Buy or wait?

[Hippea]

Last July I stupidly sold my Bugeye Impreza STi. My intention was to buy a cheap run around and move onto something else come this summer. So here I am, hugely regretting selling the Subaru. My intention was to get something like a M140i but the prices have gone crazy, is this just a bad time to buy or is it likely they will drop in the not too distant future?

[samoht]

I think things will mostly go back to normal in the next 6-12 months car price wise. The chip shortage will turn into a glut, electronics have been swinging between feast and famine for at least 25 years now. So I imagine the new and nearly-new markets will go back to about where they were.

With older performance cars it's less clear, there may be other forces making them more desirable. Quick stuff over 15 years old seems to be set on an overall upwards trajectory regardless of Covid.

See also:

Will the car market crash?
https://www.pistonheads.com/gassing/topic.asp?h=0&...

Will Coronavirus hit used car prices? (Vol 2)
https://www.pistonheads.com/gassing/topic.asp?h=0&...

Edited by samoht on Thursday 10th June 21:38

[georgeyboy12345]

Nobody knows what car prices will do, no matter how confident they may sound in their predictions. If you want a car, and can afford it, buy it.

[av185]

samoht said:

I think things will mostly go back to normal in the next 6-12 months car price wise. The chip shortage will turn into a glut, electronics have been swinging between feast and famine for at least 25 years now. So I imagine the new and nearly-new markets will go back to about where they were.

The currently very high prices are not just due to the chip shortages though this is merely one factor of many including a severe shortage of both new and used stock.

Many factors are at play discussed at length on many threads.

Most tend to think that prices across the board will continue to rise most of this year and will stay high until 2023. Many also think this could be the end of cheap used cars in the UK.

[samoht]

av185 said:

The currently very high prices are not just due to the chip shortages though this is merely one factor of many including a severe shortage of both new and used stock.

Yes, but why is there a shortage of new stock? Either demand has increased, or supply has reduced. New car sales each month this year have been lower than the same month in 2019, so it must be supply restrictions. Why is supply restricted? Chip shortages. Unless you've a reference for any other factors preventing factories building cars?

There's a range of opinions on how long the chip shortage will last
Cisco chief Chuck Robbins told the BBC: "We think we've got another six months to get through the short term."
https://www.bbc.co.uk/news/technology-56847518
but
"The boss of the US tech giant IBM has said a computer chip shortage could last another two years."
https://www.bbc.co.uk/news/business-57105368

Personally I'm leaning towards the shorter end. Once car companies can get their chips, new car production will get back to 2019 levels or higher, the new car shortage will gradually reduce, this will have a knock-on effect on nearly new cars as new car buyers trade them in. All this will take time though.

av185 said:

Most tend to think that prices across the board will continue to rise most of this year and will stay high until 2023. Many also think this could be the end of cheap used cars in the UK.

I'm not seeing the consensus you're suggesting here on PH, more like a spread of opinions. A bigger economic downturn could also reduce buyers purchasing power, if it occurs.

I do take the point that used cars are relatively more expensive compared to new in other countries than here, and there's no immutable law that this will always be the case. I think it probably represents a stronger preference for new vs used cars here, so if attitudes change, prices could too, permanently.

[Truckosaurus]

Also, it depends on the transaction you are looking to do.

If the car you want to buy has a 'strong' price at the moment then your part ex probably is also worth more than it perhaps would normally, so your cost-to-change is no different.

And if the value drops in 2 or 3 years then although it looks worse on paper, you aren't really losing out as you didn't pay for the car 100% in cash.

(Conversely, if you are looking to buy without a PX then it might not be a good time to buy - down to lack of choice as well as being strong prices)

[r1monkey]

I think that large companies will either try to buy out the chip makers or set up their own manufacture plant as it is no use building thousands of cars just to have to stockpile them.
Used car sales are strong due to several factors but i think that once the initial rush after lockdown subsides prices should stabilise .
That is unless wbac keep paying over the odds for cars ,but as Pendragon found out a couple of years ago that can go disastrously wrong .

Edited by r1monkey on Friday 11th June 07:52

[paradigital]

r1monkey said:

I think that large companies will either try to buy out the chip makers or set up their own manufacture plant as it is no use building thousands of cars just to have to stockpile them.
Used car sales are strong due to several factors but i think that once the initial rush after lockdown subsides prices should stabilise .
That is unless wbac keep paying over the odds for cars ,but as Pendragon found out a couple of years ago that can go disastrously wrong .

Edited by r1monkey on Friday 11th June 07:52

Oh yea, sure, building a fab and having the knowhow to get a process node up and running is definitely quicker, easier and cheaper than just waiting out the artificial chip shortage.

The problem here is that a lot of companies and sectors pulled their orders from fabs such as TSMC, and rightly so this left the fabs a little irked that their planned revenue had essentially gone away. Do you think their (the fabs) capacity for manufacture has changed? No. They are supplying as much as ever in absolute terms, just to different markets and clients. The chip shortage isn't across all markets, just those that left the fabs high and dry at the height of the pandemic.

[ZX10R NIN]

Buy if you can find the car you want then buy it prices will steadily decrease but not anytime soon & not at a shocking rate.

[r1monkey]

paradigital said:

Oh yea, sure, building a fab and having the knowhow to get a process node up and running is definitely quicker, easier and cheaper than just waiting out the artificial chip shortage.

The problem here is that a lot of companies and sectors pulled their orders from fabs such as TSMC, and rightly so this left the fabs a little irked that their planned revenue had essentially gone away. Do you think their (the fabs) capacity for manufacture has changed? No. They are supplying as much as ever in absolute terms, just to different markets and clients. The chip shortage isn't across all markets, just those that left the fabs high and dry at the height of the pandemic.

Then they will just buy out the companies . They can just buy the shares and do a hostile take over .

[Wadaboo]

r1monkey said:

Then they will just buy out the companies . They can just buy the shares and do a hostile take over .

Just so you are aware, tsmc is worth c. $310B. Supposedly vw group was worth $100B in 2020. Just to give you some idea of how big the fab owners are.
No car manufacturer is going to take over tsmc as they are the giants of the semiconductor fabrication world.

And to the poster above who said it is an artificial shortage and the fabs are punishing 'the big boys' who pulled their orders, I think this is incorrect. Across the board every single industry is having massive issues getting supply. I work in the semiconductor distribution industry so have an insight and the situation is dire.

I feel compelled to agree more with the 2 year estimation, rather than 6 months, with regards to how long this will take to normalise.

[HTP99]

Wadaboo said:

r1monkey said:

Then they will just buy out the companies . They can just buy the shares and do a hostile take over .

Just so you are aware, tsmc is worth c. $310B. Supposedly vw group was worth $100B in 2020. Just to give you some idea of how big the fab owners are.
No car manufacturer is going to take over tsmc as they are the giants of the semiconductor fabrication world.

And to the poster above who said it is an artificial shortage and the fabs are punishing 'the big boys' who pulled their orders, I think this is incorrect. Across the board every single industry is having massive issues getting supply. I work in the semiconductor distribution industry so have an insight and the situation is dire.

I feel compelled to agree more with the 2 year estimation, rather than 6 months, with regards to how long this will take to normalise.

A colleagues best friend works in the industry, he's said it will be 2 years and there is likely to be a timing devices issue soon which he fears may be a more dire issue than the current microchip problem.