Porsche, PCP, GFV and inflation…

[TTmonkey]

On PCP quotes, I’ve noticed that some cars have a massive ‘final payment’ in percentage terms…
Making a PCP deal actually quite cheap.
Eg, 90k GTS at three years with a projected value on 10k per annum (final value/payment to own) of £75k.

Question though. In a world of 10-15% inflation, and rock solid residuals due to supply problems, will Porsche PCP deals garner an ever growing GFV figure…?

I’m guessing that with inflation a nice (in) three year old well specced GTS could be close to current list price. And new cars, +20% higher list price than now.

Is this possible? Yes a recession looms, but most GTS buyers are probably recession proof.

Or do I need a stiff drink…? Is this just man maths…?

[Cheib]

Don’t think anyone will be recession proof.

Whatever anyone tells you Porsche are now importing as many cars into the UK as they used to pre Covid…there is pent up demand because deliveries were lower than normal for 18 months. At some stage we’ll hit an equilibrium where demand and supply will be back in balance. I suspect what will happen next year….I think at that stage premiums for new cars will disappear and that then is that order books will reduce because some of those orders will be from people who think they’ll be able to run a 992 GTS for a year for free/flip it straight away for a five figure profit. This market will disappear as quickly as it appeared.

[Taffy66]

Cheib said:

Don’t think anyone will be recession proof.

Whatever anyone tells you Porsche are now importing as many cars into the UK as they used to pre Covid…there is pent up demand because deliveries were lower than normal for 18 months. At some stage we’ll hit an equilibrium where demand and supply will be back in balance. I suspect what will happen next year….I think at that stage premiums for new cars will disappear and that then is that order books will reduce because some of those orders will be from people who think they’ll be able to run a 992 GTS for a year for free/flip it straight away for a five figure profit. This market will disappear as quickly as it appeared.

I think that premiums for the 992GTS have already passed. I was looking at used OPC prices very recently for a Manual 2WD Coupe with PCCBs and Lightweight and found one for only £4K over list which translates to a trade bid at least £5K under list.

[TTmonkey]

So the important question here is based on the thread title.
I’m asking particularly about GFV on PCP, which is set at the start of the contract.

Currently, GFV on a Boxster 4.0 GTS is about 75% of list price.
Meaning that you can get a 4.0 for around £600 per month with a deposit of £12000. But a monster final payment of £76k.

A Boxster S however has a much lower GFV of about 45% of list, therefore a PCP on that produces a monthly payment of about £800 a month with similar deposit, on a car costing £20k less.
But final payment is around £35k.

It’s odd. Add to that rampant inflation affecting future new car prices, it’s going to be an odd market in a couple of years.

Just been playing with quotes and it is making weird sense. The more expensive model is cheaper to initially ‘rent’ on PCP deals.

Let’s not have a thread about the evils of PCP though…

[john41901]

What is the interest rate? Higher balloons are all very well but are interest bearing over the term. Comparing the interest payable on these is often quite eye-opening vs an HP say.

[TTmonkey]

john41901 said:

What is the interest rate? Higher balloons are all very well but are interest bearing over the term. Comparing the interest payable on these is often quite eye-opening vs an HP say.

Quoted as 7.9, but that’s not necessarily what you get when you actually apply.

[john41901]

Here’s how I would compare the cost, below I found refers to the base at 7.9% but the calculations would apply to any deal:

Solutions Personal Contract Plan Representative Example for a 718 Cayman subject to a 36 month, 10,000 miles per annum agreement
Duration 36 months
35 Monthly payments of* £439.00
Customer Deposit £9,965.30
Recommended on-the-road price^ £50,475.00
Total amount of credit £40,509.70
Optional final payment/**Guaranteed future value £33,622.40
Total amount payable £58,962.70
Option to purchase fee *** £10.00
Fixed Rate of Interest 7.89%
Representative APR 7.9%
Excess mileage 21p per mile

Actual cost: (35 x 439) + 9965.3 = 25,330.30 = three year cost, or 8,443 PA = £703.62 per month.

Cost of PCP: 58962.7-50475 = £8,487.70 or £2,829 PA

Break even vs cash: 33622.40 – 8,487.70 = £25,134.70, i.e. you are better off with the PCP guaranteed value (handing back the car) if the future value falls below this amount. Anything above this favours cash.

A 76k balloon is going to accrue quite some interest (~76k * 0.079 = ~6,004 PA or at least 18k over 3 years). If you are happy paying that then crack on, personally I hate paying any interest so usually opt for cash, HP or a bank loan. Ymmv, of course. I guess the days of "deposit contributions" are long gone.

[Sport_Turismo_GTS]

TTmonkey said:

So the important question here is based on the thread title.
I’m asking particularly about GFV on PCP, which is set at the start of the contract.

Currently, GFV on a Boxster 4.0 GTS is about 75% of list price.
Meaning that you can get a 4.0 for around £600 per month with a deposit of £12000. But a monster final payment of £76k.

A Boxster S however has a much lower GFV of about 45% of list, therefore a PCP on that produces a monthly payment of about £800 a month with similar deposit, on a car costing £20k less.
But final payment is around £35k.

It’s odd. Add to that rampant inflation affecting future new car prices, it’s going to be an odd market in a couple of years.

Just been playing with quotes and it is making weird sense. The more expensive model is cheaper to initially ‘rent’ on PCP deals.

Let’s not have a thread about the evils of PCP though…

Can you actually get hold of an allocation for a Boxster 4.0 GTS or is this all academic?

[Far Cough]

Also note that certain OPC's can offer better APR's and also adjust the GFV depending on what tier they sit at within the Porsche network.

[TTmonkey]

Sport_Turismo_GTS said:

Can you actually get hold of an allocation for a Boxster 4.0 GTS or is this all academic?

It’s not brand new.

[EC2]

It's a good question and Porsche did put up the GFVs on 911s a lot recently but they increased the APR at the same time. They seem to build the product to encourage you to take another one at 3 or 4 years old and never play off the GFV (no surprise there). They are not recession proof in anyway IMHO. Ask many 'buyers' how much of their monthlies are actually interest (often over half) and they won't have a clue. You are still looking at a £20,000 pa commitment even for a low end car which is quite a lot of cash.

[GT4P]

EC2 said:

You are still looking at a £20,000 pa commitment even for a low end car which is quite a lot of cash.

Madness! Better off buying a cayster for £20k on a cheap loan , still have as much fun and less debt!
Unless your sinking funds into a business or have investments that are returning more than the monthly interest then buying a car on a PCP is crazy waste of money.
Buy your first car for £20k save £20k over a year then you find yourself in a £40k car and so on and at least you then own the car and can sell if funds needed elsewhere.

[soxboy]

TTmonkey said:

Let’s not have a thread about the evils of PCP though…

Less than 5 hours, surprised it took so long

Edited by soxboy on Tuesday 23 August 20:58

[EC2]

soxboy said:

TTmonkey said:

Let’s not have a thread about the evils of PCP though…

Less than 5 hours, surprised it took so long

Edited by soxboy on Tuesday 23 August 20:58

Nothing wrong with PCP as long as people know what it costs and the low depreciation on a 911 offsets the APR to a reasonable degree. A lot of people like to keep the capital somewhere else for a whole host of reasons or others cannot afford the capital but have the income and want to enjoy the product now. All answers are fine as long as you make the payments.

[Guyr]

A lot of people get very bothered about wasting money on PCP (and personally I've never used one) but what's the difference between:

- Spending £10k a year on a car via PCP with nothing to show at the end

- Spending £10k a year on holidays with nothing to show at the end

- Spending £10k a year at restaurants with nothing to show at the end

All are choices, all are about enjoyment and the costs of all are known in advance.

[john41901]

Guyr said:

A lot of people get very bothered about wasting money on PCP (and personally I've never used one) but what's the difference between:

- Spending £10k a year on a car via PCP with nothing to show at the end

- Spending £10k a year on holidays with nothing to show at the end

- Spending £10k a year at restaurants with nothing to show at the end

All are choices, all are about enjoyment and the costs of all are known in advance.

For me, paying cash or HP (or even a cheap bank loan) has saved me tons vs an expensive interest bearing PCP - key benefit being more left to spend on the other items....

[grahamm]

I used to pay cash for my cars and thought PCP was the work of the devil. I am now in my 60's and am using PCP to purchase my Macan which I have had for one year. After I have owned the car for 4 years I can pay the balloon or hand it back. I am insured against a huge drop in used car values and can leave my ISA invested. It works for me and I don't think I spend more on cars than I would if paying cash but am spreading the cost. As pointed out in the OP it does mean that a better specified car can cost less to run than a more basic model. You are also going to be a better customer for your OPC. I am looking forward to delivery of a new GT4!

[TTmonkey]

grahamm said:

I used to pay cash for my cars and thought PCP was the work of the devil. I am now in my 60's and am using PCP to purchase my Macan which I have had for one year. After I have owned the car for 4 years I can pay the balloon or hand it back. I am insured against a huge drop in used car values and can leave my ISA invested. It works for me and I don't think I spend more on cars than I would if paying cash but am spreading the cost. As pointed out in the OP it does mean that a better specified car can cost less to run than a more basic model. You are also going to be a better customer for your OPC. I am looking forward to delivery of a new GT4!

Go Graham. Our time is not long, and if you live to 100 I can guarantee the last twenty will be pretty crap anyway!!!!!

Enjoy and post pics of your GT4

[grahamm]

TTmonkey said:

grahamm said:

I used to pay cash for my cars and thought PCP was the work of the devil. I am now in my 60's and am using PCP to purchase my Macan which I have had for one year. After I have owned the car for 4 years I can pay the balloon or hand it back. I am insured against a huge drop in used car values and can leave my ISA invested. It works for me and I don't think I spend more on cars than I would if paying cash but am spreading the cost. As pointed out in the OP it does mean that a better specified car can cost less to run than a more basic model. You are also going to be a better customer for your OPC. I am looking forward to delivery of a new GT4!

Go Graham. Our time is not long, and if you live to 100 I can guarantee the last twenty will be pretty crap anyway!!!!!

Enjoy and post pics of your GT4

Thank you. Just been told build now likely to be January rather than November.
Another point is that I seem to be happier paying a larger deposit and smaller monthly payments as I'm not constantly reminded how much it's costing!