Will Coronavirus hit used car prices? (Vol 2)

Will Coronavirus hit used car prices? (Vol 2)

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Discussion

RUSTILLDOWN

354 posts

67 months

Friday 25th June 2021
quotequote all
havoc said:
321boost said:
dont wet yourself they are not going to back to where they were recently it is likely a golf R will cost the same as they did when new or even more. the days of you buying alot of car for small money are over
fk me there are some idiots on PH nowadays.

Go and study simple economics - supply and demand curves.
Agreed.

The Rotrex Kid

30,191 posts

159 months

Friday 25th June 2021
quotequote all
RUSTILLDOWN said:
321boost said:
remember at the start when people said the prices will drop?
Prices would have dropped if the government didn’t spend many many billions paying 10 million people to sit on the sofa.
And the rest of the country would have gone to st as well, so there’s that.

RUSTILLDOWN

354 posts

67 months

Friday 25th June 2021
quotequote all
The Rotrex Kid said:
RUSTILLDOWN said:
321boost said:
remember at the start when people said the prices will drop?
Prices would have dropped if the government didn’t spend many many billions paying 10 million people to sit on the sofa.
And the rest of the country would have gone to st as well, so there’s that.
Agreed, so there’s that.

Wills2

22,666 posts

174 months

Friday 25th June 2021
quotequote all
Earthdweller said:
I recall watching an interview on Tv with a very rich billionaire type who cashed out just before the GFC and didn’t lose any money

The interviewer asked him why he sold up and got out the market and how he saw it coming

His answer was simple, in that he said his postman stopped him and started telling him he had started buying shares and was going to make a fortune

At that point, he said, he knew it was time to get out the market
That guy was just paraphrasing what's called the "The shoeshine boy indicator" and it was Joe Kennedy that first coined that tale when asked how he knew it was time to the short the stock market before the 1929 crash.




jimPH

3,981 posts

79 months

Friday 25th June 2021
quotequote all
havoc said:
321boost said:
dont wet yourself they are not going to back to where they were recently it is likely a golf R will cost the same as they did when new or even more. the days of you buying alot of car for small money are over
fk me there are some idiots on PH nowadays.

Go and study simple economics - supply and demand curves. Then re-read some of the posts above about the recent (short-term) constriction in supply, AND the recent (temporary) increase in liquidity for many households, which has led to an equally temporary increase in demand.

You need go no further than this. There's no big secret, nothing special at work. Cars are a commodity for 99% of buyers, simple as that. And will remain so into the 2030s and full electrification.



SOME specialist cars - supercars, rare sports cars, homologation specials, limited editions of legendary models (e.g. Defender, MX5...) WILL appreciate as they get older, for the simple reason that the market perceives them as having more value due to either rarity, motorsport links, heritage, popular culture links or (more rarely) performance. These will only ever be a small minority, as if they were anything else the value would disappear.
You have to excuse the people talking up the market, they either sell cars or base the entire market on porsche values..


havoc

29,923 posts

234 months

Friday 25th June 2021
quotequote all
jimPH said:
You have to excuse the people talking up the market, they either sell cars or base the entire market on porsche values..
There's talking up the market, and then there's talking more nonsense than a modern politician. hehe

av185

18,432 posts

126 months

Saturday 26th June 2021
quotequote all
Wills2 said:
Earthdweller said:
I recall watching an interview on Tv with a very rich billionaire type who cashed out just before the GFC and didn’t lose any money

The interviewer asked him why he sold up and got out the market and how he saw it coming

His answer was simple, in that he said his postman stopped him and started telling him he had started buying shares and was going to make a fortune

At that point, he said, he knew it was time to get out the market
That guy was just paraphrasing what's called the "The shoeshine boy indicator" and it was Joe Kennedy that first coined that tale when asked how he knew it was time to the short the stock market before the 1929 crash.


Not unlike those who reckon its time to sell your house because the property market has peaked as soon as your chums start saying how much their property has gone up in value.

av185

18,432 posts

126 months

Saturday 26th June 2021
quotequote all
jimPH said:
You have to excuse the people talking up the market, they either sell cars or base the entire market on porsche values..
And you have to excuse those people constantly talking down the market pushing their agenda in the hope of securing a cheap car and being completely deluded and oblivious to market conditions and rising prices despite all the evidence to the contrary.

If you understood the market you would know most cars including many mainstream brands have shown large value increases of late ££ and not just Porsche which incidentally have not shown the greatest increases although some limited run cars have done particularly well.


havoc

29,923 posts

234 months

Saturday 26th June 2021
quotequote all
av185 said:
And you have to excuse those people constantly talking down the market pushing their agenda in the hope of securing a cheap car and being completely deluded and oblivious to market conditions and rising prices despite all the evidence to the contrary.

If you understood the market you would know most cars including many mainstream brands have shown large value increases of late ££ and not just Porsche which incidentally have not shown the greatest increases although some limited run cars have done particularly well.
OK, let's put this to bed for once and all...

1) please see my post on the previous page ref. supply and demand - the last 15 months have seen supply significantly curtailed of new cars. Used cars are a substitute, therefore if demand for all cars remains the same, demand for new cars will increase...which will put prices up.

This IS temporary - as soon as the OEMs are back running at full pelt, the used car market will start sliding back again because those who want a new car will be able to get one.

2) OEMs have, in the UK at least, put their prices up steadily over the last 4 years. FX problems and Brexit are both significant contributors, but probably not the only ones. If the price of new cars goes up, then (as they're a substitute) the price of new cars will also be pulled up to a degree.

This too is temporary, as I do not see any further increases in new car prices going forwards (FX and Brexit are both now stabilised, and the UK economy is unlikely to enter a boom anytime soon, potentially the opposite once the Covid bounceback has stabilised). So any increases have already been priced-in to the used market.

3) Certain rare cars (as per my post on the previous page) are immune from the usual depreciation curve because they are Veblen Goods, or are perceived as "investments"...which puts them separate from the 99.9% of cars which are cars-as-commodity.

Rises in classis Porsche prices does not translate down to rises in modern Audi prices, for example...



Is it too much to ask that anyone posting does a little bit of studying into basic economics first?!? rolleyes

Pistonheader101

2,206 posts

106 months

Saturday 26th June 2021
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Are fords factories still shut?

Fast Bug

11,597 posts

160 months

Saturday 26th June 2021
quotequote all
I honestly don't see the supply issues with new vehicles being resolved this year, and probably not early next year

av185

18,432 posts

126 months

Saturday 26th June 2021
quotequote all
havoc said:
Rises in classis Porsche prices does not translate down to rises in modern Audi prices, for example...
Clearly.

No ones mentioned classic Porsches we all know the market for these we are talking about contemporary models from basic Caysters to say 3 year old GT2 RS at £375k.

Check out the 'rocketing used car price thread' for further evidence of supply and demand and the current market conditions from numerous posters.

havoc

29,923 posts

234 months

Saturday 26th June 2021
quotequote all
av185 said:
Check out the 'rocketing used car price thread' for further evidence of supply and demand and the current market conditions from numerous posters.
I've never disputed that. I can see it clearly, and I can see the causes.

My point is that this phenomenon is transient...once the new-car supply issue is resolved, used car prices will resume their downward trajectory.

Wills2

22,666 posts

174 months

Saturday 26th June 2021
quotequote all
WBAC quoted me £29,680 for my 69 plate Golf Gti TCR on 6800 miles this week

So that's £26,450 in March then £27,500 to £28,450 then £29,400 to £29,680 as we approach the end of June.

jimPH

3,981 posts

79 months

Saturday 26th June 2021
quotequote all
av185 said:
jimPH said:
You have to excuse the people talking up the market, they either sell cars or base the entire market on porsche values..
And you have to excuse those people constantly talking down the market pushing their agenda in the hope of securing a cheap car and being completely deluded and oblivious to market conditions and rising prices despite all the evidence to the contrary.

If you understood the market you would know most cars including many mainstream brands have shown large value increases of late ££ and not just Porsche which incidentally have not shown the greatest increases although some limited run cars have done particularly well.
Well I don't know if it's you, I can't be bothered to trawl the thread, but people seem to be thinking these prices are here to stay.

No one can deny prices are up, but I can't see it lasting longer than 12-18 months. Maybe less.

People need to recognise that the circus is in town and the temporary increase in trade will return to normal when the circus leaves.

WBAC price has dropped for my merc and hasn't gone above what I sold it for. It sucks not being able to get any good deals on cars I want, but that can't be helped.

Fast Bug

11,597 posts

160 months

Saturday 26th June 2021
quotequote all
I'd say we're in this for 12 months as a minimum. There will also be more price rises on new in that time, and support for fleets will be wound back further. I'm not sure if that will change once supply eases, but some commercial vehicles have lead times of Q2 next year already, I'd imagine some cars are Q1 if not Q2 as well.

Casa1862

1,062 posts

164 months

Saturday 26th June 2021
quotequote all
I don’t think prices will fall, you’ll have restricted new cars for a while, which will maintain pricing, plenty of cash floating around, official inflation figures are rising, unofficial inflation figures everyone knows is sky high, I just don’t see an environment for drops, maybe prices will remain steady but not drops, inflation will make sure of that. Once the consumer gets used to paying a price, rarely is there an incentive to bring the price down, it’s not just cars but goods in general. The likes of WBAC and the other supergroups are more than capable of knowing if this is a blip or more permanent, certainly more knowledgeable then folks on PH!.

Edited by Casa1862 on Saturday 26th June 21:58

jimPH

3,981 posts

79 months

Saturday 26th June 2021
quotequote all
Great, PCP just got a lot cheaper.

  • checks PCP deals*
Turns out they haven't. Guess dealers quite like depreciation after all.

Deep Thought

35,724 posts

196 months

Saturday 26th June 2021
quotequote all
jimPH said:
Great, PCP just got a lot cheaper.

  • checks PCP deals*
Turns out they haven't. Guess dealers quite like depreciation after all.
Nothing to do with dealers. The finance company sets the residual.

Clearly right now they are working on the basis that prices may have dropped in 3 years time.

And as new cars are selling so well, why would they take any risk?

Fezzaman

552 posts

192 months

Sunday 27th June 2021
quotequote all
Deep Thought said:
jimPH said:
Great, PCP just got a lot cheaper.

  • checks PCP deals*
Turns out they haven't. Guess dealers quite like depreciation after all.
Nothing to do with dealers. The finance company sets the residual.

Clearly right now they are working on the basis that prices may have dropped in 3 years time.

And as new cars are selling so well, why would they take any risk?
If the logic of 'market is strong/going to be strong so we (the finance company) can set higher GFVs and/or make PCPs cheaper with lower APR for the end user because we are so generous' held, why did BMWFS do what was (IMO) the equivalent of a fire sale last summer on up to 18 mth old M cars offering 2.9% APR on AUCs? Last summer everyone thought it was all going kaput right? Or maybe BMWFS knew all along that market was going to be strong so they offered cracking deals but everyone was too scared to bite/sat at home waiting for a mythical 'drop in prices' - it just happened artificially by dropping finance rates.

Can't find the PH thread where people were posting up quotes/deals they were getting but here's one from cutters - the deals even covered stuff like late M3CS/M4CS cars which had taken a massive drop in that first year but could be picked up with a relatively high GFV. You had to be quick and be ready to move on cars though as dealers then starting increasing the advertised price of incoming stock to account for the newfound affordability when headline APR dropped from 9.9% or whatever to 2.9% overnight.

https://forums.m3cutters.co.uk/threads/bmw-auc-fin...

Some example numbers for an M2 - £300/pm with £6k down on 8k miles pa. They sound unbelievable now, but depending on what you were in the market for, last summer was the time to 'get a bargain'. By the same measure, the current market dynamic will seem 'unbelievable' too (one way or the other!!).