Discussion
Hi
Just wondering what people's thoughts are these days on car residuals.
As we know the German brands seem to hold better in this regard. Would you say end user costs between buying a 3 to 4 year old 35k miles German car (say 320d for argument) vs say a similar age Mondeo would be similar after 2 to 3 years due to residuals?
The above assumes similar use ( and condition by the way!
Or has the market changed favouring one over the other?
Thanks
Just wondering what people's thoughts are these days on car residuals.
As we know the German brands seem to hold better in this regard. Would you say end user costs between buying a 3 to 4 year old 35k miles German car (say 320d for argument) vs say a similar age Mondeo would be similar after 2 to 3 years due to residuals?
The above assumes similar use ( and condition by the way!
Or has the market changed favouring one over the other?
Thanks
They don't hold their value as much as you'd expect because the German Manufacturer's are now mainstream car makers just like Ford/Vauxhall, unless you get a true premium model like an C43/340i/S4 the residuals on the regular models is the same as on the Mondeo there are discounts of between 15-18% to be had on a BMW etc & as someone pointed out yes it may be more expensive than the equivalent Mondeo but it was more expensive to buy in the first place.
A good example of this is the Golf GTI when new it was more expensive whereas now someone with 5-7k will get the same year mileage GTI as they will a Focus ST/Megane RS etc.
Residuals are more model & Spec specific these days things like Kia's have good residuals due to their warranty & the peace of mind that brings.
Specification is very important I'm finding a lot more of the people I'm sourcing for are looking at spec as a bigger factor than the badge, I think this is down to the fact there really aren't any truly terrible cars anymore, so things like a bigger screen DAB Air Cooled Seats Heated Windscreen etc carry more sway than a badge & bogo interior.
Of course some people will always pick the badge but I'm finding more are swayed by spec, for example I had a customer who's wife wanted an SUV (she was convinced she wanted an X5) they had a budget of 25k after me showing them the Volvo/VAG options & the leftfield option of a Grand Cherokee Summit they chose the Jeep due to the fact it still had everything but the kitchen sink in terms of (they were looking at very low spec X5's for the same money) spec, on average 15-25k less on the clock than a base spec X5 & the Cherokee had 1 years worth of Manufacturer's Warranty left that they could extend (they went for a 2016 Summit with 34k on the clock) for more stress free motoring.
Both car will depreciate at a similar rate & are no less reliable than each other, now if you want an X5 with similar spec to the Summit you have to buy an older model or spend a fair bit more.
Here's an example:
X5 3.0d SE
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Grand Cherokee Summit
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Where would your money go when you're going to be sat in either one for the next 3-5 years.
Things like Cam Chains that no longer last the life of the car, that are also located at the back of the engine meaning four figure bills, (take a bow all three makes) as cars get more complicated & harder to work on it means the used market are also more swayed by being able to extend a Manufacturer's Warranty.
It's a complicated market but spec age & MW are now becoming bigger draws than the badge hence I've now sourced two of the below for customers, one uses it for chauffeuring & has reported most people think it's a Mercedes & the other wanted a hassle free waft omatic loaded with kit but unlikely to make him go grey if it went wrong, they're cars that wouldn't have got a look in as little as 5 years ago but they're now a legitimate alternative to the Germans.
https://www.autotrader.co.uk/classified/advert/201...
A good example of this is the Golf GTI when new it was more expensive whereas now someone with 5-7k will get the same year mileage GTI as they will a Focus ST/Megane RS etc.
Residuals are more model & Spec specific these days things like Kia's have good residuals due to their warranty & the peace of mind that brings.
Specification is very important I'm finding a lot more of the people I'm sourcing for are looking at spec as a bigger factor than the badge, I think this is down to the fact there really aren't any truly terrible cars anymore, so things like a bigger screen DAB Air Cooled Seats Heated Windscreen etc carry more sway than a badge & bogo interior.
Of course some people will always pick the badge but I'm finding more are swayed by spec, for example I had a customer who's wife wanted an SUV (she was convinced she wanted an X5) they had a budget of 25k after me showing them the Volvo/VAG options & the leftfield option of a Grand Cherokee Summit they chose the Jeep due to the fact it still had everything but the kitchen sink in terms of (they were looking at very low spec X5's for the same money) spec, on average 15-25k less on the clock than a base spec X5 & the Cherokee had 1 years worth of Manufacturer's Warranty left that they could extend (they went for a 2016 Summit with 34k on the clock) for more stress free motoring.
Both car will depreciate at a similar rate & are no less reliable than each other, now if you want an X5 with similar spec to the Summit you have to buy an older model or spend a fair bit more.
Here's an example:
X5 3.0d SE
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Grand Cherokee Summit
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
https://www.autotrader.co.uk/classified/advert/201...
Where would your money go when you're going to be sat in either one for the next 3-5 years.
Things like Cam Chains that no longer last the life of the car, that are also located at the back of the engine meaning four figure bills, (take a bow all three makes) as cars get more complicated & harder to work on it means the used market are also more swayed by being able to extend a Manufacturer's Warranty.
It's a complicated market but spec age & MW are now becoming bigger draws than the badge hence I've now sourced two of the below for customers, one uses it for chauffeuring & has reported most people think it's a Mercedes & the other wanted a hassle free waft omatic loaded with kit but unlikely to make him go grey if it went wrong, they're cars that wouldn't have got a look in as little as 5 years ago but they're now a legitimate alternative to the Germans.
https://www.autotrader.co.uk/classified/advert/201...
DickP said:
Hi
Thanks for the comments but I'm not sure I wrote the easiest to understand opening post.
Just to remove any confusion, I'm comparing second hand cars that are circa 3 to 4 years old and what the residual difference might be after 2 to 3 years use.
Thanks
It seems like you are considering a 3 year old BMW at,say £15000, and comparing it with a 3 year old Mondeo at, say £10k?Thanks for the comments but I'm not sure I wrote the easiest to understand opening post.
Just to remove any confusion, I'm comparing second hand cars that are circa 3 to 4 years old and what the residual difference might be after 2 to 3 years use.
Thanks
As IanCress suggests, i'd agree that a £15k BMW will depreciate by the same £s as a £15k Mondeo. Similarly a £10k BMW will lose value at the same rate as a £10k Mondeo. It's no longer the case that BMW's hold their value well. Both BMW and Mondeo are available with substantial discounts, so comparison with list price when new is misleading.
A reliable approximation for depreciation is to reduce the value by 25% pa on a reducing balance, so after 3 years your £10k car (of which ever make ) will be worth around £4500 as a trade in, therefore maybe £5500 as a private sale. Your £15000 car will be £6750 trade, and £8000 privately.
A more common approach to this dilemma is "I have £15k to spend, shall I buy a 3 year old BMW or a 1 year old Mondeo" or " I have £10k to spend, should I buy a 5 year old BMW or a 3 year old Mondeo?"
If you are asking "I'm considering a £10000 Mondeo, if I put £5000 extra to buy a same age BMW then would I get the £5000 back when I come to sell it?" then the answer is probably not. But you will have had the pleasure of an arguably better car.
Edited by Wooda80 on Thursday 19th July 16:50
IanCress said:
Personally I think the big difference in residual value is largely a myth, due to the fact that you can negotiate huge discounts on the Mondeo versus the 3 Series. Yes the Mondeo might be worth 5k less after 3 years, but you can buy it for 5k less in the first place.
It's actually the other way round. Wooda80 said:
It seems like you are considering a 3 year old BMW at,say £15000, and comparing it with a 3 year old Mondeo at, say £10k?
As IanCress suggests, i'd agree that a £15k BMW will depreciate by the same £s as a £15k Mondeo. Similarly a £10k BMW will lose value at the same rate as a £10k Mondeo. It's no longer the case that BMW's hold their value well. Both BMW and Mondeo are available with substantial discounts, so comparison with list price when new is misleading.
A reliable approximation for depreciation is to reduce the value by 25% pa on a reducing balance, so after 3 years your £10k car (of which ever make ) will be worth around £4500 as a trade in, therefore maybe £5500 as a private sale. Your £15000 car will be £6750 trade, and £8000 privately.
A more common approach to this dilemma is "I have £15k to spend, shall I buy a 3 year old BMW or a 1 year old Mondeo" or " I have £10k to spend, should I buy a 5 year old BMW or a 3 year old Mondeo?"
If you are asking "I'm considering a £10000 Mondeo, if I put £5000 extra to buy a same age BMW then would I get the £5000 back when I come to sell it?" then the answer is probably not. But you will have had the pleasure of an arguably better car.
HiAs IanCress suggests, i'd agree that a £15k BMW will depreciate by the same £s as a £15k Mondeo. Similarly a £10k BMW will lose value at the same rate as a £10k Mondeo. It's no longer the case that BMW's hold their value well. Both BMW and Mondeo are available with substantial discounts, so comparison with list price when new is misleading.
A reliable approximation for depreciation is to reduce the value by 25% pa on a reducing balance, so after 3 years your £10k car (of which ever make ) will be worth around £4500 as a trade in, therefore maybe £5500 as a private sale. Your £15000 car will be £6750 trade, and £8000 privately.
A more common approach to this dilemma is "I have £15k to spend, shall I buy a 3 year old BMW or a 1 year old Mondeo" or " I have £10k to spend, should I buy a 5 year old BMW or a 3 year old Mondeo?"
If you are asking "I'm considering a £10000 Mondeo, if I put £5000 extra to buy a same age BMW then would I get the £5000 back when I come to sell it?" then the answer is probably not. But you will have had the pleasure of an arguably better car.
Edited by Wooda80 on Thursday 19th July 16:50
Yes that was what I was asking. Thanks for the comments.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff