People will avoid public transport--so there will be a demand for cars--and guess what?
Prices will rise as will insurance costs, fuel and all vehicle maintenance.
Might also be worth mentioning that many brand new cars will have been sitting in fields for the last 8 weeks waiting dealer delivery --so maybe deals to be had?
If prices rise the less likely to be deals as they will need to sell less cars to make the same money so no need to sell them off quickly.
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Just topped the petrol tank up @ 99.7p at Morrisons, been a long time since it was under £1 a litre, though to put this in perspective i can remember my dad going to fill the Morris Traveller up becaused 4* was going up 4d in the budget, from 4s4d to 4s8d for a gallon, thats a rise from 22p to 24p 'ish, so priced something in the region of 5p a litre if you insist on those dodgy foreign measures, mind you wages weren't great back then, but at least they were in £sd so proper money.
Be interesting to see what happens to the price of cars, but more to the point what cunning plans the govt of the day have re using their Covid debacle to shift numerous goal posts.
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1966 - Road Tax £12 10/- and 4/8d (24p) per gallon (5.5p per litre) for 4 star
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My take is as follows
Manufacturers/dealers will put on a brave face at first but will be aggressively pushing sales fearing a growing economic decline
Used values will be interesting, no doubt anything in retail condition with lowish miles will moderately go up in value as there will be a shortage of certain new cars, likewise pre reg models will not be as much of a bargain,
Give it until October and that will all change,
Depending on what various European countries including the UK do to address the coming recession will depend on how the car values hold up.
Create more imaginary money to stave off deflation and mass inflation will follow, devastating for car imports, not as bad for UK produced cars which in theory will be financially attractive compared to expensive imports.
Still mass inflation is no ones friend and car prices may rise but buyers savings will not.
Allow economic decline and deflation, prices will follow with some exceptions but cash will be king.and car values will reduce. New sales will have to be very competitive until the supply side slows to match the lack of demand.
I Spoke with a senior technician at a Nissan dealership today whom has been back in work this week. He said the plan from the sales meeting was to get any of the current customers 2 or more years into a finance pcp agreement back to the showroom and onto a new agreement regardless of current pcp finance agreement; finance house willing to allow early settlement provided new agreement is commenced.
This will only be for stock vehicles not yet registered of which they normally would have shifted end of March/April.
Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable.
Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
PCP is not a Ponzi scheme - stop spouting your nonsense.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
PCP is not a Ponzi scheme - stop spouting your nonsense.
Given that car firms have been actively encouraging people to, rather than taking a hit from the end of the current PCP deal, roll it over and to buy an even more expensive car, I disagree.
Yes, the seneible amongst us can obviously see through that and make sure they pay it off (especially almost immeditaely where any penalty for doing so is less than any manufacturer saving for taking a PCP out), the vast majority of people never do this.
I mean, all those people who previously couldn't afford some expensive German saloon amazingly now can, despite them not having the income to support that purchase long term.
I am NOT making any of this up, but re-reporting what has on many occasions been reported widely in the media, including on this site.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
PCP is not a Ponzi scheme - stop spouting your nonsense.
Given that car firms have been actively encouraging people to, rather than taking a hit from the end of the current PCP deal, roll it over and to buy an even more expensive car, I disagree.
Yes, the seneible amongst us can obviously see through that and make sure they pay it off (especially almost immeditaely where any penalty for doing so is less than any manufacturer saving for taking a PCP out), the vast majority of people never do this.
I mean, all those people who previously couldn't afford some expensive German saloon amazingly now can, despite them not having the income to support that purchase long term.
I am NOT making any of this up, but re-reporting what has on many occasions been reported widely in the media, including on this site.
You said a PCP deal is a Ponzi scheme. It's not - you are making that up and talking nonsense.
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Got to agree that it isn't a Ponzi scheme (= relying on ever-increasing new cash inputs to keep the plates spinning...) - but it's the finance houses rather than the punters who might be looking at an unsustainable cost structure if and when Guaranteed Future Values are no longer realisable to a significant degree. Difficult for the uninitiated (like me) to know how far this might bite into the broader banking system, with wider consequences.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
PCP is not a Ponzi scheme - stop spouting your nonsense.
Given that car firms have been actively encouraging people to, rather than taking a hit from the end of the current PCP deal, roll it over and to buy an even more expensive car, I disagree.
Yes, the seneible amongst us can obviously see through that and make sure they pay it off (especially almost immeditaely where any penalty for doing so is less than any manufacturer saving for taking a PCP out), the vast majority of people never do this.
I mean, all those people who previously couldn't afford some expensive German saloon amazingly now can, despite them not having the income to support that purchase long term.
I am NOT making any of this up, but re-reporting what has on many occasions been reported widely in the media, including on this site.
You said a PCP deal is a Ponzi scheme. It's not - you are making that up and talking nonsense.
Symantics. Both are unsustainable for the vast majority of those participating in them, because they rely on others taking similar risks to cover your current one and your future one, increasing the likelihood of default through each generation they progress.
Sounds similar to me, even if they aren't the same in what they do. You appear to want to argue black is white just for the sake of it. I hope you're not taking the 'discussions' over on the OMB thread as personal and taking action accordingly out of spite.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
PCP is not a Ponzi scheme - stop spouting your nonsense.
Given that car firms have been actively encouraging people to, rather than taking a hit from the end of the current PCP deal, roll it over and to buy an even more expensive car, I disagree.
Yes, the seneible amongst us can obviously see through that and make sure they pay it off (especially almost immeditaely where any penalty for doing so is less than any manufacturer saving for taking a PCP out), the vast majority of people never do this.
I mean, all those people who previously couldn't afford some expensive German saloon amazingly now can, despite them not having the income to support that purchase long term.
I am NOT making any of this up, but re-reporting what has on many occasions been reported widely in the media, including on this site.
You said a PCP deal is a Ponzi scheme. It's not - you are making that up and talking nonsense.
Symantics. Both are unsustainable for the vast majority of those participating in them, because they rely on others taking similar risks to cover your current one and your future one, increasing the likelihood of default through each generation they progress.
Sounds similar to me, even if they aren't the same in what they do. You appear to want to argue black is white just for the sake of it. I hope you're not taking the 'discussions' over on the OMB thread as personal and taking action accordingly out of spite.
Sounds like buying ..a house. A holiday time share. A share.
In the real world, you always take on some risk when you spend money. Sometimes you are relying on a future buyer to buy from you..
That is LIFE.
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You said a PCP deal is a Ponzi scheme. It's not - you are making that up and talking nonsense.
Symantics. Both are unsustainable for the vast majority of those participating in them, because they rely on others taking similar risks to cover your current one and your future one, increasing the likelihood of default through each generation they progress.
Sounds similar to me, even if they aren't the same in what they do. You appear to want to argue black is white just for the sake of it. I hope you're not taking the 'discussions' over on the OMB thread as personal and taking action accordingly out of spite.
Andy, your not stupid so you know a PCP deal is not the same as a Ponzi scheme.
It's not arguing black is white - it's arguing black is black.
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PCP is not a Ponzi scheme - stop spouting your nonsense.
Agreed.
Also, the manufacturer, will charge say 5.9% for a PCP deal (one I looked at today).
That is on the full sale price (including balloon payment).
Now the cute car companies (aren't they all) will go to the market and say we have £x millions in loans on PCP. The repayment rate is effectively 100% - not allowing for default - remember they get the car back in a default. They will then price the loans out to the market at say 107%. For my PCP its effectively 106% so the PCP is 1% more.
How 107%, well, many countries' govt bonds have real term negative govt bond rates or effectively 0%. So they will pay over the face value of a bond and are still better off than taking a negative interest rate.
This is one of the reasons why deposits are restricted on PCP schemes - they want to lend as much as possible because they make such a big margin on the loan.
This is a very crude example but we do this all the time at work.
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. Benefit for dealer is good used stock that has an increased value and they can move onto customers where delays for certain models will be considerable. Assume the benefit for finance house is people locked into new 3/4 year PCPs before the recession really bites.
If the PCP pricing is realistic, interest rates charged will have to rise to cater for the increased risk of default/early termination due to a recession.
Having many millions of people rolling over their PCP deals just to keep things going is to me akin to just changing the time on a ticking explosive. As a world, we need to wean ourself off the ponzi scheme of PCP as soon as possible.
At the moment, when governments are having to borrow untold £Bns to keep their countries afloat and to adi the fight against the virus, the last thing we need is yet more borrowing to finance cars many of us don't really need. We're addicted to credit, and we need to stop.
I agree but the sales staff at the finance houses and dealers are on monthly or quarterly targets, better to kick the inevitable into the long grass for as long as possible from their point of view
The one good thing about closing of factories from the manufacturers perspective is there ability to adjust recommencing manufacturing with expected lower demand; this will help reduce any over supply and help maintain profits
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>>trade up customers of 2 year old cars on PCP
This assumes that the customer has faith that his/her employer, or a self employed, are confident that they will have a job in that time.
I would suggest that there will be a lot of people with a 2+ year car looking to voluntary termination of the agreement when they have paid 50% of the finance transaction which can come around on a 3 yr PCP at 2 ish year and about 33 months of a 4 year (depends on residual initial deposit / Int Rate & GMFV)
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I was on the cusp of buying a new (low mileage used) car but didn’t do so because I saw no sense in it sitting outside on the drive for months.
The car I intended buying is still on the forecourt, unless the price drops I shall not be buying it, the forthcoming recession will reduce the value of our savings and inflation will make things worse.
Unless dealers recognise this they will not survive.
I reckon there will be deals to be had as they try to recapitalise their businesses, whether or not it will be a good bargain for the consumer remains to be seen.
A major cultural change faces us as many businesses will not open, or will cut staff, home working will become more popular and reduce the need for private transport.
Thousands will lose their livelihoods and default on finance plans/mortgages etc
Bumpy road ahead.
Hold on tight....
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If several million people lose their jobs by the end of the year, a number that wouldn't surprise me in the least, then the value of cars will drop through the floor.
Only those with fixed guaranteed incomes will risk new or newer cars, most employed people if they have any sense will shore up and ride the storm out with what they already have.
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Only those with fixed guaranteed incomes will risk new or newer cars, most employed people if they have any sense will shore up and ride the storm out with what they already have.
They're going to need large sails.
I believe it could be a depression rather than a recession.
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I was on the cusp of buying a new (low mileage used) car but didn’t do so because I saw no sense in it sitting outside on the drive for months. The car I intended buying is still on the forecourt, unless the price drops I shall not be buying it, the forthcoming recession will reduce the value of our savings and inflation will make things worse. Unless dealers recognise this they will not survive. I reckon there will be deals to be had as they try to recapitalise their businesses, whether or not it will be a good bargain for the consumer remains to be seen. A major cultural change faces us as many businesses will not open, or will cut staff, home working will become more popular and reduce the need for private transport. Thousands will lose their livelihoods and default on finance plans/mortgages etc Bumpy road ahead. Hold on tight....
Even for those working the prospect of a tax increase is going to eat away at disposable income, the furlough and other support schemes are costing a fortune and the government's debts will need to be repaid.
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Do not see any movement but down for car prices. People have spent their future on the PCP game for many years and funded this by secure employment at the expense of disposable income. Even this game is coming to an end as many people are asking themselves will they still have a job and if so for how long? Public sector incomes which already in many cases were close to serfdom are facing salary halts for a number of years.
What happens if a second wave of the virus does occur in 12 months? Will the motor trade still be asking silly prices for cars built to a tight budget? I would suggest people with savings ensure they split the monies so that no more £85k or £170k joint are in an account in the event the financial organisation does fail, after all many of the higher rate savings (in the West at least) have links to car companies e.g. RCI, Ford Money.
The next 12 months will be interesting, as a small noteworthy addition, back in Jan this year I made the silly move of attempting to replace my old Ford with a 2018 Lexus IS, dealer wanted £23k, it had done hardly any miles and was a very good spec. I offered £18.5k cash and was advised this is unacceptable and told essentially to come back when I could afford the vehicle. When the dealership opens again as that same car is still for sale perhaps that same offer might be seen an another light....
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"I offered £18.5k cash and was advised this is unacceptable and told essentially to come back when I could afford the vehicle."
Carl, if that's the salesman's attitude he'll soon be out of a job. These statistically dubious surveys are always saying that Lexus dealers are the best. Clearly not this one....but if you look at Cars for Sale on this site (button at the top of the page) you'll find plenty of Lexus ISs.
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"I offered £18.5k cash and was advised this is unacceptable and told essentially to come back when I could afford the vehicle."
Carl, if that's the salesman's attitude he'll soon be out of a job. These statistically dubious surveys are always saying that Lexus dealers are the best. Clearly not this one....but if you look at Cars for Sale on this site (button at the top of the page) you'll find plenty of Lexus ISs.
Not taking an offer does not make them a poor salesman - is £18.5k a good price for a dealer to sell at?
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"I offered £18.5k cash and was advised this is unacceptable and told essentially to come back when I could afford the vehicle."
Carl, if that's the salesman's attitude he'll soon be out of a job. These statistically dubious surveys are always saying that Lexus dealers are the best. Clearly not this one....but if you look at Cars for Sale on this site (button at the top of the page) you'll find plenty of Lexus ISs.
Not taking an offer does not make them a poor salesman - is £18.5k a good price for a dealer to sell at?
What makes him a poor salesman is the snobbish, arrogant "come back when you can afford one" response.
A good salesman would explain he can not cut the price so far and at least show some flexibility in price, if unable to negotiate an affordable deal apologise and hope to see the customer again someday.
People do win on horses/lotteries and will then remember who was polite and who treated them with contempt.
I'd be interested in SLO's opinion on this?
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What makes him a poor salesman is the snobbish, arrogant "come back when you can afford one" response.
A good salesman would explain he can not cut the price so far and at least show some flexibility in price, if unable to negotiate an affordable deal apologise and hope to see the customer again someday.
People do win on horses/lotteries and will then remember who was polite and who treated them with contempt.
I'd be interested in SLO's opinion on this?
Ah, the twerp must have moved on from a nearby BMW dealer and is now single handedly ensuring customers never darken the Lexus dealership doorstep again, said twerp told a chap i know to come back when he could afford a BMW.
The chap i know doesn't wear spiv suits or pointy shoes and doesn't gel his hair so his more down to earth appearance must have been quite a shock for our young super salesman who presumably wished to deal with a mirror image of himself, if he'd cast his eyes out the window and clocked the personal plate on chap's car he might have twigged he could have bought the dealership let alone a 3 series, todays Cortina.
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On the subject of pcps, hubby bought a car beginning of march with a manufacturer Contribution of £2500 and a nearly £4000 dealer discount on top with a low interest rate so got the best deal for him and the interest charges are lost in the discounted price.
I. Will post them when I find them. Hubby is happy.
Edited by maxime on 14/05/2020 at 21:51
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No one really knows but the general consensus in the "trade" is that the cheaper stuff (sub £3k) may well see an uplift, the middle stuff (>£6k) drop a little or stay about the same and the more expensive things see a fairly substantial drop.
It's all guesswork however.
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What happened in 2007/08?
Expensive stuff was available at huge discounts
At times Stock cars were flogged cheap, some really cheap (friend picked up pre reg 2 week old fiat punto for £6k).
Budget sub £3k end of the market wasn’t really effected until the 2009 scrapage scheme began.
Maybe we will see another scrappage scheme but this time it will only be for UK built cars or electric/hybrid non UK built cars?
Now we are out of EU (transition ends this year) there is no restriction on UK gov to prevent a UK manufacturing sales advantage.
I’m not fan of any government being biased to its own country’s product but they all do it and as a short term option it can help.
Long term it results in rubbish lazy products.
Edited by daveyK_UK on 15/05/2020 at 14:37
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there is no restriction on UK gov to prevent a UK manufacturing sales advantage. I’m not fan of any government being biased to its own country’s product but they all do it and as a short term option it can help. Long term it results in rubbish lazy products.
That depends on what trade deal we get with the EU - we could agree a deal that does limit what the UK government can do - we will have to wait and see what we get first - hopefully we will have something so we can be more flexible in situations like this.
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The current virus crisis is very different to recessions that have gone before.
In 2008-10 manufacturers were pumping out cars as if the good times woild never end. It is no surprise that prices of premium cars came under a lot of pressure in the ensuing recession. Total new car sales fell from around 2.5m at the peak to 1.95m in 2011.
This time around the fall in total demand in March - June will be massive. Sales down by more than 90% compared to the previous year? There may be some catch up as lockdown is relaxed - but car production has also fallen off a cliff.
So what happens to pricing will depend not just on demand, but on how much stock there was at the end of February, volumes produced (globally) during lockdown, difficulties of re-establishing supply chains, etc.
The reluctance of people to buy a car due to uncertainty and stresses on incomes generally will impact all market sectors - except at the banger level most cars could be held for several years before replaement is actually required.
There is no crystal ball. If you think you can beat the market, that's up to you. My take would be to buy a car when/if the price, time, model meets my aspirations or needs, not try to outguess market movements.
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