Secondhand car price crash?
Discussion
Deep Thought said:
Earthdweller said:
It was mentioned on here on another thread, Mercedes aren’t doing well at all and if they hadn’t registered an entire new fleet of centrally owned demo cars in Jan it would be dire. Dealers aren’t happy and customers aren’t happy
Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
They're just several months in to a long term strategy. Long term benefits not short term gains? No?Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
Edited by Earthdweller on Tuesday 4th April 12:04
Fundamentally, if a global company is commiting to a new long term strategy, they'll have modelled in the short term turbulence it will cause.
Edited by Deep Thought on Tuesday 4th April 12:35
Deep Thought said:
Earthdweller said:
It was mentioned on here on another thread, Mercedes aren’t doing well at all and if they hadn’t registered an entire new fleet of centrally owned demo cars in Jan it would be dire. Dealers aren’t happy and customers aren’t happy
Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
They're just several months in to a long term strategy. Long term benefits not short term gains? No?Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
Edited by Earthdweller on Tuesday 4th April 12:04
Fundamentally, if a global company is commiting to a new long term strategy, they'll have modelled in the short term turbulence it will cause.
Edited by Deep Thought on Tuesday 4th April 12:35
And they have no control over customer reaction and decision making
Certainly from a personal point of view if I was considering a C Class v an A4 and the Audi was incentivised and subsequently several £k less than the C then I’d be hard put to put my money in the Merc that wasn’t
I’m sure that view is equally valid for both retail and fleet buyers
But as I said time will tell
Earthdweller said:
Time will tell …
And they have no control over customer reaction and decision making
Certainly from a personal point of view if I was considering a C Class v an A4 and the Audi was incentivised and subsequently several £k less than the C then I’d be hard put to put my money in the Merc that wasn’t
I’m sure that view is equally valid for both retail and fleet buyers
But as I said time will tell
Yup. Agreed.And they have no control over customer reaction and decision making
Certainly from a personal point of view if I was considering a C Class v an A4 and the Audi was incentivised and subsequently several £k less than the C then I’d be hard put to put my money in the Merc that wasn’t
I’m sure that view is equally valid for both retail and fleet buyers
But as I said time will tell
That is going to be the choice people have - get a discounted Audi or BMW or whatever or pay more for the Mercedes. If that means Mercedes sell less A Class and C Class then (their approach seems to be) so be it.
Earthdweller said:
Plenty of citations out there if you want to look .. even been covered on MSM and TV channels
Here’s an example :
https://electrek.co/2023/04/01/ice-car-values-plum...
If it has been covered in MSM and TV, why quote a site that only exists to promote EVs?Here’s an example :
https://electrek.co/2023/04/01/ice-car-values-plum...
And the only mainstream news source I can find is CNBC talking about discounts of 2-7000 dollars, hardly apocalyptic levels of discount.
Deep Thought said:
Mr Whippy said:
Deep Thought said:
Mr Whippy said:
It’s obviously nonsense that you make more by selling less high margin gear.
That’s a different market and is accordingly full of competition.
Could you imagine this in the board rooms of car makers?
We’re gonna make less, and sell them for more!
Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.
You mean like Mercedes are directly doing now?That’s a different market and is accordingly full of competition.
Could you imagine this in the board rooms of car makers?
We’re gonna make less, and sell them for more!
Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.
And many other manufacturers are indirectly doing by raising prices and offering less discounts?
(hint, someone else will fill the demand gap, thus taking away the ability to charge more)
Don't you look around at this vast economic and industrial consumer society, and wonder how we got here?
(hint, it's because demand and supply balance out)
This is why we don't have a car industry that sells one car a year for £100,000,000,000 to a very rich single owner.
After inception, car demand grew rapidly and continued/s to do so.
Now if global car demand is weakening, then I can see a need to scale back volume of production generally. However it's not in order to generate artifical demand, it's to curb over-supply and crashing prices.
They're not going to do this to 'make more money', they're doing it to 'not lose as much money'
Unless the whole paradigm of supply and demand changed over-night. I look around and see people as stupid and crazy as they've always been to buy moronic useless s
t... so no it hasn't changed.They got in on volume to make more profit because “economies of scale”
Higher margin is a function of making a good product where consumers are willing to pay more.
That has to be seen though hasn’t it?
It’s seemingly great news for shareholders, coming off the back of 3 years of record breaking stimulus.
The proof of what Mercedes are saying will be in the pudding.
I expect they’ll just cherry pick the highest margin lines, ie, popular models get price hikes, low margin/popularity get cut.
Any business can make money doing that. For a time.
Earthdweller said:
It was mentioned on here on another thread, Mercedes aren’t doing well at all and if they hadn’t registered an entire new fleet of centrally owned demo cars in Jan it would be dire. Dealers aren’t happy and customers aren’t happy
Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
Whilst volume may be down, and Audi et al are on the up, is it profitable business? As an example MB have pulled out of rental which for big numbers loses money, they've also pulled out of (heavily discounted) private hire/chauffeur market. There's no point shifting metal if you're not making any money on it.Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%
Mercedes sales are down 37%, Audi sales for comparison are up 40%
(SMMT figures)
That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling
Edited by Earthdweller on Tuesday 4th April 12:04
As an aside, will agency model stay? I'm not sure, there's so much invested in to making it work that they'll throw everything at it to make it work. But, they tried agency model for vans in Scandinavia and switched back to margin model. Its a big but though, as vans are a more difficult sale in many cases.
Deep Thought said:
I suggest you give Mercedes a ring and let them know their future strategy is "wrong" then, because less volume, higher margin is precisely what they say they are doing going forward.
So back to what they used to do when their cars actually were ‘premium’ and depreciated very slowly before they piled them high and financed them cheaply to the great unwashed.Tomanybikes said:
So back to what they used to do when their cars actually were ‘premium’ and depreciated very slowly before they piled them high and financed them cheaply to the great unwashed.
When was that?I remember luxury cars having ridiculous depreciation in the 90s and 00s.
I bought a 4.5 year old £45k for £13k in 2008, 18 months later it was worth £9k, I sold it to a friend who still has it, it's worth about £4-5k, it cost me more to own it for 18 months than them to own it for 12 years.
Tomanybikes said:
Deep Thought said:
I suggest you give Mercedes a ring and let them know their future strategy is "wrong" then, because less volume, higher margin is precisely what they say they are doing going forward.
So back to what they used to do when their cars actually were ‘premium’ and depreciated very slowly before they piled them high and financed them cheaply to the great unwashed.
. My Da bought a fking Cavalier. It's hard to shake prejudices that get baked in early. I still have a bit of it even though I know it's not true.Mercedes financial services aren't fools. You can be sure they've modelled every potential outcome of a policy. It doesn't mean they'll get it right but if they get it wrong it'll be for sound reasons. Lol, can't believe I just wrote that but I've done board room presentations.
e-honda said:
Tomanybikes said:
So back to what they used to do when their cars actually were ‘premium’ and depreciated very slowly before they piled them high and financed them cheaply to the great unwashed.
When was that?I remember luxury cars having ridiculous depreciation in the 90s and 00s.
I bought a 4.5 year old £45k for £13k in 2008, 18 months later it was worth £9k, I sold it to a friend who still has it, it's worth about £4-5k, it cost me more to own it for 18 months than them to own it for 12 years.
cheesejunkie said:
There was a time when I would have put Mercedes in a bracket above any other mainstream German marque. Above BMW and way above Audi. I'm not as old as some on here and older than others but late 80's, early 90's. They were premium. A wealthy done well uncle owned one, very few did in the place I grew up. Another wealthy done well uncle owned a 7 series and it wasn't as impressive to us. Mind you, the other Uncle that owned the Capri was the coolest . My Da bought a fking Cavalier. It's hard to shake prejudices that get baked in early. I still have a bit of it even though I know it's not true.
Mercedes financial services aren't fools. You can be sure they've modelled every potential outcome of a policy. It doesn't mean they'll get it right but if they get it wrong it'll be for sound reasons. Lol, can't believe I just wrote that but I've done board room presentations.
If they have got it wrong, it will be because they have made assumptions that didn't materialise.. My Da bought a fking Cavalier. It's hard to shake prejudices that get baked in early. I still have a bit of it even though I know it's not true.Mercedes financial services aren't fools. You can be sure they've modelled every potential outcome of a policy. It doesn't mean they'll get it right but if they get it wrong it'll be for sound reasons. Lol, can't believe I just wrote that but I've done board room presentations.
cheesejunkie said:
911hope said:
If they have got it wrong, it will be because they have made assumptions that didn't materialise.
Bear sts in woods.When I get things wrong it's always because my predictions go wrong due to incorrect assumptions
They will have assumed lost volume at a certain level. If it is worse than their low ball assumption, it will be a major failure.
911hope said:
cheesejunkie said:
911hope said:
If they have got it wrong, it will be because they have made assumptions that didn't materialise.
Bear sts in woods.When I get things wrong it's always because my predictions go wrong due to incorrect assumptions
They will have assumed lost volume at a certain level. If it is worse than their low ball assumption, it will be a major failure.
You and I don't know any better than MBFS unless I'm mistaken. That's not a criticism.
I was joking about stating the obvious. "If they have got it wrong, it will be because they have made assumptions that didn't materialise.", I can read obfuscation speak, it's my job sometimes.
SFTWend said:
Bit confused about the Mercedes low volume higher price model.
Why do they keep phoning inviting me to special discounted stock events?
Its an agency model that allows them to control discounting.Why do they keep phoning inviting me to special discounted stock events?
Also, its a long term plan, not something with instant results. Their aim is to return to lower volumes of higher end cars, rather than flogging a load of A Classes at minimal profit.
Deep Thought said:
Inky81 said:
Or, just perhaps, they've modelled it with flawed data and unrealistic assumptions around competitor and consumer behaviour?
Well, as a multi $billion company with 100+ years experience in the industry, i'd say they maybe know their market better than you, no?They could be wrong. But the odds of being wrong vs random even if informed bloke on internet is in their favour.
I joked on a thread that we're eventually going to end up with car haggling being a chatgpt variant arguing with a chatgpt variant.
The internet and WBAC has hit the ability of dodgy dealers to inflate prices. They can still sell lemons. But price comparisons mean everything's open. I could write a scraper script in a few hours, that's a specialist skill but it's easily doable if you know how.
Every car finance house knows what they're doing. You, me, us, don't know the margin in the car. They do.
You, me, us, don't have much influence over the resale value. They do.
It's not a closed shop but the manufacturers have more control than just the retail price.
Theoldguard said:
Deep Thought said:
Well, as a multi $billion company with 100+ years experience in the industry, i'd say they maybe know their market better than you, no?
A few banks that had a long history and sound business models changed course and are now no longer with us. With regards to Mercedes - their company, their choices. They know their business better than anyone here.
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