There has been a number of recent emails highlighting the collapse in used car prices and I am grappling with this conundrum as to where it is all going to end?!!!
1. HJ?s comment that a lady looking at an £3k N reg 80k clio could have a had an 80k w reg at auctions
2. Mr GTI looking for £7k plus when in reality no one will buy it for more than £5500
3. Car are getting more durable in terms of finish and core mechanics but more complex and more expensive to fix as they get older
4. The german brands (and maybe volvo?) seem to be the only ones relatively immune to the collapsing prices.
5. The availability of prices via the Internet from auctions and places like the great trade centre push dealer?s prices down.
Are we moving or have we moved to a situation where there is such a glut of oversupply that no one wants an older than 7 yr old car and there are not enough bangernomics people to pick up the perfectly useable cars remaining thereby confining then to scrap heap or encouraging even more cars onto the roads as 3rd and 4th cars.
Is this shorter life span going to drag the price of new cars down still further?.who wants to lose more than £300pm in depreciation for the pleasure of a new car and if your new e.g S40 is £16k and destined to be £6-7k in 3 yrs almost regardless of what you do with it then that is some drop to bear.
Any advice on whether it worth spending 9k on a premium type car or stick to 6k on a mainstream 3yr old car (still buys a decent top Ford, Toyota, Honda, Nissan) and see what happens. I think the germans are going to come under increased pricing pressure as the gap opens up and marketing and image are not enough to justify £20k plus price tags.
Sorry about the thesis! Answers on a post card please!
|
Ian,
I have been very busy lately but also intended to pull together some recent threads about just the above points. So thanks you have done it for me.
This is a multi-issue situation as you rightly describe. I often sum it up now by saying all second hand cars are cheap and all motoring costs. There is no simple answer.
Much depends on who is funding your motoring, personal income and personal car thoughts (often related to image).
Still too busy to post a full reply. This topic justifies a 4000 word article.....HJ young writer of the year competition??
David
|
|
Nearly all new cars are company owned anyway. Private motorists tend not to buy new cars.
|
|
|
|
Hmmm...
Buying a car is always a painful experience. Bangernomics may be the only way to keep depreciation to manageable proportions.
I've tended to buy 2 year old cars and run them for 3 years and, however I sharpen my pencil, I can't seem to get below £1500 pa depreciation. Could I if I paid more for the car in the first place (i.e. Panzerwagen or Anorakmobil)?
When buying anthing for, say, £7000 I tend to ask myself "how much could I lose on this £7000 thingy?" The answer is, of course £7000.
The reliability of electronics is going to be a real killer - the MOT and emissions will be the first nail in the coffin (probably already is), coupled with European environmental and safety legislation (like having to have airbags reaplced at 10 years or your insurance will be invalid).
From here, we might as well go back to rusty bangers of the 60s/70s. Why pay a fortune for a box on wheels that some European/HMG twerp is going to force you to throw away before it's really worn out?
Blimey, I wish I hadn't started to think about this!
|
|
|
> Any advice on whether it worth spending 9k on a premium type car or stick to 6k on a mainstream 3yr old car
IMO, wrong logic. There aren't many people, comparatively, making a profit buying and selling cars. IT certainly isn't a very good speculative business since the car itself depreciates and detiorates with time.
There is only one judgement about price which has *any* relevance to *anything*.
"Am I happy/prepared/able to pay this price in return for this car ?".
It doesn't matter what someone else would pay or whether the car is truly worth it in resale terms or not, unless this is what you intend to do with it.
I am a complete supported of the idea of working out price per mile over your chosen length of time and hten asking yourself if you are prepared to pay that in order to drive that car.
Therefore, do you want to drive the 9k car and do you want to sufficiently to pay that price ?
M.
|
How do you work out pence per mile?
What do you allow for?
Thanks.
|
|
|
How do you work out pence per mile?
What do you allow for?
Thanks.
|
|
|
|
The unfortunate reality is that many 'consumer goods', of which cars fall into the category are not being designed to last (things aren't built as they used to be!). Yes, technology has moved forward and yes build quality has moved forward, but as consumers want to pay less to buy a car, manufacturers now need to build in obsolescence to them so that we buy spare parts and eventually a new vehicle, to make their money (EU has helped greatly with this).
On the other side of the coin, consumers will not, on the whole, pay a realistic amount more for high quality. I am sure it is possible with current technology to build a vehicle that would last a lifetime. Who would buy it and at what price??
Even manufacturers who used to build vehicles like proverbial tanks e.g. the Germans and Volvo you mentioned, are now being forced by consumers to build to a price rather than a quality. They make what people buy. They are in business to make that ugly thing called profit. If you want cheap prices you get cheap goods.
Conclusion, find a used car which is built like a tank, with the engine and extras you need. Don't go for the silly electrical bits that just go wrong and you rarely use. The herd of 'extras freaks' who want a heated back massage whilst trying to hear which direction to go in over a random selection of 10 CD's leave plenty of rich pickings.
'Germanomics' is born!!
|
|
|
|
As one of my customers told me the other day, manufacturers aren't in the business of making cars, they're in the business of making money.
|
|
|
I think this is where the Jap's have got it wrong. Build a very simple car but jam it full of electrics that will go wrong in later life and therefore lower the re-sale value after 5-7 years.
German cars, especially the older ones, tend to be built well but no frills. Many Audi's and BMW's came w/o stereos or cigarette lighters but solid panels and high-spec bearings, for example. Ever compared the door skin thickness on a new Peugeot 306 to a 10 yr old Golf?
|
|
|
Last time I bought a car, I subscribed to the Germanomics theory and bought a new Audi A3. It was a financial strech but there is no doubt about the sheer build quality of these cars, and the real answer is to keep them for years. They will still look good 10 years from now if you look after them.
The reason they are so expensive new and used is tight control of supply and demand and people keep buying them because they have image! Dont tell me we only buy cars because we need cheap economical personal transport (We would have the whole family piled on a Honda 50 like the Vietnamese if that were the case).
Having said this, I havent subscribed to my own 'keep it ' theory and am now looking at a new BMWafter 3 years. As depreciation goes , I will have done much better than most, but its still a lot of cash down the pan.
Can any other 'economists' tell me why It seems impossible to get through a three year ownership cycle without some 'major change in the market ' pushing used car values down again?
|
I think Mark is right. Perhaps we shouldn't look at the "loss" as such, more as a cost of enjoying/using the thing. After all we don't moan about the "loss" on our washing machine or TV when a new one is needed.
I mean if you income is 100K and the house is worth £300K what is £3000 a year in car depreciation, just a small part of the lifestyle budget.
BrianT comments on his A3. I guess you have dropped about £9K in three years Brian, had you bought a Citroen Xantia at the same price you would have lost another £3K+. So in all quite acceptable if my first paragraph is your theory. In fact it must be or you wouldn't be looking at a BMW next...so no real problem.
Where motoring is more of a problem is for lower income families who get caught in the never ending depreciation loop. Then there is some sense in them trying to do the best possible deal, keeping away from main dealers and maximising their enjoyment at minimum cost. That is somewhat my own circumstance and many of my posts are to support such a motoring ethic.......but I do appreciate the other angle.
After all if a won the lottery this Saturday I wouldn't still run a £2K car would I, no there's something at £5K I might just splash out on.
David
|
David W wrote:
> .........
> Where motoring is more of a problem is for lower income
> families who get caught in the never ending depreciation
> loop.....
Or where you try and run a second car as economically as possible, and I feel servicing costs will come more into the equation.
As a family we have had two strategies re 2nd car BCC and WCC, (Before/With company car)
BCC was to recycle the main car into the second car and put the miles on the second car and then only to change the main car when the second car was, as HJ puts it, about ready for recycling into beans cans or maintenance costs on the upward curve.
Now as we are WCC the second car strategy has been, buy a decent 2/3 year old motor, nothing fancy, reliability being the key, and run it till Heinz beckons. Regular maintenance being frequent and DIY except on the, fortunately rare, occasions its beyond me. Then take a good long look round at the market for a replacement in the last year or two that the car will be viable thus it is never an "emergency" purchase.
In terms of the depreciation issue I guess the same strategy is still valid today, except as mentioned elsewhere the gubbins installed on even 2/3 yr old motors makes them very dodgy prospects maintenance wise in 8 years or so. Certainly beyond my skill and equipment.
Be interested to hear the trades view here. Can we expect that the independants will upgrade their ability to service such motors? Or will it be a case of you get the simple mechanical work done either by DIY/independant and have to go to specialists for the electronic bits? Or will it just be sewn up so tight that dealers will have it their own way.
|
|
|
|
|
I think the 'unrepairable electronics' angle for finally scrapping a car in the future has to be correct. I watched Top Gear last night on the new BMW 7 series, which has the 'i-drive' computer controlling every gadget known to man on the car. Apart from the problem of being rear ended by some fat cat fiddling with his TV screen or electric seat massager, these cars will lose money like a falling brick and end up at around £9000 a few years from now. Thats probably what it will cost some poor punter to repair or replace the indespensible 'i-drive' without which the car won't go any more! So several tonnes of Bavarian heavy metal will come to 'End of Life recycling' a hellof a lot quicker than it does today and somebody will catch a cold!
|
|
|
