2016 Mustang GT Depreciation

[OddCat]

Auto Express reckoned that the new Mustang would lose 50% or so in the first 3 years. But we are still in a place where lightly used 12 month old cars are still asking list price (or thereabouts).

http://www.autoexpress.co.uk/ford/mustang

The 'waiting list' will surely largely disappear soon as orders better match the supply so do we expect the use prices to fall sharply at that point to get 'back on track' for the 50% figure ? If so, then buying a 12 month old one for list (say £36k) would be a bad idea as it could be worth maybe £20k in two years time ? All of the 'new car' depreciation but none of the joy of actually having owned it from new ?

[OddCat]

New, unregistered cars asking around £40k. Quite a few on PH classifieds (assuming these are genuine and the physical cars really are for sale). So why would someone pay £38k for a 12 month old pre owned one ?

If PCP deals are quoting £20k as the final payment after 2 years what do we think the cars will really be worth after 2 years. If it was £28k then who would hand the car back ? Surely you'd buy it ? Are PCP final payments not supposed to reflect roughly what the car is actually worth at the end - so what you have paid for 2 years is depreciation and interest ?

I can't quite fathom what is going on here. Maybe the Mustang defies depreciation ?

[OddCat]

djc206 said:

The tax thing is not necessarily true. Mine being an auto with premium paint has a list price nearly £42k so would attract the extra £310 meaning a much higher first tax followed by £450 per year

Is the extra £310 per year not just for the first 5 years and then a simple £140 each year from year 6 onwards ?

[OddCat]

irish boy said:

The used car market is weird at the minute tho....dealer near me is asking £27k for a 3 year old 335d, how much were they new? Not much more with a heathy discount I'd wager. Look at golf gtd's as well.

Hmmm. I think maybe the whole PCP "guaranteed future value (GFV)" thing is distorting the market. The manufacturers set the GFV high so the monthly cost of the PCP is less (because the notional depreciation that is being paid for by PCP is less). That means they have to try to keep the general used values equally high. Such manipulation will end in tears for the manufacturer finance companies because a combination of saturation point (too many ex PCP cars and not enough buyers of those cars at the inflated used prices) and further economic headwinds and interest rate increases (low interest rates have also been making PCP artificially 'cheap') will cause the whole thing to fall apart. Too many people driving cars they really shouldn't be able to afford. A 3 year old 335d is a £20k car.

Re Mustangs, yes, a different animal. Waiting lists, increasing list price, limited supply means they don't (yet) follow the normal rules. More seem to be becoming available now though on the used market. Mostly low miles. Many people must have bought them as a trophy thing or a toy - not a daily user.

[OddCat]

My budget £30k. So will be one if these in a few months time or a 4 year old C63 AMG coupe sooner I think....

[OddCat]

I have only been looking at Autos, as I wouldn't want a manual, but expanded my search to include manual cars just to see what was happening with those as there are more around and they provide a better picture.

There are 16 plate cars with tiny mileage at Ford Store dealers with asking prices lower than similar spec private sale cars with thousands of miles on the clock. Given that, even like for like, you would expect dealers to be asking maybe 20% more than private sellers for cars with similar spec / mileage, let alone ones with tiny mileage vs ones with thousands of miles, this is plain weird.

Examples (all manual with custom pack):

Dealer, 2,000 mules £34k http://www.autotrader.co.uk/classified/advert/2017...

Dealer, 1,000 miles, £35k: http://www.autotrader.co.uk/classified/advert/2017...

Private, 6,500 miles £36k: http://www.autotrader.co.uk/classified/advert/2017...

Private, 750 miles £36k: http://www.autotrader.co.uk/classified/advert/2017...

Seems odd that private sellers are expecting such strong money. If I were selling a car (any car) privately that, at a franchised dealer, would be £35k I'd expect to get maybe £30k. Or a little above WBAC valuation. Otherwise surely the person will simply buy from the dealer with all of the razzamataz, part ex facility, finance, comeback, no fear of cash transferring / fraud etc ?

[OddCat]

It is basically coming down to a toss up between something like:

This:

http://www.autotrader.co.uk/classified/advert/2017...

And this:

http://www.autotrader.co.uk/classified/advert/2017...

Edited to say: they both have 2 years warranty.........

[OddCat]

Hmmm.....

In 3 years the C63 will be 7 years old and have 60,000 miles. The Mustang will be 4 years old and have 38,000 miles.

I reckon the C63 will be worth £18k and the Mustang maybe £21k. They will therefore each have lost £14k.

Running costs similar. Depreciation similar. Performance similar (as near as makes no difference anyway - I'm not Lewis Hamilton). C63 might be better built - but Mustang is half the age in 2020 so maybe less likely to have significant / expensive issues ?

How a car sounds is a massive part of my enjoyment. So maybe it comes down to which has the best standard exhaust note (which might be the C63 ?)

First world problems !

[OddCat]

croyde said:

Probably repeating myself but my 2016 Comp Orange GT is for sale on PH and eBay.

Really don't want to sell it, the plan was to keep it forever and not worry about depreciation, but lack of work is starting to mean rent difficult to find.

Would be interested to see how you get on selling privately. You must be asking pretty much what you paid for it ? Have you had much interest ? If so, from what sort of people ?

There are 44 new 5 litre Mustangs on AT and only two have done more than 7,000 miles. Three quarters of them have done less than 3,000 miles. So it doesn't look like people are going very far in them.

Oddly, Ford Dealers seem to be most realistic about pricing. Private sale asking prices are generally higher as are non-franchised dealers (but most of these are probably on SOR with the owners having high initial expectations of minimum they want from the sale).

Prices are held high because the supply is still slow, the novelty value is still there and most cars on sale have tiny miles which is distorting the average value I think. It won't be long before we see the first ones dipping below £30k.

[OddCat]

swerni said:

May have a great deal to do with the dollar rate declining by circa 15% since then

Yes, that will almost certainly have contributed to the accelerated new car price increases in £ in the last few months. But the £40k threshold for the new (mental) Road Tax should have an effect both ways:

1. it should cap new cars at £40k (otherwise they will be subject to the extra £310 per year for the next 5 years - so why would you spec one at £41k ?)
2. it should make the pre April 2017 cars less attractive as they are stuck with £515 per year whereas newer cars that sneak in under £40k will be subject to annual Road Tax only £140

[OddCat]

slowhand99 said:

Well, you might want a V8, vert, auto. In which case you are over £40k before tax regardless of extras.

It is a bit like the old Stamp Duty where it was 3% if the property was over £250k or more but only 1% if under £250k. No one paid £251k for a house as the duty would be £7,500 whereas, if they paid just £1k less, the duty was just £2,500.

Along same lines it would be insane to pay £41k for a car....