Will Coronavirus hit used car prices? (Vol 2)
Discussion
time waster said:
Chancellor clearly very worried about cost of living crisis and handing out money to all households.
just the start of it
https://www.bbc.co.uk/news/live/uk-61591398
Astra prices are already on the up I’d imagine.just the start of it
https://www.bbc.co.uk/news/live/uk-61591398
jimPH said:
I don't think it matters how much money people earn the cost of living affects everyone.
If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
That's just it, I'm not going to keep money as it's devaluing at 10% p/a and intend to buy a car with it. There are hard times for some at the moment I get that but this is not representative of the whole population many of whom are not really impacted by an energy bill that is 300 quid a month rather than 150.If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
In a normal supply market that ratio of people affected would be sufficient to impact the used market however with significantly reduced supply it won't be to the tune of a crash. Add in low unemployment and low interest rates and there is enough money about to keep the transactions going. New car prices are increasing daily/monthly due to rising production costs which will further support the used market. Waiting just sees the ship sailing further from the shore.
I believe there will be a continued softening of used prices with large engined stuff taking a much steeper downward curve but nothing more severe overall. BTW I'm not a motor trader.
Venisonpie said:
That's just it, I'm not going to keep money as it's devaluing at 10% p/a and intend to buy a car with it. There are hard times for some at the moment I get that but this is not representative of the whole population many of whom are not really impacted by an energy bill that is 300 quid a month rather than 150.
In a normal supply market that ratio of people affected would be sufficient to impact the used market however with significantly reduced supply it won't be to the tune of a crash. Add in low unemployment and low interest rates and there is enough money about to keep the transactions going. New car prices are increasing daily/monthly due to rising production costs which will further support the used market. Waiting just sees the ship sailing further from the shore.
I believe there will be a continued softening of used prices with large engined stuff taking a much steeper downward curve but nothing more severe overall. BTW I'm not a motor trader.
That's broadly my view too. Pay rises do offset for some of the inflation too, and I am talking about organic ones alone. Although of course that could also generate a bit of inflation in itself but I think it is reactive so hopefully most people will be sensible. The current high inflation is by and large due to the supply side, not just in the car industry. Some will suffer sadly but the overlap between them and the people actually buying cars might not be that great, certainly still not large enough to offset for the continued shortage, for now.In a normal supply market that ratio of people affected would be sufficient to impact the used market however with significantly reduced supply it won't be to the tune of a crash. Add in low unemployment and low interest rates and there is enough money about to keep the transactions going. New car prices are increasing daily/monthly due to rising production costs which will further support the used market. Waiting just sees the ship sailing further from the shore.
I believe there will be a continued softening of used prices with large engined stuff taking a much steeper downward curve but nothing more severe overall. BTW I'm not a motor trader.
Venisonpie said:
jimPH said:
I don't think it matters how much money people earn the cost of living affects everyone.
If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
That's just it, I'm not going to keep money as it's devaluing at 10% p/a and intend to buy a car with it. There are hard times for some at the moment I get that but this is not representative of the whole population many of whom are not really impacted by an energy bill that is 300 quid a month rather than 150.If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
In a normal supply market that ratio of people affected would be sufficient to impact the used market however with significantly reduced supply it won't be to the tune of a crash. Add in low unemployment and low interest rates and there is enough money about to keep the transactions going. New car prices are increasing daily/monthly due to rising production costs which will further support the used market. Waiting just sees the ship sailing further from the shore.
I believe there will be a continued softening of used prices with large engined stuff taking a much steeper downward curve but nothing more severe overall. BTW I'm not a motor trader.
Similarly depending on your risk profile there is regular volatility in equity markets once more making a car purchase more convincing to many overall.
Your money isn't devaluing at 10% a year
It devalued 9% in the last 12 month, that has happened nothing you can do about it.
It is projected to devalue 3.5% over the next 12 months.
That projection may prove to be low, bit equally could prove to be high.
But that is only relevant if you plan to spend your money on a broad range of goods and services.
If you are into cars then a good proportion of your money may go on cars, and if you tend to buy used they've gone up 27% so your personal inflation rate is huge, however if used prices fall over the next 12 months your personal inflation rate drops and could potentially be negative.
It devalued 9% in the last 12 month, that has happened nothing you can do about it.
It is projected to devalue 3.5% over the next 12 months.
That projection may prove to be low, bit equally could prove to be high.
But that is only relevant if you plan to spend your money on a broad range of goods and services.
If you are into cars then a good proportion of your money may go on cars, and if you tend to buy used they've gone up 27% so your personal inflation rate is huge, however if used prices fall over the next 12 months your personal inflation rate drops and could potentially be negative.
Venisonpie said:
jimPH said:
I don't think it matters how much money people earn the cost of living affects everyone.
If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
That's just it, I'm not going to keep money as it's devaluing at 10% p/a and intend to buy a car with it. There are hard times for some at the moment I get that but this is not representative of the whole population many of whom are not really impacted by an energy bill that is 300 quid a month rather than 150.If you have money, you are more likely to want to keep it. Or at least you will, once you accumulate some with your new uplift...
Why pay peak prices during a low demand cycle? Just wait for production to catch up and see where the market is next year or so.
Its just a sensible, reasonable action.
In a normal supply market that ratio of people affected would be sufficient to impact the used market however with significantly reduced supply it won't be to the tune of a crash. Add in low unemployment and low interest rates and there is enough money about to keep the transactions going. New car prices are increasing daily/monthly due to rising production costs which will further support the used market. Waiting just sees the ship sailing further from the shore.
I believe there will be a continued softening of used prices with large engined stuff taking a much steeper downward curve but nothing more severe overall. BTW I'm not a motor trader.
Prices are artificially high due to low supply.
They'll be lower when supply increases. In fact the arse will fall out.
(I bought a new car in Sept that we needed, but if I was buying something I wanted, I'd wait)
Edited by jimPH on Thursday 26th May 17:05
I know our friend likes to quote other posters, so here's one of my own. Merc EQB arriving 3 months earlier than the delivery date:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Certainly not the case that lead times are getting longer or staying long.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Certainly not the case that lead times are getting longer or staying long.
Fusion777 said:
I know our friend likes to quote other posters, so here's one of my own. Merc EQB arriving 3 months earlier than the delivery date:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Certainly not the case that lead times are getting longer or staying long.
MB seem to be prioritising EV over traditional ICE at the moment. It all helps with the CAFE regulations at the end of the year.https://www.pistonheads.com/gassing/topic.asp?h=0&...
Certainly not the case that lead times are getting longer or staying long.
Still no sign of my new car, this is the first company car I've had to get serviced!
Were people asleep in 2007/8/9?
Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
Fast Bug said:
MB seem to be prioritising EV over traditional ICE at the moment. It all helps with the CAFE regulations at the end of the year.
Still no sign of my new car, this is the first company car I've had to get serviced!
I’m sure I read that the V-Class is now only available as electric (EQV), all diesel variants are no longer sold - however I don’t recall where or if it’s an accurate statement.Still no sign of my new car, this is the first company car I've had to get serviced!
Mr Whippy said:
Were people asleep in 2007/8/9?
Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
Extremely unlikely, simply due to rising new prices.Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
Btw we were buying 2 year old Carreras in early 2009 at 20% under book.
What was surprising though was the pace of recovery. Many sold out on the crash took a masdive hit ££ but were forced to pay way over book price retail on the rise ££ buying back in due to the speed of the bounce back in prices. Shows clearly how being out of the market is often riskier than being in.
No chance this will be repeated this time around though. Totally different scenario simply due to the supply constraints and huge increase in new prices.
Yes fewer buyers for cars with the economic headwinds but fewer cars available to buy.
Mr Whippy said:
Were people asleep in 2007/8/9?
Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
I would say that the supply issue wasn't a factor then, there will be a drop due to economic factors but it won't be so sudden due to the supply issue not being a sudden fix. Probably a slow decline of prices month by month like we are seeing now.Inflation! Stagflation! Rate rises!
Car prices strong.
Petrol and diesel spiking in price.
2009. Cars probably went from 20% a year depreciation average to 35-40% curves over that 18 month period.
Dealers that were full of used Porsches (specialist one near me I drove past regularly), now full of diesel VWs and Audis etc.
Given 36 months used to be a 50% loss, or 20% a year, I can see a 50% in 18-24 months drop coming along soon.
Indecision said:
Fast Bug said:
MB seem to be prioritising EV over traditional ICE at the moment. It all helps with the CAFE regulations at the end of the year.
Still no sign of my new car, this is the first company car I've had to get serviced!
I’m sure I read that the V-Class is now only available as electric (EQV), all diesel variants are no longer sold - however I don’t recall where or if it’s an accurate statement.Still no sign of my new car, this is the first company car I've had to get serviced!
Thought I’d add a bit of what i am seeing from a material supply chain perspective and my other observations.
It seems that the price of raw materials has now peaked and levelled off, this is steel, copper, nickel, titanium etc. They levelled off about 4 weeks ago. Confidence is returning with suppliers holding prices for 7 days now, after a period of only holding for 24 hours.
Prices rose rapidly due to 2 factors, increased demand out of Covid and Ukraine, I was anticipating a 12-15% rise in costs as we came out of Covid, but have seen rises anywhere between 20% and 80% depending on the commodity.
This has levelled off as other supply has been ramped up to meet the demand, I expect commodity prices to remain static and then fall around March,April next year but not back to where they were. However If China goes nuts like they did in 2010 and buy everything then all bets are off.
This along with energy has increased the cost of new car production which is being passed on, I would expect new car prices to level off, possibly with some lag as the final increases trickle through.
Electronics wise the biggest issue now is obsolescence, as the suppliers are just not making some of the old chips anymore, this will likely be the cause of models being dropped as it makes no sense re-designing a car that will soon be phased out anyway. Supply of anything that isn’t obsolete is actually not to bad now after being a total sh*t show about a month ago
New car order wise, we have a few fleet cars on order, Audi is crazy leadtimes that just get pushed out. BMW are fairing better quoting in the 30 week bracket with some models available immediately if you aren’t fussy. Merc have reasonable availability on electric. (We only buy high end stuff)
Used cars, I have been watching the larger end of the market and have seen price falling inline with depreciation again, but no mass correction, that could happen later in Q4 as the new supply ramps back up but I am not banking on it.
It seems that the price of raw materials has now peaked and levelled off, this is steel, copper, nickel, titanium etc. They levelled off about 4 weeks ago. Confidence is returning with suppliers holding prices for 7 days now, after a period of only holding for 24 hours.
Prices rose rapidly due to 2 factors, increased demand out of Covid and Ukraine, I was anticipating a 12-15% rise in costs as we came out of Covid, but have seen rises anywhere between 20% and 80% depending on the commodity.
This has levelled off as other supply has been ramped up to meet the demand, I expect commodity prices to remain static and then fall around March,April next year but not back to where they were. However If China goes nuts like they did in 2010 and buy everything then all bets are off.
This along with energy has increased the cost of new car production which is being passed on, I would expect new car prices to level off, possibly with some lag as the final increases trickle through.
Electronics wise the biggest issue now is obsolescence, as the suppliers are just not making some of the old chips anymore, this will likely be the cause of models being dropped as it makes no sense re-designing a car that will soon be phased out anyway. Supply of anything that isn’t obsolete is actually not to bad now after being a total sh*t show about a month ago
New car order wise, we have a few fleet cars on order, Audi is crazy leadtimes that just get pushed out. BMW are fairing better quoting in the 30 week bracket with some models available immediately if you aren’t fussy. Merc have reasonable availability on electric. (We only buy high end stuff)
Used cars, I have been watching the larger end of the market and have seen price falling inline with depreciation again, but no mass correction, that could happen later in Q4 as the new supply ramps back up but I am not banking on it.
Some interesting data out from Asda this morning, they have a weekly disposable income tracker (earnings, less essentials, less tax) which shows a year on year decline of 16% (the largest decline since 2008).
The tracker currently shows a disposable income level of £205, a level not seen since October 2018.
Unwinding all the significant gains seen during COVID.
A year on year decline in avg disposable income is a rare event, see graph and the few times the red line dips below zero (graph excludes latest month April 22 data) - Statement on latest data can be found here:
https://www.bloomberg.com/news/articles/2022-05-26...
The tracker currently shows a disposable income level of £205, a level not seen since October 2018.
Unwinding all the significant gains seen during COVID.
A year on year decline in avg disposable income is a rare event, see graph and the few times the red line dips below zero (graph excludes latest month April 22 data) - Statement on latest data can be found here:
https://www.bloomberg.com/news/articles/2022-05-26...
av185 said:
What was surprising though was the pace of recovery. Many sold out on the crash took a masdive hit but were forced to pay way over book price retail on the rise buying back in due to the speed of the bounce back in prices. Shows clearly how being out of the market is often riskier than being in.
The reason the car market recovered so quickly was down to the scrappage scheme! The industry was on its arse and the scrappage scheme was a massive success in bringing back sales. Dealers were offering huge discounts on top of the schemes framework which was getting things moving. If you were trading in your ropey mk1 espace worth pennies and effectively getting 6-7 grand off a new s-max (which dealers were offering at the time) which retailed at 22k on 0% finance, it was a no brainer for many people.
I’m sure you like to think the market just bounced but it was government intervention and massive discounts that got it going again.
Just waiting for ‘nope, nothing to do with the scrappage scheme or discounts, market was pulled up by escalating values of GT3s and other limited availability Porsches, everything else just followed, even Astras.
Except the stuff that didn’t such as pointless practical cars that people actually need - a clear sign that prices can only ever go up’
It’s almost become parody.
Except the stuff that didn’t such as pointless practical cars that people actually need - a clear sign that prices can only ever go up’
It’s almost become parody.
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