Are prices due to crash?

[66tim99]

The 309 and 406 were brilliant cars.

I learned to drive in the Yorkshire Dales in a 309 Trio Diesel. Only 55bhp but pulled like a train up the hills in 4th. Everything seemed ergonomically correct. I loved burning around after passing with Pixies and Happy Mondays on, smoking Bensons

 

[RockinNRollin]

I learned to drive in the Yorkshire Dales in a 309 Trio Diesel. Only 55bhp but pulled like a train up the hills in 4th. Everything seemed ergonomically correct. I loved burning around after passing with Pixies and Happy Mondays on, smoking Bensons

A friend of mine has just got rid of his 406; it had nearly 300k miles on it (and no, he wasn't a taxi driver!). While it felt tired, it was still very comfortable.

 

[soulstyledevon]

I learned to drive in the Yorkshire Dales in a 309 Trio Diesel. Only 55bhp but pulled like a train up the hills in 4th. Everything seemed ergonomically correct. I loved burning around after passing with Pixies and Happy Mondays on, smoking Bensons

Snap me too. Bought from my uncle for £500. One of my first cars. Might have been slow, but was great on fuel in its day.

 

[soulstyledevon]

Cash is king.

I have tried hard to understand the financial benefits (to the consumer) of PCP and have miserably failed.

There aren’t any, that’s why.
I just don’t get why people don’t calculate the full cost over the term of use…

Last year I bought a used BMW, 4.5 years old, which cost less than half the price of a new model. With one owner and only 10k miles I thought it was a bargain compared to a factory fresh model.

 

[CaliforniaSeb]

There aren’t any, that’s why.
I just don’t get why people don’t calculate the full cost over the term of use…

Last year I bought a used BMW, 4.5 years old, which cost less than half the price of a new model. With one owner and only 10k miles I thought it was a bargain compared to a factory fresh model.

Only worth it if you can strike a better deal and can then pay it off asap. CarWow give a cash and PCP price. That PCP is always lower. So we recently bought are Skoda on PCP. It will be paid off shortly. Saving us about 1,500 pounds on the purchase price.

 

[Amarillo]

There aren’t any, that’s why.
I just don’t get why people don’t calculate the full cost over the term of use…

Last year I bought a used BMW, 4.5 years old, which cost less than half the price of a new model. With one owner and only 10k miles I thought it was a bargain compared to a factory fresh model.

Calculating the cost over the term isn’t as easy as it appears for the reason I gave a few posts ago. It is not the depreciation calculated the traditional way that matters, but the difference between the current value of your car and a new replacement which is the real loss in value.

 

[JuanVecino2023]

Cash is king.

I have tried hard to understand the financial benefits (to the consumer) of PCP and have miserably failed.

There are none.

There aren’t any, that’s why.
I just don’t get why people don’t calculate the full cost over the term of use…

Last year I bought a used BMW, 4.5 years old, which cost less than half the price of a new model. With one owner and only 10k miles I thought it was a bargain compared to a factory fresh model.

i think the reality is that car manufacturers during the largely ~ 0% risk free rate since 9/11 ceased to be sellers of cars, becoming sellers of financing.

It was a genius virtuous circle. Give people shiny new trinkets at ‘discounts’,, then loading them up with options that people could justify based on the discounts, selling vastly overpriced service packages, further locking them into the ecosystem.

Then you use the ‘equity’ to trade in your barely broken in car for another finance package in 2 years.

As I boringly repeat, the mafia couldn’t find a better racket.

Now money isn’t free, the big unwind is occurring. Used car markets are dumping, meaning everyone is handing the keys back further suppressing the second hand market.

EV issues with battery replacement costs, insurers backing out of the market are exacerbating the problems.

Which is why the banger market is flourishing.

I often bore people with my theory, the longer the party, the bigger the hangover.

We’ve had a long, long party of free money. We’re just witnessing the unwind now it actually costs real money to buy things.

There are so many facets to this. But another impact, as mortgage rates spiralled and the housing market declined, no one is buying cars with free money from releasing equity from their home.

VW isn’t giving me 0% lending and a ton of incentives out of the goodness of their heart. They are doing it because it’s tough to shift £70k vans in this environment.

 

[soulstyledevon]

Calculating the cost over the term isn’t as easy as it appears for the reason I gave a few posts ago. It is not the depreciation calculated the traditional way that matters, but the difference between the current value of your car and a new replacement which is the real loss in value.

Absolutely agree with you.
But in my scenario, I was looking for, essentially, a first purchase.
So PCP costs over a new model were eye-watering. The sensible option was to pull the money needed from savings, buy the used equivalent. Now I pay myself back over a three year period.
However, in 3 years I own the vehicle outright…

 

[Wannabecamperman]

I haven’t had many cars in my life.
1992 Ford Orion B332TKN £1200
1994 Peugeot 309 G251UKJ £3000
2003 Peugeot 406 V515MMV £6000
2013 Peugeot 5008 KP62CDK £11,000
2017 Amarillo £42,222
2019 Skoda Citigo £9,000

The 309 and 406 were brilliant cars. The Orion was a lemon. And I never liked the 5008.

I wish I could remember how much sold each car for.

Slightly off topic, but one of my first owned cars was a Peugeot 309 diesel, and to me it was lightning fast and an incredible diesel engine! I subsequently had an Escort XR3i (loved the aesthetics) and an old Fiesta XR2, but they never gave me the same feeling driving them as the Peugeot.

 

[Amarillo]

Slightly off topic, but one of my first owned cars was a Peugeot 309 diesel, and to me it was lightning fast and an incredible diesel engine! I subsequently had an Escort XR3i (loved the aesthetics) and an old Fiesta XR2, but they never gave me the same feeling driving them as the Peugeot.

I should have mentioned that the 309 and 406 were both diesels, as was the 5008 (which I never liked).

Our current Skoda is petrol. I’d like to change it for an electric car.

 

[Corradobrit]

Slightly off topic, but one of my first owned cars was a Peugeot 309 diesel, and to me it was lightning fast and an incredible diesel engine! I subsequently had an Escort XR3i (loved the aesthetics) and an old Fiesta XR2, but they never gave me the same feeling driving them as the Peugeot.

When I worked for Glaxo back in the 80's they had an XR2 in the company car fleet. I always tried to reserve it when I was heading up to manufacturing site in Ulverston. Super little car, although I give the nod to the Golf GTi Mk1 1.8 I owned in Italy. A real pocket rocket.

 

[Mansfieldman750]

There are none. With theve

i think the reality is that car manufacturers during the largely ~ 0% risk free rate since 9/11 ceased to be sellers of cars, becoming sellers of financing.

It was a genius virtuous circle. Give people shiny new trinkets at ‘discounts’,, then loading them up with options that people could justify based on the discounts, selling vastly overpriced service packages, further locking them into the ecosystem.

Then you use the ‘equity’ to trade in your barely broken in car for another finance package in 2 years.

As I boringly repeat, the mafia couldn’t find a better racket.

Now money isn’t free, the big unwind is occurring. Used car markets are dumping, meaning everyone is handing the keys back further suppressing the second hand market.

EV issues with battery replacement costs, insurers backing out of the market are exacerbating the problems.

Which is why the banger market is flourishing.

I often bore people with my theory, the longer the party, the bigger the hangover.

We’ve had a long, long party of free money. We’re just witnessing the unwind now it actually costs real money to buy things.

There are so many facets to this. But another impact, as mortgage rates spiralled and the housing market declined, no one is buying cars with free money from releasing equity from their home.

VW isn’t giving me 0% lending and a ton of incentives out of the goodness of their heart. They are doing it because it’s tough to shift £70k vans in this environment.

That‘s a contradiction surely. You say that there are no advantages to the customer with PCP then go on to say everyone is handing their keys back, presumably because the car is worth less than the guaranteed minimum future value.
In which case PCP has worked in the customer’s favour and it’s the lender who takes the hit.

 

[Corradobrit]

That‘s a contradiction surely. You say that there are no advantages to the customer with PCP then go on to say everyone is handing their keys back, presumably because the car is worth less than the guaranteed minimum future value.
In which case PCP has worked in the customer’s favour and it’s the lender who takes the hit.

Many will just want to cut their losses. Especially given the grim economic forecasts going forward.

 

[Mansfieldman750]

Many will just want to cut their losses. Especially given the grim economic forecasts going forward.

Well yes but what I’m saying is PCP gives the customer protection against hyper depreciation in that they have the option to give the car back and walk away.

 

[JuanVecino2023]

That‘s a contradiction surely. You say that there are no advantages to the customer with PCP then go on to say everyone is handing their keys back, presumably because the car is worth less than the guaranteed minimum future value.
In which case PCP has worked in the customer’s favour and it’s the lender who takes the hit.

Not sure it’s a contradiction?

The ‘buyer’ has already paid the depreciation curve plus financing rates? Which are part of the calculus of the monthly payments.

Which is why it now costs £650 PCM to lease a little Honda e. The depreciation curve on EVs just steepened sharply.

 

[JuanVecino2023]

That‘s a contradiction surely. You say that there are no advantages to the customer with PCP then go on to say everyone is handing their keys back, presumably because the car is worth less than the guaranteed minimum future value.
In which case PCP has worked in the customer’s favour and it’s the lender who takes the hit.

Also, the no advantages was a quote from another poster.

Personally, I buy my cars outright. Except when my business leases me an EV for tax breaks.

Or when VW give me actually free money at 0% when risk free is north if 5%.

But, I recognise they are gifting me this money because the economics of California ownership just shifted considerably.

It’s the ultimate discretionary spend after a watch.

 

[CamperFam]

There's some good deals out there - but it all depends on own personal circumstance. That's why it's always tough to do a blanket 'getting finance is a stupid move'. For many (most), having 75k sat around isn't a thing. There's a reason the majority of the ownership base aren't 25 year olds.

I'd wager that if you put each age demographic on a chart, you'd see a clear trend of the majority of owners being on the 45-65 age range, and a very clear trend of PCP deals on ages below that.

For us, the PCP worked out great. When we got our Ocean we were in our late 20's, just got our first house, and had a family on the way; we most certainly didn't have a stack of money. We watched the market for a year or more, before seeing an opportunity just as C19 hit, and to do it, we needed finance. It's worked out well for us.

The van's depreciated £2k, and so the majority of what we've put in has gone straight into equity, with a small amount being lost on depreciation and interest. And that interest cost could easily be covered through the price inflation if we were to have waited, stacked and got an equivalent Cali now.

Not saying the above is every case; far from it; it's how finance providers make a profit. But ultimately it's all down to personal circumstance as to whether it makes sense to you or not.

The real shame is when individuals aren't able or supported to make calculated decisions.

 

[JuanVecino2023]

Many will just want to cut their losses. Especially given the grim economic forecasts going forward.

The clients of my business are mostly listed U.K. Homebuilders.

Given they represent the backbone of the U.K. economy, I would say that unless there is a wholesale and quick change in planning legislation, it looks incredibly bleak.

 

[JuanVecino2023]

There's some good deals out there - but it all depends on own personal circumstance. That's why it's always tough to do a blanket 'getting finance is a stupid move'. For many (most), having 75k sat around isn't a thing. There's a reason the majority of the ownership base aren't 25 year olds.

I'd wager that if you put each age demographic on a chart, you'd see a clear trend of the majority of owners being on the 45-65 age range, and a very clear trend of PCP deals on ages below that.

For us, the PCP worked out great. When we got our Ocean we were in our late 20's, just got our first house, and had a family on the way; we most certainly didn't have a stack of money. We watched the market for a year or more, before seeing an opportunity just as C19 hit, and to do it, we needed finance. It's worked out well for us.

The van's depreciated £2k, and so the majority of what we've put in has gone straight into equity, with a small amount being lost on depreciation and interest. And that interest cost could easily be covered through the price inflation if we were to have waited, stacked and got an equivalent Cali now.

Not saying the above is every case; far from it; it's how finance providers make a profit. But ultimately it's all down to personal circumstance as to whether it makes sense to you or not.

The real shame is when individuals aren't able or supported to make calculated decisions.

Absolutely there are always exceptions. And wise people seize those advantages.

My observation is the overall economics of car ownership. And why the game has changed.

Covid, QE2 etc were exceptional times. We’re seeing the aftermath now.

 

[pjm-84]

Cash is king.

I have tried hard to understand the financial benefits (to the consumer) of PCP and have miserably failed.

The clients of my business are mostly listed U.K. Homebuilders.

Given they represent the backbone of the U.K. economy, I would say that unless there is a wholesale and quick change in planning legislation, it looks incredibly bleak.

I work in the commercial market (architecture) and work is busy

 

[JuanVecino2023]

I work in the commercial market (architecture) and work is busy

All the top 10 UK Homebuilders are enforcing discounts on their contracts with the trades building them.

And whilst they are putting up the superstructure & making them watertight, they aren’t finishing them. Nothing past first fix.

Their Q1 & beyond forecasts are pretty grim. Beyond stock plots, nothing is shifting.

That said, the current mortgage rate war will eventually filter through into sales volumes.

 

[Ch1pbutty]

Covid, QE2 etc were exceptional times. We’re seeing the aftermath now.

Now you have the issue in the Red Sea, cost of goods will increase.

https://www.export.org.uk/news/661473/Rising-shipping-costs-could-hit-consumers-as-US-led-coalition-struggles-to-address-Red-Sea-crisis.htm

US and Allies Issue Warning to the Houthis: Stop the Attacks on Shipping or Else

In a joint statement released by the White House, the governments of the United States, Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, and the United Kingdom...

gcaptain.com

 

[soulstyledevon]

I work in the commercial market (architecture) and work is busy

That sounds about right.
Domestic/Private work drying up, commercial installations remain strong. Not surprising considering how much material costs have risen. It’s an odd time in the building sector as vast parts still have worker shortages. Good skilled labour is hard to find…

 

[Ch1pbutty]

That sounds about right.
Domestic/Private work drying up, commercial installations remain strong. Not surprising considering how much material costs have risen. It’s an odd time in the building sector as vast parts still have worker shortages. Good skilled labour is hard to find…

Cost of raw materials will rise even more in next few months.

 

[Amarillo]

At least now we have the option to make a bit of money from cash savings again.

My bank offers 4% - limited to three withdrawals per year and has a quirky regular savings account giving 6.25% - limited to £400 per month.

It only just beats inflation (3.9%), but keeping a bit of cash to hand is no longer costing anything.

Having transitioned from a saver to borrower shortly after the financial crisis, I’m now rapidly transitioning back to being a saver.