What,Can and Should Mclaren be Doing About Protecting Resale

What,Can and Should Mclaren be Doing About Protecting Resale

Author
Discussion

Cheib

16,206 posts

116 months

Thursday 9th May
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cypriot said:
I don't think there is any particular issue with mclaren... they are an 8 year old car company, still finding their feet. At the end of the day, they still only make less than half of what ferrari make in any given year, so they are definitely not making too many cars. I honestly think things will settle down in a few years once they have a clear model line up (ie. mid engined entry car, GT car, and then full on super car etc), and so the need to release a new model every year stops. Once Mclaren commit to specific lifecycles, like replacing a model every 5 years, then I think values will be a bit more solid.
That’s true but Ferrari’s volume is spread across a wider range of cars.....also Ferrari have a totally different brand position I would say. There are people who will own Ferrari’s just because they want to own one and are not really interested in cars/want one as a status symbol etc.

I think McLaren’s problem is a combination of the amount of cars and the way the amount of models/special editions and doing things like increasing volume of cars. I think they also need to make them more affordable to run....warranty costs and servicing availability are huge issues which come up again and again.

Turbo cab

1,251 posts

173 months

Thursday 9th May
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Show more faith in there brand for starters, The fact that most Mclaren dealers wont even bid on a used car shows how much faith they have in there product and their ability to resale it, I've never had an issue putting a Lamborghini or Ferrari back through their dealer network.

Now I could be wrong but i have heard Mclaren is to offer a five year warranty as standard, If they are this will help massively as it shows confidence in there product. The fact the extended warranty is so expensive shows none. Including a service pack for X amount of years like Ferrari and Lamborghini do would also help IMO.

justin220

3,975 posts

145 months

Thursday 9th May
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Targarama said:
Reliability is pretty good in general, certainly no worse than other supercar brands. As for warranty costs, in reality £3,500 p.a. is nothing in the grand scheme of things for someone who can afford a £100k+ car. Those who complain about it are not owners or are dreamers. Yes, it could be less, yes Mclaren could sell their cars for less new etc. etc. But we all know they punch well above their class across the board, no need to, they are selling anyway at the current prices.
The owners group is full of chat about the warranty cost being too high. It's too high compared to other similar manufacturers, and that's what putting off people buying. Which reduced demand and the value drops.

Add to that the stories of unreliability and people saying not to run a McLaren without warranty, many posts even on PH saying people have been put off.

Mine is out of warranty next summer, and I'm in two minds. Sell on and take a big depreciation hit, or pay a big price to keep the warranty going. If I go for the first option I'm not sure I'll be in another Mac. If the second option was cheaper it'd be a no brainer. I love the car but won't want to risk it without a warranty. but near on £400 per month for warranty is a bit rich.

isaldiri

4,508 posts

109 months

Thursday 9th May
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justin220 said:
The owners group is full of chat about the warranty cost being too high. It's too high compared to other similar manufacturers, and that's what putting off people buying. Which reduced demand and the value drops..
What's the cost of the Ferrari/Lambo extended warranty?

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
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GRD 8 said:
sjc said:
I’d also suggest they stand by their products. Give them a 5 year or longer warranty and show some faith in the quality of their own cars.
Doing that will take some of the guesswork and (perceived) leap in the dark out of buying 4/5 year old cars, gradually stabilising the values.Making more info available to the likes of Thorney as the cars get older will also help
I agree. Part of the problem, for potential customers of second hand cars, is being put off by the uncertainty of the cost of maintaining these vehicles as they get older. As there are very few independent repairers and lack of technical information available for potential repairers, then most vehicles will have to return to the dealers for repair. This is fine while the cars are under warrantee, but i think its making potential customers very nervous when it comes to vehicles outside warrrantee. A possible solution is to make the initial warrantee longer and the extended warrantee either less expensive or more comprehensive. I believe that as the cars get older then to keep prices up independent repairers are a must if independent retailers are to be convinced to sell these cars.
The above two comments are exactly what is required to strengthen the used car market,which in turn fuels the confidence in the new car market, one cannot exist long term without the other!
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MDL111

3,451 posts

118 months

Thursday 9th May
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isaldiri said:
justin220 said:
The owners group is full of chat about the warranty cost being too high. It's too high compared to other similar manufacturers, and that's what putting off people buying. Which reduced demand and the value drops..
What's the cost of the Ferrari/Lambo extended warranty?
I think it is close to 4K euros a year and does not cover all that much from memory (might be wrong, but I think electrical gremlins for instance are not covered)

Edit: that’s Ferrari, no clue about Lambo

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
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Rocketreid said:
Juno said:
As the Mclaren Hatfield post turned into another depreciation disaster maybe it would be good to have a thread about how and what could be done and suggested to improve the situation.

As the constant depreciation talk obviously upsets many on here then this should be a way to look for positive solutions.

I'll start

All cars ordered to customer spec,one offs,should stop the panic selling of unsold stock cars at discounted prices further harming residuals

Don't build 100's of rubbish launch spec cars that just clog up the system and in the main are NOT what people want anyway when spending £250k, build desire and want in the market place

Get the list price right from the start (closer to the actual transaction prices) and address the ridiculous option prices then residuals wont seem quite so bad

Your go!!!




As mentioned The McLaren Owners Club are attempting to influence the hierarchy to listen to grass roots owners and also potential new owners. They are having regular meetings with them now and this may have some effect.

Unfortunately the Bahrainian investors/owners still want profits and that is a dilemma for such a young car manufacturer to achieve both profits for shareholders and deliver a reliable, sustainable product. The main issue has been the demand for Macs around the world has been very strong and the unfortunate constant model changes which has had a negative effect on used car residuals.

McLaren will succeed and many wealthy individuals won’t care greatly about losses but many ordinary folks will. A positive is there will be a group of people who will be able to get into a McLaren who perhaps would not usually be able to

With regards to pricing I think retail prices are not far off when compared to the competition although the extras are rather ridiculous. My 570S with Track Pack was over £17,000 more with not a huge amount to show for it !!!
I think you’ve hit the nail on the head, it’s a catch 22 when you are a newer and emerging brand!

I get the bit that Mclaren will pick the low hanging fruit from the Rich List but IMO those types of buyer come and go and are not generally enthusiasts for the longer term,OK for now as cash cows.

Yes it is good for used car buyers and there are some great bargains to be had after the first owner has taken the hit. However I can’t see us Brits being prepared to take too many hits and that’s where it may stall, the UK market is still very important after all said.

Good news to hear the interaction between Mclaren and owners, let’s hope it bears some fruit.

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
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justin220 said:
Car looks great but a pretty poor post IMO.

I'm sure you'd feel a lot better if your 720S hasn't cost you 50k depreciation. It's a good thread and we should be posting ideas how to avoid massive depreciation hits.

One for me is reduce the warranty costs. I don't understand how McLaren think £5k a year is acceptable. No wonder potential owners are put off.

The dealers should be supporting the used network. Buy in all the used stock and control the market. The used cars are clearly desirable as people are buying them. If McLaren dealers had all the stock they can dictate prices

They need to improve the perceived customer care. Personally I've had no issues but clearly others have. This rubs off onto potential owners and either reduces values or number of people willing to actually put their hand into their pockets. Any issues under warranty should be dealt with swiftly and efficiently. Like for like cars as replacements when work is being carried out

McLaren dont need to only match Ferrari etc, they need to be better
Your absolutely right about the crazy warranty costs,IMO these costs are saying either a. We have no confidence in our product or b. We are just going to rip your pants off, either way it’s not a good message.

As an example there is a 570 that I’d buy right now at what I would say is a very reasonable price, I would probably only keep it for 10/12 months. The issue is at sale time I’d have NO chance of selling private and would be required to do an SOR and stump up for a warranty to sell it. That’s going to be circa 10k with vat excluding depreciation which even on this reasonably priced car will be another 5-10k. Sadly I just can’t bring myself to accept that 20k for a years motoring at this price point is acceptable.

If the warranty,service costs and ability to sell privately or back to the dealer existed then I’d be in like a burglar. I know for sure that currently the dealer network won’t even bid on these older higher mileage cars so half of your exit route is cut off before you enter the ownership arena.

In comparison I’ve always sold my cars privately including many Porsche,Ferrari,Lamborghini and the likes with no problem, that’s the confidence that I and assume others would look for to inspire confidence in Mclaren

It’s a shame but hopefully time will resolve the issues

AL001

794 posts

211 months

Thursday 9th May
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The first thing McLaren should do is subsidise the warranty costs so it is circa 50% cheaper than currently. This would help support the used market, which in turn feeds into the new market.

Perhaps they have left it too late as the hefty depreciation on new (and more than usual niggles) is well established in most buyers minds. That won't put off all but will deter many from buying new in future I expect.

When buying my pre-owned 570 recently, the Mac salesman did say there was talk of bringing in something new on the warranty front (without being specific).

In saying that, I can't recall if Lambo have even introduced an extended warranty yet and I should know as have a Perf! Italian logic, no need to worry on warranty pricing, there isn't one. biggrin

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
quotequote all
AL001 said:
The first thing McLaren should do is subsidise the warranty costs so it is circa 50% cheaper than currently. This would help support the used market, which in turn feeds into the new market.

Perhaps they have left it too late as the hefty depreciation on new (and more than usual niggles) is well established in most buyers minds. That won't put off all but will deter many from buying new in future I expect.

When buying my pre-owned 570 recently, the Mac salesman did say there was talk of bringing in something new on the warranty front (without being specific).

In saying that, I can't recall if Lambo have even introduced an extended warranty yet and I should know as have a Perf! Italian logic, no need to worry on warranty pricing, there isn't one. biggrin
Isn’t the warranty on a new Lambo 4 years anyway ?sure it used to be.

355spiderguy

206 posts

112 months

Thursday 9th May
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I have been quoted a smidge under £8500 for a 4th year service and 24months of macwarranty when the time is due in October.

Normal service price at 4yrs is around £1350 so just over £3500 a yr for the warranty.

In jan a front strut had to be replaced due to signs of minor weeping...no warranty cost would be just over £3k.

Its was approx £270k 3.5 yrs ago....its an expensive car so for a near bulletproof warranty to cost £3500 a year i don't think its that bad...how much is a Ferrari warranty and how much is not covered by comparison?

With no warranty my Ferrari cost me the similar amount each year on bits and pieces.

Heck, my oldest lads M3 just needed pads, discs and 2 driveshafts...that cost around £1800....with lots of labour still to be added.

As a previous poster mentioned, if £3500 for a 5* warranty on a supercar seems expensive, maybe supercars are not for you.

With regards to depreciation, it appears as though there is almost a generation out there that have no idea this was the norm until recently and now normality is back in business and its a real shock to the system.

Best to get used to it...its not just a McLaren issue.



seawise

1,460 posts

147 months

Thursday 9th May
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If I wanted to improve my business, the first thing I'd do is look at want my competitors are doing better. Probably before I even ask my customers. McLaren rightly or wrongly seem to be battling with a reputation of being a bit aloof about the issues that they are currently facing. The main one for sure is perceived quality/reliability, be that of it's product or dealer network. How often do you hear Ferrari owners moaning about the dealer service for example. Never, or at least I haven't. That's the one thing that McLaren could fairly quickly and cheaply address. Get the dealers to look after your customers, sure some will be better than others at this, but McLaren should be all over their shop window to customers ensuring that their dealers are amongst the best in the market. These stories of dealers refusing to buy back cars they have sold are hugely damaging to the brand. Cut that out straight away. McLaren don't sell that many cars, so it should not be that hard for them to exercise a significant element of control over the used market. Once they have done that, then they could allow some independents to take up the excess in looking after the older cars that are coming out of warranty. McLaren should help support the indi's as well, as it will serve them very well in looking after a new band of new customers who can't currently stretch to new product, or choose not to and want to dip their toe in at a lower price point initially.

Also, it goes without saying, but flooding the market with a slightly confused but similar model range is also doing them no favours. Who wants to spend the tick end of quarter of a bar to find in a few months time that this model is old news. That's very short sighted, but I do understand that their shareholders want a decent return on their investment and I am afraid that means volume. Certainly in the early years.

Finally build the bloody cars properly, and don't launch them until they are 100 pcnt bug free. We seen how this sank TVR, and have done extreme damage to both Lotus and JLR's rep. I don't think the market want another slightly posher/faster Lotus. They want something comparable quality wise to the best Germans and Italians. Sadly there aren't enough enthusiasts to go around to put up with shoddy build and constant reliability niggles. Not anymore, and certainly not when chasing volume in an unforgiving market.

None of this seems rocket science to me, but of course we as punters only have a small insight into the full picture of what drives McLaren's business policy. I am not suggesting that they should try and do everything like Ferrari does, but it wouldn't harm them to cherry pick from some of their close competitors customer driven attributes.

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
quotequote all
355spiderguy said:
I have been quoted a smidge under £8500 for a 4th year service and 24months of macwarranty when the time is due in October.

Normal service price at 4yrs is around £1350 so just over £3500 a yr for the warranty.

In jan a front strut had to be replaced due to signs of minor weeping...no warranty cost would be just over £3k.

Its was approx £270k 3.5 yrs ago....its an expensive car so for a near bulletproof warranty to cost £3500 a year i don't think its that bad...how much is a Ferrari warranty and how much is not covered by comparison?

With no warranty my Ferrari cost me the similar amount each year on bits and pieces.

Heck, my oldest lads M3 just needed pads, discs and 2 driveshafts...that cost around £1800....with lots of labour still to be added.

As a previous poster mentioned, if £3500 for a 5* warranty on a supercar seems expensive, maybe supercars are not for you.

With regards to depreciation, it appears as though there is almost a generation out there that have no idea this was the norm until recently and now normality is back in business and its a real shock to the system.

Best to get used to it...its not just a McLaren issue.


I think you will find if you come out from under your Umbrella Mclaren depreciation is Spectacular by any measurement yikes unless of course you are the recipient of someone else’s hit! But don’t worry you will get used to it!

Taffy66

2,385 posts

43 months

Thursday 9th May
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Every new McLaren car which enters the production line should only be a personally specced customer order car..There shouldn't be a penny discount available.

isaldiri

4,508 posts

109 months

Thursday 9th May
quotequote all
355spiderguy said:


As a previous poster mentioned, if £3500 for a 5* warranty on a supercar seems expensive, maybe supercars are not for you.

With regards to depreciation, it appears as though there is almost a generation out there that have no idea this was the norm until recently and now normality is back in business and its a real shock to the system.

Best to get used to it...its not just a McLaren issue.


£3500 is not unexpected for a £200k ish car I agree and people expecting Porsche levels of warranty are quite frankly being stupid as Mclaren don't have economies of scale of selling 200k SUVs that is Porsche's real business these days. However £5k (for the 5+ year old cars) for cars that are approaching £100k and continuing to drop makes them a poor ownership proposition as the running cost of the thing just starts looking poor unless you start being prepared to chance running the car without the warranty where parts are very expensive..

Depreciation coming back might not just be a Mclaren issue but in a market when everything else has held better (and considerably better in many cases), if everything else starts falling like before Mclaren are going to be even worse affected....

crimbo

1,233 posts

169 months

Thursday 9th May
quotequote all
Sales were up last year 44% and it's clear thats all that matters, investors will want returns. None stop development is probably the only thing keeping them where they are. If cars held money maybe customers would stay in them for longer damaging profits.

More indies need to compete against each other but none are willing to take a punt. If your paying 5k a year warranty on an old one maybe the depreciation isn't that far different considering all new cars loose a load in the first few years. Run an old one for 4 years and your at 20k alone for warranty, their servicing is probably more plus a little wear and tear and it could be close to 30k before depreciation where people think it could loose another 20k.

So your thinking if I keep it 4 years my second hand car I got for 100k has cost 50k to own. There's people in second hand ferrari,porsche,lambo that have run cars for a decade cheaper than that. But then again that could be my man maths

I'm sure if the approved used mclarens got put up for sale say 5k more but came with a 2year extended warranty they would firm up then.

Taylor James

170 posts

2 months

Thursday 9th May
quotequote all
355spiderguy said:
I have been quoted a smidge under £8500 for a 4th year service and 24months of macwarranty when the time is due in October.

Normal service price at 4yrs is around £1350 so just over £3500 a yr for the warranty.

In jan a front strut had to be replaced due to signs of minor weeping...no warranty cost would be just over £3k.

Its was approx £270k 3.5 yrs ago....its an expensive car so for a near bulletproof warranty to cost £3500 a year i don't think its that bad...how much is a Ferrari warranty and how much is not covered by comparison?

With no warranty my Ferrari cost me the similar amount each year on bits and pieces.

Heck, my oldest lads M3 just needed pads, discs and 2 driveshafts...that cost around £1800....with lots of labour still to be added.

As a previous poster mentioned, if £3500 for a 5* warranty on a supercar seems expensive, maybe supercars are not for you.

With regards to depreciation, it appears as though there is almost a generation out there that have no idea this was the norm until recently and now normality is back in business and its a real shock to the system.

Best to get used to it...its not just a McLaren issue.


Good post. Especially:

As a previous poster mentioned, if £3500 for a 5* warranty on a supercar seems expensive, maybe supercars are not for you.

With regards to depreciation, it appears as though there is almost a generation out there that have no idea this was the norm until recently and now normality is back in business and its a real shock to the system.

Ferruccio

830 posts

60 months

Thursday 9th May
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Rocketreid ]uno said:
Unfortunately the Bahrainian investors/owners still want profits and that is a dilemma for such a young car manufacturer to achieve both profits for shareholders and deliver a reliable, sustainable product.
The best way to build value in any business is to have happy customers who recommend you.
The shareholders look to be much too greedy and much too impatient.

Juno

Original Poster:

3,261 posts

190 months

Thursday 9th May
quotequote all
Taffy66 said:
Every new McLaren car which enters the production line should only be a personally specced customer order car..There shouldn't be a penny discount available.
Definitely

mike01606

487 posts

90 months

Thursday 9th May
quotequote all
Juno said:
Definitely
But then how do you smooth production flow through your factory? Lay highly skilled people off when quiet then recruit and re-train when you get busy again? That would be a recipe for disaster.
This is where Ferrari seem to excel....as the model runs towards end of life, the specials get brought out and to get a slot for one, you have to buy cars that you might not want....
They rely on good customer relationships with a group of owners who will get first dibs on new models and make money on those knowing they will have to take mid-life run cars to keep the early launch cars and specials flowing.
McLaren seem to be operating like a volume manufacturer using pre-registered cars to smooth the production flow....

I’d be very interested in a McLaren and they are absolute bargains but as a man of modest means they’re out of reach purely on running/ownership costs. If you sort that, then they’d be more expensive to buy.