What's going to happen to the car market?

I'm a little confused why we'd be expecting to see used car prices fall. Those I know seem to want to switch out of their expensive lease deals and get something reliable but second hand so see them through this mess, again seems people want the confidence of having a small reliable car incase they loose their jobs and thus their PCP cars. I'm not saying that's a trend across the country... but.....
 
ultralaser said:
Those I know seem to want to switch out of their expensive lease deals
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even those such cars, would need to be sold on the market, and, themselves, contribute to over supply, thus pushing down the values across the whole market.
and if the market shrinks too (unemployment, people go from 2 to 1 car families), even if the manufacturers cut production, the outcome is still market price drop.
 
ultralaser said:
I'm a little confused why we'd be expecting to see used car prices fall. Those I know seem to want to switch out of their expensive lease deals and get something reliable but second hand so see them through this mess, again seems people want the confidence of having a small reliable car incase they loose their jobs and thus their PCP cars. I'm not saying that's a trend across the country... but.....
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I have a lease car as a main family car and a really cheap owned runaround as a second car. I have mixed feelings about the lease. On the one hand I'm not using it much in lockdown so I would be OK with getting rid of it if the option were there. On the other hand I'm not too bothered because it's protecting me from falling values. I don't car what the car market does now. I'll just hand it back in 1.5 years and I don't care what the market will be like.

...but I'll certainly not be buying an expensive car in 1.5 years from now. I'll either just keep my current runaround or get another second cheap runaround. My job seems safe so far but I simply don't want to put money into an expensive asset. I assume more people think the same way so values of expensive nearly new cars will very likely fall.
 
jpaul said:
even those such cars, would need to be sold on the market, and, themselves, contribute to over supply, thus pushing down the values across the whole market.
and if the market shrinks too (unemployment, people go from 2 to 1 car families), even if the manufacturers cut production, the outcome is still market price drop.
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But they can’t get out of them therefore there isn’t going to be a glut.

Used car values aren’t going to take a huge hit as I said a few weeks ago. New car sales are going to be dead, but they’ve been falling recently anyway.

A big issue could be nearly new, there may be a glut of one day rentals coming into the market but rental companies may decide to extend the life cycle of those cars. Which will add extra pressure to new cars
 
Ahleckz said:
But they can’t get out of them therefore there isn’t going to be a glut.
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Aren't PCPs easy to get out of. Even leases can be stopped - possibly with a fee, but if you've just lost your job then stopping a £300-400/month payment (even at 1 off payment of a couple months) could be needed.

As I said earlier in the topic - I could well imagine the cheaper end of the used market for "reliable family cars" being in demand and holding their cash, but I'd imagine anything over £10k is likely to drop (along with anything with a higher running cost e.g. sporty, high tax etc.).

But, It could well be a couple months before any significant happens to the market. I'd guess Sep, with dealers wanting to push the new plate/models could mean deals on new cars (which could likely have a knock-on effect of devaluing the used market)
 
Hades said:
I have a lease car as a main family car and a really cheap owned runaround as a second car. I have mixed feelings about the lease. On the one hand I'm not using it much in lockdown so I would be OK with getting rid of it if the option were there. On the other hand I'm not too bothered because it's protecting me from falling values. I don't car what the car market does now. I'll just hand it back in 1.5 years and I don't care what the market will be like.
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So I think that make sense to me, if you can afford it, my worry is for many parts of the PCP market there's a whole of lot people that are in the high mortgage / high PCP bracket that are super sensitive to a drop in income or loss of income - I think we all know the type who turn up to the pub in a Q7 then can only afford one pint :p and if we start to see those people defaulting / returning their PCP leases it's going get interesting. We know that 1/3 of Brits don't have more than £1500 in savings so those £400PCM payments are going to bite hard if there's a shock to income, and combine that with 82% of new cars being PCP leases and an expected economic contraction of >25% this year......:eek: For those that can afford it I think PCP lease deals will actually get better as manufacturers demand falls dramatically faster than supply + existing stock. My gut feeling is when the PCP defaults start rolling most of that market will head to reliable second hand, which I think will make the second hand market prices stay the same - none of that will kick in though I suspect until after the fourlough schemes end and people know if they have jobs to come back to. Scary times all round :(
 
hadn't seen it, in b&w before .... specific data about 2008 https://cardealermagazine.co.uk/publish/2008-price-crash-confirmed/4163

USED car values crashed by a massive 21 per cent during 2008, reports vehicle auction house Manheim.
This works out to be an average monetary hit of £1515 for car dealers.
December’s plunging values, where 3.1 per cent was knocked off November values, rounded off a disastrous year.
2008 saw a similarly shocking fall in new price retained – down from an average 41 per cent after 39 months, to just 33 per cent.
The only bright spot in December was in an unexpected recovery in compact executive and executive models. These saw rises of 6 per cent and 2 per cent respectively.
It suggests that such larger-engined vehicles may have finally ‘become too cheap to miss’. Overall auction hall values(volumes?) rising by a surprising 16 per cent also indicate activity could be returning.
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ultralaser said:
I'm a little confused why we'd be expecting to see used car prices fall. Those I know seem to want to switch out of their expensive lease deals and get something reliable but second hand so see them through this mess, again seems people want the confidence of having a small reliable car incase they loose their jobs and thus their PCP cars. I'm not saying that's a trend across the country... but.....
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Think you just answered your own question ;)

The used Car market going get flooded by loads of expensive cars that where on lease deals & Finance Loans that people & companies now can't afford to pay
Even people that own there expensive car it most likely be one the first things they try sell when needing money to pay bills due to losing there job
 
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If I was in a 2 person+ household and one of the earners became out of work and we needed to cut expenditure drastically, one of the first thing I’d look at is getting rid of a car if we’d got 2. This would be even more obvious if one or more were on lease or financed. You can look at phone contracts etc, but very little compares to the expenditure on a car.
 
In addition to people selling or having to hand back their lease/PCP cars, very few people will want to look for a 'new' car in the current climate. So there will be a lack of new buyers entering the market. So more supply and fewer buyers. The law of supply and demand will drive prices down.
 
There might be more demand for used cars from people not wanting to splash out on something new. Used prices could rise while new ones drop.
 
Nasher said:
There might be more demand for used cars from people not wanting to splash out on something new. Used prices could rise while new ones drop.
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Yes some will. But if someone just had their lease/PCP car reposessed then I doubt they will have much money to spend on a used car.
 
Hades said:
I found this report from 2009 showing the affect the 2008 recession had on new and used prices in the UK. I don't see any reason it would be very different this time.

https://www.buckingham.ac.uk/wp-content/uploads/2011/05/pnc-2009-bca-used-car-market-report.pdf

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interesting graph and thanks for the link.

but, that's not the full story of the drop - they drop even more in 2009 and then it takes to 2012-2013 for the sales to return...

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^ from 2014's report

So, if this is expected to be a bigger recession then it could be more than 4-5 years for the sales to return...
 
interesting - yes

Looking at 2008 used car volumes by age of car shows:
Car sales in the 0-8 year age groups were stronger than the market as a whole last year, down iust 2.8% to 4.44 million units compared to a market fall or 5.8%.
• Sales of 0-2 year-old cars slipped by 1 .2% to 978,000 units in 2008: their used car market share up from 14.0% to 14.7% year on year.
• while sales of 3-5 year-old cars fell 3.4% and 67,000 units to 1.88 million. their share of the used car market rose from 27.6% in 2007 to 28.3% in 2008.
• Sales of cars in the 6-8 year age group fared better than the market drop of 5.8% - down 3% and 49,000 to 1.58 million units and an improved market share of 23.8%.
• Nine years-plus car volumes rell to their lowest point for 15 years: by 11.3% and 281,000 to 2.21 million units, driving this segment’s share of the market down 2.1 percentage points to 33.2%.
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although value of used market didn't slip much, it's not inflation adjusted, and against rpi, it slipped more ....but they seem coy to talk about profit per car
... maybe i missed that bit ... word profit is not in the report, margin 3 times ?
 
Dieselgate is still having an effect as well. There is a shortage of family sized petrol cars on the used market at the low/mid end.
 
Can't be helped but this has come at a less than optimal time for me.

I've had an Audi S3 (2002 - 8L) for a little over 5 years and is currently on 197k miles, I've been resisting getting rid of it for a while (because I love it!!) but last year it had an issue which took 5 weeks to resolve, so I ended up buying an 06 diesel megane to get me to work.

Was planning to list the S3 as soon as I'd renewed the MOT (April), hoping to get a few hundred more for it, then CV19 happened. I've cancelled the insurance before it renewed, but as I have no drive or off road storage options, I had to keep it taxed, so have lost £170 to that as well as the car only now being valued at £1220 (WBAC).

On the plus side, I've spent very little while furloughed (been eating quite restrained as I need to lose a few stone) and have almost used £60 of diesel in 9 weeks :D so do have a little bit saved up so I can either trade the megane in for something I like more, or just live with it and put the ££ towards something else (e.g. big navi!).
 
I sold my 530d a few days ago. It seems to be worth around 10% less than before COVID. I took an offer on it as it was no longer used and I did not want to risk getting stuck with it when the ass falls out of the Markt.
 
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