Lag Time for Supercar Prices to adjust to Market Conditions

Lag Time for Supercar Prices to adjust to Market Conditions

Author
Discussion

carspath

Original Poster:

613 posts

130 months

Wednesday 25th March
quotequote all
I am not in the market to buy or sell a supercar , but am curious as to how quickly Dealers and Private Sellers will , or are forced to , react to a major change in trading conditions .


I browse the PH Classifieds (too) regularly , and it appears that there has been absolutely no change in the advertised prices for most supercars .
And this despite what we are told , is probably the single most acute change in the world's economy in living memory .
Economists are now not talking of a V , U or L shaped trend , but rather a I pattern .


I have specifically asked about the timing of price adjustment , rather than price drops , because in theory , 2nd hand supercar prices could rise due to factory closures limiting production and delivery of new cars .

In theory .

MAC 720S

884 posts

100 months

Wednesday 25th March
quotequote all
carspath said:
I am not in the market to buy or sell a supercar , but am curious as to how quickly Dealers and Private Sellers will , or are forced to , react to a major change in trading conditions .


I browse the PH Classifieds (too) regularly , and it appears that there has been absolutely no change in the advertised prices for most supercars .
And this despite what we are told , is probably the single most acute change in the world's economy in living memory .
Economists are now not talking of a V , U or L shaped trend , but rather a I pattern .


I have specifically asked about the timing of price adjustment , rather than price drops , because in theory , 2nd hand supercar prices could rise due to factory closures limiting production and delivery of new cars .

In theory .
People are pre-occupied with more important things.
Luxury items are at the bottom of the must-have list.

carspath

Original Poster:

613 posts

130 months

Wednesday 25th March
quotequote all
Mac720 .. I fully understand that .

But the question was a different one .

As per the title , what do you think the TIME LAG is , and what are the factors that determine this time lag ?

Thank you Mac720

Edited by carspath on Thursday 26th March 00:01


Edited by carspath on Thursday 26th March 00:02

MAC 720S

884 posts

100 months

Thursday 26th March
quotequote all
carspath said:
Mac720 .. I fully understand that .

But the question was a different one .

As per the title , what do you think the TIME LAG is , and what are the factors that determine this time lag ?

Thank you Mac720

Edited by carspath on Thursday 26th March 00:01


Edited by carspath on Thursday 26th March 00:02
I suppose the answer to the question is: Only time will determine.

Penrhyn

42 posts

51 months

Thursday 26th March
quotequote all
when the lockdown is withdrawn the traders will then have their first opportunity to value their stock.

So realistically September back work, new prices and specials (finance) will l be the order of the day to stimulate a dead market.

Kid A

54 posts

17 months

Thursday 26th March
quotequote all
Guess we'll find out in the coming months.

There are probably more important issues right now but it's still an interesting question and one that will be good to have an answer to.

I imagine a lot of car dealerships will be struggling for business which gives buyers more leverage too. If you have a strong cash position you'd be advantaged. Just wait it out and swoop in later.

Taffy66

3,639 posts

55 months

Thursday 26th March
quotequote all
Personally i see supercar prices recovering very quickly after this crisis has passed..The reason i say this is firstly the delayed effect of the £200B emergency money printing will end up in the hands of finance companies..Couple this with historic low BoE base rates of 0.1% will fuel a huge resurgence in supercar buying..
I was looking for another car just before this crisis unfolded but have delayed until it blows over..I suspect i won't be alone in this thinking..Another point is that new dealers including Porsche will have to entice buyers back into the showroom to make up for a few months of not selling cars..This will result in extremely attractive finance deals and discounts IMO.

ThePackMan

96 posts

19 months

Thursday 26th March
quotequote all
Dealers know that cars aren’t selling right now, and a lot (most?) dealers aren’t even open - so why adjust prices? Agree with many of the above comments, it won’t be until life goes back to relative “normal” that the real price picture will become clearer.

At the start of this year I began the process of selling a big yacht, it’s the same situation in that world too. Nothing selling since C19 lockdown but listed prices haven’t changed at all. Maybe there are some off book fire sale type deals being done, but I’m not so sure. Why buy something you cannot use?

So it will be the same with super cars, I’m sure about that.

MDL111

4,477 posts

130 months

Thursday 26th March
quotequote all
I suspect you will see an adjustment of prices once people are forced to sell - dealers/private individuals who need cash to service debt and therefore need to liquidate / can no longer “wait out the market” - in terms of time, I’d say towards end of April when they need to raise cash for end of May/beginning of June payment obligations (taking into account the time lag to sell even at a knockdown price)

LooneyTunes

3,986 posts

111 months

Thursday 26th March
quotequote all
ThePackMan said:
Dealers know that cars aren’t selling right now, and a lot (most?) dealers aren’t even open - so why adjust prices? Agree with many of the above comments, it won’t be until life goes back to relative “normal” that the real price picture will become clearer.

At the start of this year I began the process of selling a big yacht, it’s the same situation in that world too. Nothing selling since C19 lockdown but listed prices haven’t changed at all. Maybe there are some off book fire sale type deals being done, but I’m not so sure. Why buy something you cannot use?

So it will be the same with super cars, I’m sure about that.
I’ve been getting offers from sellers of other luxury goods with very significant discounting already taking place (25-50%). All online sales for goods that people would more normally have bought in person.

Many of the overheads of dealers, including the financing and insuring of stock, don’t go away just because they’ve closed their doors. Some cash flow may be needed and the only way to tempt people to part with cash for things they don’t need/can’t use right now is to adjust pricing.

Agree that most probably will hold off until life is heading back towards normality, but even then I question how many people are going to be shopping for supercars if the economic climate and sentiment of the broader public has taken a hammering.

IMI A

7,540 posts

154 months

Thursday 26th March
quotequote all
Taffy66 said:
Personally i see supercar prices recovering very quickly after this crisis has passed..The reason i say this is firstly the delayed effect of the £200B emergency money printing will end up in the hands of finance companies..Couple this with historic low BoE base rates of 0.1% will fuel a huge resurgence in supercar buying..
I was looking for another car just before this crisis unfolded but have delayed until it blows over..I suspect i won't be alone in this thinking..Another point is that new dealers including Porsche will have to entice buyers back into the showroom to make up for a few months of not selling cars..This will result in extremely attractive finance deals and discounts IMO.
You're not taking into account sentiment. Many people will not want supercars when so many people unwell. Cant see it even with free money but you never know. The money will have to be paid back and this has happened many times before. i'm funny about even having a mortgage if you see how much money the banks make from all of us over a 25 year period with little or no risk. Govts bailed them out so many times they've become brazen. Even asking small businesses at the moment to put their properties up as collateral for free money the govt is giving them to help people in this emergency. It's disgusting.

The markets closed till Sept. By Xmas we will see the true state of the market.

footsoldier

1,613 posts

145 months

Thursday 26th March
quotequote all
Trade prices dropped 25-30% in 2 weeks before the closure. WBAC bids about 40% and now suspended.
A blip or a forward indicator? All depends on medical outcome I’d say, same as economy.

JimmyConwayNW

2,384 posts

78 months

Thursday 26th March
quotequote all
I think the market currently is completely frozen and will be largely unchanged when things first start off again.

TBH I see prices going up for a lot of used cars.Supply wasn't plentiful before and theres going to have been a big gap. I would imagine things will stay similar with slight increases if anything.

Cheib

18,484 posts

128 months

Thursday 26th March
quotequote all
The big unknown is whether individuals or dealers have sufficient financial stress that they have to sell cars...if that happens in sufficient numbers market goes down. You could argue that the “YOLO” effect could mean that people decide life is too short and now is the time to buy the dream car or on the flip side it could change the aspirational lifestyle (some may say materialistic) mindset which has driven the demand for some brands.

Personally I think the long term economic impacts on the UK economy could be significant......we’re quite possibly looking at another long stretch of austerity combined with the unknown of Brexit.

footsoldier

1,613 posts

145 months

Thursday 26th March
quotequote all
I’m honestly staggered that people think prices might hold or go up on ‘everyday supercars’.
Massive economic disruption and changed landscape on the other side, in so many ways.
Cars were already stuck, with an oversupply, how does this help..?
It took c5 years post 2008, and that rise was into perfect conditions.

cgt2

1,555 posts

141 months

Thursday 26th March
quotequote all
Remember that the vast number of supercars for sale with independent dealers are SOR and therefore no risk to the dealer, most of whom have very little in the way of liquidity (quite easy to look at company accounts these days).

The business model has been for awhile that a dealer scrapes together rent money for a unit, pays a couple of people but has zero ability to invest in lumpy stock and thus puts together an amazing selection of cars on SOR. Obviously not all, but the vast majority.

Friend of mine has already had the experience this week which I suspect is going to become quite common. He has asked to take back his £200k + supercar, which is rapidly shedding value, the SOR dealer is being evasive presumably as if everyone does the same the dealer is left with a flashy unit and website and no cars. Whether this impacts pricing for a car the dealer never owned (and never had the capital to own) then who knows.


willy wombat

432 posts

101 months

Thursday 26th March
quotequote all
But how would one even buy or sell a supercar (or any car) at the moment? Dealers are shut and travelling to view a supercar up for private sale hardly counts as essential travel and who wants strangers traipsing round their house or garage at the moment anyway? I have never been one for participating in the myriad Pistonheads car value threads but really, is there any point at the moment?

BlackR8

303 posts

30 months

Thursday 26th March
quotequote all
For owners of supercars like us it all depends on whether you want to sell your car or change into another. I fully expect the market to tank, but I guess the impact of this is somewhat softened by the fact that all cars will go down so the cost to change would be the same regardless of market conditions. If you need to sell to release the capital then yes I think it is not going to be pretty.

Ferruccio

1,129 posts

72 months

Thursday 26th March
quotequote all
As distressed, financed sellers come into the market, we’ll find out.

Lloyds have already granted 70,000 three month mortgage “holidays”.

mattt7

73 posts

162 months

Thursday 26th March
quotequote all
People commenting on here that supercar prices will go up or stay the same are out of touch.
A lot of these cars are owned by business owners and on finance, business owners that are suffering on a unprecedented scale.you wait until the jobless claim numbers are released in the US this afternoon, it’s going to be horrible.

Before this crisis happened I’d never seen so many expensive cars on the road, 90% of which were financed. People saying that the BOE dropping rates to again will make all the difference, what utter rubbish, rates were and have been incredibly low for over 10 years now.
The finance bubble that has grown and grown is now ready to pop, business owners and individuals that scraped by every month paying the mortgage, finance on their everyday car, the wife’s car and their weekend toy will be defaulting left right and centre.

There is only one way for prices and that is down and down. I’d say that the supercar and classic market is looking at a 40-50% drop and this will happen over the next 6 months.

Prices of course will slowly go up again when the World gets back on its feet again in 12-18mths time but in the near term this is what will happen.

There will and already are behind the scenes some far cheaper special cars out there. A mint lhd Scuderia went for £103k this week, with its history and mileage that was a £150k car in Jan, likewise a very nice AM V8 Vantage went for something like £14k a few days ago.