Secondhand car price crash?

Secondhand car price crash?

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Hitch

6,101 posts

193 months

Sunday 26th March 2023
quotequote all
I visited a large local car supermarket yesterday. Generally well regarded as not being a seller of dodgy cars. We've had two cars off them in the last five years with no issues.

This place used to be the home of the 24-36 month old 15-30k miles bargain. Cars used to be very well prepped before sale.

It is now the home of whatever stock they can get. 3-6 years, 40-70k seems to be the net they're casting, and the cars seemingly now have no prep before hitting the lot. It was as busy as I've ever seen it. The lot was 1/3 empty, and the sold part looked full.

Interestingly, there was virtually nothing less than three years old.

I've been fairly bullish on a drop, but the lack of stock because of the 2020/21/22 lower volumes will be a big driver of second hand vehicle availability for another two to three years.

I've started to look at discounted new/nearly new as a better bet.

cheesejunkie

2,325 posts

16 months

Sunday 26th March 2023
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RVB said:
ChrisH72 said:
But I can't understand why dealers are increasing the prices of used cars if nobody is buying them. Makes no sense to me.
Sometimes it's a sales tactic.
If people see prices rising, they're more likely to panic buy just in case prices go up even further.

Humans love to buy houses, shares and cryptocurrencies when prices are rising. Perhaps it'll turn out to be the case that they also love to buy cars when prices are rising.
I’m sure some level of that is possible through AUC or large car supermarkets but not across the whole market and it’s only sustainable so far. Predictable values are good all round, for sellers and buyers. Only the winning speculators win when they’re not, other speculators will lose to compensate.

There may be some degree of some dealers milking the last of it. But a return to depreciation and a return to new supply being able to meet demand looks likely at some point, maybe not a definite point yet. That’s not a crash prediction but it might hit some speculators more hard than those who stuck to more solid principles.

I know that’s non specific guff to some extent. But I’m not a car trader. I do have experience of bubbles though. I don’t think we’re in a bubble in the same way that I think of them where many will lose their shirt. Some will be overexposed to risk but not the whole used car market. As some much more experienced on car sales than me have mentioned on this thread most dealers will not be more exposed more than a stock cycle or so. They’ll reprice at the market rate and get on with it.

I’d question whether a true crash would increase availability. Cars aren’t houses but with both many don’t like to sell at a huge loss. Distressed sales get bought by speculators. Sales need both a source and a consumer. The only way I could see that shifting and I’m not denying it’s possible is people ditching something they can’t afford or think they’re now overpaying for, I don’t see much evidence of the former as previously mentioned. Car deals are fixed rate for the term unlike houses where we’re in a stupid system of renegotiating long term debt over short term periods.

cheesejunkie

2,325 posts

16 months

Sunday 26th March 2023
quotequote all
Hitch said:
I visited a large local car supermarket yesterday. Generally well regarded as not being a seller of dodgy cars. We've had two cars off them in the last five years with no issues.

This place used to be the home of the 24-36 month old 15-30k miles bargain. Cars used to be very well prepped before sale.

It is now the home of whatever stock they can get. 3-6 years, 40-70k seems to be the net they're casting, and the cars seemingly now have no prep before hitting the lot. It was as busy as I've ever seen it. The lot was 1/3 empty, and the sold part looked full.

Interestingly, there was virtually nothing less than three years old.

I've been fairly bullish on a drop, but the lack of stock because of the 2020/21/22 lower volumes will be a big driver of second hand vehicle availability for another two to three years.

I've started to look at discounted new/nearly new as a better bet.
I know many don’t have the flexibility, but if I was considering nearly new and I am I’d give serious credence to looking for a good new deal and saving a few quid while I wait on the new car by running the current one for a while. I’m not saying I’ll do that, but I’m regularly evaluating the option. The main blocker is options and specs and comparing like for like being more complex and expensive than the last time I went through that process.

Deep Thought

35,724 posts

196 months

Sunday 26th March 2023
quotequote all
RVB said:
ChrisH72 said:
But I can't understand why dealers are increasing the prices of used cars if nobody is buying them. Makes no sense to me.
Sometimes it's a sales tactic.
If people see prices rising, they're more likely to panic buy just in case prices go up even further.

Humans love to buy houses, shares and cryptocurrencies when prices are rising. Perhaps it'll turn out to be the case that they also love to buy cars when prices are rising.
The big dealers have price trackers linked to Autotrader, so the prices are adjusted periodically to ensure they are competitive. This means they go up as well as down.

jonwm

2,504 posts

113 months

Sunday 26th March 2023
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Fast Bug said:
Inky81 said:
Perhaps, but who would want to buy a Model 3 now either when the price will probably be lower in a months time? No-one wants to catch falling knives.
This. Tesla are doing a great job at destroying their residual values with all these price cuts. I know of one company (circa 700 cars on fleet and mainly BEV or PHEV) that have taken Tesla off their lists for the moment. The price cuts keep pushing the RV down which is pushing the contract hire figure up.

So for a lot of company car fleets, they're actually doing more harm than good as the leasing companies are getting nervous of their product.
My work run an all electric fleet and Tesla have been removed, I guessed it was down to this reason.

Niguy

149 posts

25 months

Sunday 26th March 2023
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As long as people need cars, there will be no crash.

SWoll

18,207 posts

257 months

Sunday 26th March 2023
quotequote all
jonwm said:
Fast Bug said:
Inky81 said:
Perhaps, but who would want to buy a Model 3 now either when the price will probably be lower in a months time? No-one wants to catch falling knives.
This. Tesla are doing a great job at destroying their residual values with all these price cuts. I know of one company (circa 700 cars on fleet and mainly BEV or PHEV) that have taken Tesla off their lists for the moment. The price cuts keep pushing the RV down which is pushing the contract hire figure up.

So for a lot of company car fleets, they're actually doing more harm than good as the leasing companies are getting nervous of their product.
My work run an all electric fleet and Tesla have been removed, I guessed it was down to this reason.
Lease companies have been ready for this for ages, hence why even when depreciation was glacial they were still charging a huge % of the list price on a 3 year deal. They're just being greedy as ever in a desperate attempt to retain their margins.

cheesejunkie

2,325 posts

16 months

Sunday 26th March 2023
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Niguy said:
As long as people need cars, there will be no crash.
I don’t disagree with the general sentiment but need implies a must have reason, much car ownership is an evaluation of want plus spending priorities for some resulting in spending more than it is on pure need. Face it an aygo, jazz, whatever is all many need and a more sensible purchase than most cars many own on this forum. I include myself in that.

I don’t believe it but if people are implying a more continental level of slower depreciation I think that would have to be coupled with a more continental style of ownership, so many more small cars. Equivalent tax/Ved regimes. Maybe also an acceptance of dings and scrapes if comparing to some countries cases, and maybe some looser MOT type equivalent rules in some cases wink. My view is always that you can’t assume like for like trends on a partial comparison of habits and market conditions.

ETA Add on a temporarily distorted market and even less so. See also any international comparison on costs such as cost when new vs average wages, finance rules, interest rates, contractual obligations. Import/export. Customer expectations of value including resale You can compare but you can’t assume an equivalent trend is likely. It may be but there’s not enough reason to believe it will happen. Particularly on customer expectations. But it’s still not a crash. I just have no reason to expect depreciation will become lower than it was, especially in the more premium higher margin market. Margin is profit that doesn’t historically hold up on the second hand market. Those expensive options don’t add too much at resale - relatively of course and car dependent of course, on some cars they’re just a must - but too short a post to count for every edge case.

Edited by cheesejunkie on Sunday 26th March 23:50

nickfrog

20,874 posts

216 months

Monday 27th March 2023
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cheesejunkie said:
I don’t believe it but if people are implying a more continental level of slower depreciation I think that would have to be coupled with a more continental style of ownership, so many more small cars. Equivalent tax/Ved regimes. Maybe also an acceptance of dings and scrapes if comparing to some countries cases, and maybe some looser MOT type equivalent rules in some cases wink. My view is always that you can’t assume like for like trends on a partial comparison of habits and market conditions.
No implying nor assumption on my part. As ever, I pride myself in saying I don't know. The very confident predictions here for the past 3 years have proved so wide of the mark, I don't find the possibility of the future used car market in the UK being closer to the continental one (like it has been for the past 18 months or so) that inconceivable. Might happen, might only be transient, who knows? (no one posting here IMO).

confused_buyer

6,610 posts

180 months

Monday 27th March 2023
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jonwm said:
My work run an all electric fleet and Tesla have been removed, I guessed it was down to this reason.
Which is odd because, frankly, Teslas haven't dropped any more (and arguably less) than any other EV.

The Rotrex Kid

30,192 posts

159 months

Monday 27th March 2023
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confused_buyer said:
jonwm said:
My work run an all electric fleet and Tesla have been removed, I guessed it was down to this reason.
Which is odd because, frankly, Teslas haven't dropped any more (and arguably less) than any other EV.
Absolutely, if I were a fleet buyer for EV, I'd be happier with Tesla tha most brands at the moment. It's a bloodbath on EV values right now.

darreni

3,759 posts

269 months

Monday 27th March 2023
quotequote all
Prices are certainly softening on the premium suvs as some predicted a while ago.
I reckon the supply will start to increase just as buyers really start feeling the pinch.

RayDonovan

4,265 posts

214 months

Monday 27th March 2023
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I've got a relative looking to sink £75k into a used Defender....

darreni

3,759 posts

269 months

Monday 27th March 2023
quotequote all
RayDonovan said:
I've got a relative looking to sink £75k into a used Defender....
That will just about buy a classic shape 90 the way the prices have been rising!

Defenders are an oddity, I reckon if they doubled the prices of new ones, they would struggle to build ‘em fast enough.
See also VW transporters / campers.

ChocolateFrog

24,869 posts

172 months

Monday 27th March 2023
quotequote all
Assuming it's not a scam (it could well be) this one is pretty funny.

Owner said in the comments he thought he could sell it for a profit.

Trade bids IRO of £24k.


Chamon_Lee

3,779 posts

146 months

Monday 27th March 2023
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ChocolateFrog said:
Assuming it's not a scam (it could well be) this one is pretty funny.

Owner said in the comments he thought he could sell it for a profit.

Trade bids IRO of £24k.

Honestly would not surprise me 1 bit if that is genuine. Many people jumped on the band wagon cars but drop that much/minimal and in fact if you order a desirable model that you can flip it for a profit.

many would have fell into the trap of thinking that the "new normal" now.

Hub

6,413 posts

197 months

Monday 27th March 2023
quotequote all
Chamon_Lee said:
ChocolateFrog said:
Assuming it's not a scam (it could well be) this one is pretty funny.

Owner said in the comments he thought he could sell it for a profit.

Trade bids IRO of £24k.

Honestly would not surprise me 1 bit if that is genuine. Many people jumped on the band wagon cars but drop that much/minimal and in fact if you order a desirable model that you can flip it for a profit.

many would have fell into the trap of thinking that the "new normal" now.
Obviously not keeping much of an eye on the market if they picked up this month? (Or would it have been too late to cancel?)

Niguy

149 posts

25 months

Monday 27th March 2023
quotequote all
ChocolateFrog said:
Assuming it's not a scam (it could well be) this one is pretty funny.

Owner said in the comments he thought he could sell it for a profit.

Trade bids IRO of £24k.

'I'm selling my car because I've fallen out of love with the soulless and mundane driving experience it offers and am going back to petrol'

Tonberry

2,078 posts

191 months

Tuesday 28th March 2023
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darreni said:
Prices are certainly softening on the premium suvs as some predicted a while ago.
I reckon the supply will start to increase just as buyers really start feeling the pinch.
Absolutely.

'19, '20 and '21 X5s are all available at similar prices with vastly differing specs and mileages - some as high as 90k and some as low as 10k:

https://www.autotrader.co.uk/car-details/202301263...

https://www.autotrader.co.uk/car-details/202302174...

A 4 year old X5 with 80k miles should not be £40k. They're a poor proposition because a new X5 can be had for only slightly more on PCP.

There is 700+ G05 models for sale so no shortage and supply is continuing to increase.

And yes list prices are increasing, but discounts are still here:

https://www.autotrader.co.uk/car-details/202301153...

EVOTECH3BELL

786 posts

23 months

Tuesday 28th March 2023
quotequote all
darreni said:
Prices are certainly softening on the premium suvs as some predicted a while ago.
I reckon the supply will start to increase just as buyers really start feeling the pinch.
Might be underestimating the importance People place on driving their premium SUV a mile to drop the kids off at school.
Some people will go without other things or increase their debt pile before they are seen in a 10 year old hatchback.
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