2008 Financial Crisis' Impact on the Used Car Market
Discussion
Hello everyone,
Does anyone remember what happened to the used car market back in 2008 financial crisis ?
After the crisis, to stimulate the economy interest rates were slashed which created bubbles because of cheap money. The corporate and household debt is rather high at present.
Interest rates are likely to go up in the next few years so the borrowing will be more expensive -i am not going into £ to lose its value argument-
If anyone can remember and share what happened back in 08, 09, 10, 11 that would be great.
Cheers
Does anyone remember what happened to the used car market back in 2008 financial crisis ?
After the crisis, to stimulate the economy interest rates were slashed which created bubbles because of cheap money. The corporate and household debt is rather high at present.
Interest rates are likely to go up in the next few years so the borrowing will be more expensive -i am not going into £ to lose its value argument-
If anyone can remember and share what happened back in 08, 09, 10, 11 that would be great.
Cheers
I remember the government introducing the scrappage scheme in 2009 where they gave £2000 off the price of a brand new car. Lots of people then decided to scrap their perfectly good 10 year old cars and buy a new Hyundai i10 for £5500.
From what I remember the price of anything newish, big and expensive to run pretty much dropped by 20% overnight.
I was having new double glazing fitted at the time and the fitter asked me how work was going. Turned out he had very little work on the horizon, clearly the signs of what was about to come.
Then in the space of a year interest rates fell from 5.5 to 0.5% which basically got the majority of people addicted to cheap debt and kicked the can further down the road. I really can't see interest rates risng that much as a large percentage of people are up to their eyes in debt and could not cope.
From what I remember the price of anything newish, big and expensive to run pretty much dropped by 20% overnight.
I was having new double glazing fitted at the time and the fitter asked me how work was going. Turned out he had very little work on the horizon, clearly the signs of what was about to come.
Then in the space of a year interest rates fell from 5.5 to 0.5% which basically got the majority of people addicted to cheap debt and kicked the can further down the road. I really can't see interest rates risng that much as a large percentage of people are up to their eyes in debt and could not cope.
The pound has already lost value, it’s not an argument. ~£450billion of QE doesn’t happen without devaluing the currency, just have to be clever with your inflation metrics to make it skim under the radar and allow interest rates to stay low.
That incidentally is also why I think there certainly is a bit of a bubble in the high end used car market at present. I don’t remember where but I remember inflation being described/simplified as “too much money chasing too few things.” Look at the prices of things like E46 M3 CSLs...
That incidentally is also why I think there certainly is a bit of a bubble in the high end used car market at present. I don’t remember where but I remember inflation being described/simplified as “too much money chasing too few things.” Look at the prices of things like E46 M3 CSLs...
emicen said:
The pound has already lost value, it’s not an argument. ~£450billion of QE doesn’t happen without devaluing the currency, just have to be clever with your inflation metrics to make it skim under the radar and allow interest rates to stay low.
That incidentally is also why I think there certainly is a bit of a bubble in the high end used car market at present. I don’t remember where but I remember inflation being described/simplified as “too much money chasing too few things.” Look at the prices of things like E46 M3 CSLs...
Agree with 'too much money chasing too few things'. CSL, 1M, 993s etc are I believe are in bubble territory. Yes pound lost its value already no argument there, but I am afraid what is around the corner. if things go further south, flying under the radar might be more challenging and maybe not possible. could be opportunity to some people as well. That incidentally is also why I think there certainly is a bit of a bubble in the high end used car market at present. I don’t remember where but I remember inflation being described/simplified as “too much money chasing too few things.” Look at the prices of things like E46 M3 CSLs...
Joey Deacon said:
I remember the government introducing the scrappage scheme in 2009 where they gave £2000 off the price of a brand new car. Lots of people then decided to scrap their perfectly good 10 year old cars and buy a new Hyundai i10 for £5500.
From what I remember the price of anything newish, big and expensive to run pretty much dropped by 20% overnight.
I was having new double glazing fitted at the time and the fitter asked me how work was going. Turned out he had very little work on the horizon, clearly the signs of what was about to come.
Then in the space of a year interest rates fell from 5.5 to 0.5% which basically got the majority of people addicted to cheap debt and kicked the can further down the road. I really can't see interest rates risng that much as a large percentage of people are up to their eyes in debt and could not cope.
oh yes, that is correct the scarppage scheme! From what I remember the price of anything newish, big and expensive to run pretty much dropped by 20% overnight.
I was having new double glazing fitted at the time and the fitter asked me how work was going. Turned out he had very little work on the horizon, clearly the signs of what was about to come.
Then in the space of a year interest rates fell from 5.5 to 0.5% which basically got the majority of people addicted to cheap debt and kicked the can further down the road. I really can't see interest rates risng that much as a large percentage of people are up to their eyes in debt and could not cope.
From 2013 some cars skyrocketed like all of the aircooled Porsches...
I think interest rates could go up but not as high as 5.5s. even FED did pause on their hike but next year they will continue +200points up apparently.
it will be interesting to see the what's going to happen in the UK. My friend is in building/real-estate business and he is having trouble with shifting his stock and worried that he will start accepting lower offers. His comments are also about the future is not very optimistic
I remember a PHer putting in sporadic reports on BCA sales around the time.
It was a very good time to be buying stuff from an auction IIRC - there was a 56-plate Disco3 that went through Blackbushe for about £10.5K when it was max' 2.5 years old...
Second hand cars suffered BIG time, because basically all new cars were discounted £2K by the Gov' with scrappage scheme.
It was supposed to be in order to incentivise people to get "the worst polluting cars" off the road, but the reality was that the car industry was absolutely on its arse...
The cheapness of new cars had a predictable impact on S-H car prices and a great many independent dealers who were heavily invested in stock struggled massively....
If you were in the market for a newish car however, it was pretty good....!
It was a very good time to be buying stuff from an auction IIRC - there was a 56-plate Disco3 that went through Blackbushe for about £10.5K when it was max' 2.5 years old...
Second hand cars suffered BIG time, because basically all new cars were discounted £2K by the Gov' with scrappage scheme.
It was supposed to be in order to incentivise people to get "the worst polluting cars" off the road, but the reality was that the car industry was absolutely on its arse...
The cheapness of new cars had a predictable impact on S-H car prices and a great many independent dealers who were heavily invested in stock struggled massively....
If you were in the market for a newish car however, it was pretty good....!
Somewhat related topic but I do wonder how the 2008 financial crisis impacted the build of of cars which were just coming off the drawing board or starting production at that time, which has a knock on to today in the used market in terms of how well built those cars were.
For example if manufacturers didn't know if a model would continue to sell did they make the paint thinner to save money, or remove features? Or do they not twist and turn like that.
For example if manufacturers didn't know if a model would continue to sell did they make the paint thinner to save money, or remove features? Or do they not twist and turn like that.
Bloke I know had five cars on his drive and decided he needed to "lighten up" so as a long standing customer of his OPC rang them and asked them to put a price on his six month old Cayenne Turbo. IIRC it had cost him something like £90k. To cut quite a long story short they wouldn't put a price on it....he found a specialist who offered £40k and then reneged on it and ended up selling it for £27.5k. Ouch! It wasn't easy getting anyone to offer any money at all for it. `Thing is the capacity of dealers to act as a buffer (and buy cars for stock) in times like this is close to zero.
Porsche are aiming to sell 16,000 cars in the UK next year....that's something like 400 cars per OPC. So over the last three years each dealer has sold in excess of 1,000 new cars and they'll hold probably stock 40 AUC at any one time. They can probably stretch that by 50% in the short term.
With a marque like Porsche for example you really don't need many people aggressively wanting/needing to sell a car to really move prices south.
Porsche are aiming to sell 16,000 cars in the UK next year....that's something like 400 cars per OPC. So over the last three years each dealer has sold in excess of 1,000 new cars and they'll hold probably stock 40 AUC at any one time. They can probably stretch that by 50% in the short term.
With a marque like Porsche for example you really don't need many people aggressively wanting/needing to sell a car to really move prices south.
I remember some of the deals around then - they were insanely low. You've also got to remember that at the time petrol was getting very expensive.
My uncle picked up a four year old Grand Cherokee with a V8 for £1800 I think. Nothing wrong with it, either. That car would probably cost you more now, ten years later.
That said, that particular deal was an anomaly
My uncle picked up a four year old Grand Cherokee with a V8 for £1800 I think. Nothing wrong with it, either. That car would probably cost you more now, ten years later.
That said, that particular deal was an anomaly
chronic123 said:
Whats your take on it? What will happen to the car makrets?
If anything it looked to me like second hand car values had increased by 10% over the last few months, probably due to less new cars being sold.If prices do crash by 20 or 30% then I will seriously think about upgrading my 13 year old shed.
Edible Roadkill said:
I can recall seeing a low miles 2006 cobalt blue 911 turbo (997) for sale in 2009 for 40k. 3yr old car.
Also 3yrs old m3 for under 20k
Would be nice if this was repeated as I have some money to blow.
I bought a 3 year old 997 2S for 32k. It was at a main dealer and was up for 37 then 36 and finally 35k and over the course of a few weeks I made a few offers and one day out of the blue they called me and said ok we will take your offer. Also 3yrs old m3 for under 20k
Would be nice if this was repeated as I have some money to blow.
You would be lucky to find the same car today for 32k.
And a 3 year old 911 today is 80k+
I cant see a crash like that coming any time soon again. It would need prices to fall so far its just crazy to imagine what would happen.
The crisis as it was happening wiped the value of many high end cars right down. I bought my noble m12 for £20k Ferrari 355s were sub 30k a 550 was 50k a diablo sv was 80k...
Then once QE really took hold and people figured out your cash was dilluting values of all the cars started rising rapidly.
2019 imo the crazy stuff was on the way down again Lambo gallardo v10s 50-60k Aston martin vantage v8s 23k but a very short space of time tehy have all shot up again.
Then once QE really took hold and people figured out your cash was dilluting values of all the cars started rising rapidly.
2019 imo the crazy stuff was on the way down again Lambo gallardo v10s 50-60k Aston martin vantage v8s 23k but a very short space of time tehy have all shot up again.
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