes, A6s, etc up to 20k.
I have noticed that the mileage on cars in the 18-19k range seems to have increased from sub-50k to 70k+. I don’t think I’d have got my car for what I paid for it if I’d waited. I don’t suppose the confirmation of the ULEZ expansion has helped buyers there, and I guess buyers nervous about taking on PCP might be looking at that price range instead.
I have noticed that the mileage on cars in the 18-19k range seems to have increased from sub-50k to 70k+. I don’t think I’d have got my car for what I paid for it if I’d waited. I don’t suppose the confirmation of the ULEZ expansion has helped buyers there, and I guess buyers nervous about taking on PCP might be looking at that price range instead.
I’m thinking a slump may not happen now and it’s just the usual fear mongering in the media for clicks.
Until the supply of new cars is more plentiful, demand will still be there regardless if PCP rates keep going higher.
I’m after a new company car (EV or low emitting PHEV) and needs to fit 5 comfortably so looking at the higher end.
I have x3 low price/refundable deposits on different cars and nothing is available anytime soon still and have been quoted 8 months to 2 years wait time.
Tesla are dropping in prices yes (used and new) but that’s because they are one of the few brands where you can get a brand new car right now within a week or so and the used market is flooded with 3 year leases ended and all up for sale.
Once the manufacturers can meet the demand more, that’s when I see things going more pear shaped.
Until the supply of new cars is more plentiful, demand will still be there regardless if PCP rates keep going higher.
I’m after a new company car (EV or low emitting PHEV) and needs to fit 5 comfortably so looking at the higher end.
I have x3 low price/refundable deposits on different cars and nothing is available anytime soon still and have been quoted 8 months to 2 years wait time.
Tesla are dropping in prices yes (used and new) but that’s because they are one of the few brands where you can get a brand new car right now within a week or so and the used market is flooded with 3 year leases ended and all up for sale.
Once the manufacturers can meet the demand more, that’s when I see things going more pear shaped.
Yup. I've a similar alert set but I've started to see asking prices softening but a lot of the stuff is high mileage but you'd arguably expect that for large estate cars. But through next year it's impossible for such a leveraged consumer market to be miraculously price insensitive or to not be impacted by more and more cities adding ULEZ zones.
Higher utility bills for most next year, fuel duty is going up, cost of borrowing will stay high, manufacturers will be discounting stock, more and more ULEZ and zero need for taxpayers to be forced to step in to support values. There are a lot of pressures here and looming to support a view that the consumer borrowing bloodbath could manifest itself in the car market and for it to start presenting fair value to PHers.
Won't be as many buyers for an E55 AMG next year, for example.
Higher utility bills for most next year, fuel duty is going up, cost of borrowing will stay high, manufacturers will be discounting stock, more and more ULEZ and zero need for taxpayers to be forced to step in to support values. There are a lot of pressures here and looming to support a view that the consumer borrowing bloodbath could manifest itself in the car market and for it to start presenting fair value to PHers.
Won't be as many buyers for an E55 AMG next year, for example.
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