Second hand value!

[190]

I'd probably have to pay them to take my 2008 C class then it's worth more to me as a nice working vehicle, the problems come if it falls victim to an accident, I would never get what it would cost me to replace it with a similar low mileage (50K) car.

I'm in a similar position with my 2009 C class. While it won't be worth much I'm still only losing £100 a month or less in depreciation. My annual miles are too low to make the depreciation of a new car remotely sensible.

I have a spreadsheet that records the depreciation of every car I've ever owned and the average annual depreciation varies from 4.5% to 23 %. You can guess that the 23% car was bought new and kept for only 15 months. The 4.5% car was a 190e bought at 5 years old and kept for 21 years.
All of the cars I bought new depreciated more than 10% pa and all of the used cars depreciated less than 10% regardless of how long I kept them.

I have no problem with the PCP culture if it supplies the used market with cheap mint cars under 5 years old.

 

[Dippo]

2] Both new and used car sales have been extraordinarily high this year (PCP/PCH as mentioned), rebate/similar targets have been met, so the old anxiety we saw to cut a deal 2 or 3 years ago, is no longer there.

According to the SMMT, new car sales to end November are down 5.0% compared with 2016. Used car sales are up 0.1%.

 

[Eddy77]

You're being low-balled by the dealer as MB (and all car manufacturers) are IN THE SH1T over the next few years.　


A big % of new Mercedes are financed through MB Financial Services. To get the volume sales, leases have been written at ludicrously low rates of interest and with unrealistically high Residual Values (RVs) priced in. That's why the monthlies have gone so low on new cars, because all you are doing in financing the difference between the sale price and the RV, plus some interest ( at a low rate).　

BUT, and here's the rub, three years down the line MB Financial Services are in serious trouble as they are under water on the deal. All car manufacturers have done this in the last few years - effectively robbing Peter to pay Paul.　

The cars are not worth the RV that was priced in.　

At the same time, huge volume of cars coming off finance and not enough demand for used cars is HAMMERING prices.　

Thirdly, most cars coming off finance are diesel, and demand for that has dropped off dramatically.　

Basically, all vehicle leasing companies are in a lot of trouble. The worst culprits are the manufacturer-owned finance companies.　

It's a massive problem in the industry which is being hushed up!

This isn't conjecture....I know, as I am the FD of a leasing company. Thankfully, my company does not lease vehicles, but many of my competitors do and the writing is on the wall. Tough times ahead. Unfortunately for us the consumer, that means the end of mega-cheap car finance deals is nigh as the era of unrealistic pricing is coming to an end. What it might mean longer term is a recovery in used car prices....but not for a while.

 

[ioweddie]

My Brilliant Blue 2016 model C220d premium plus estate, bought on PCP in July 2015 has a final payment of £20150 its only done 10000 miles and is as new condition, however its current sales value is about £19999 on a forecourt, so come July I will probably walk away, which is a shame as I love the car. It has the pano roof, tinted rear glass etc and looks fantastic
Do you thinks its worth to trying to negotiate with the Mercedes finance with an offer about £15k as they will be lucky to even get that for it.
Unless anyone on here would be interested in July?

 

[Maco]

My Brilliant Blue 2016 model C220d premium plus estate, bought on PCP in July 2015 has a final payment of £20150 its only done 10000 miles and is as new condition, however its current sales value is about £19999 on a forecourt, so come July I will probably walk away, which is a shame as I love the car. It has the pano roof, tinted rear glass etc and looks fantastic
Do you thinks its worth to trying to negotiate with the Mercedes finance with an offer about £15k as they will be lucky to even get that for it.
Unless anyone on here would be interested in July?

Is it a 15 plate? If you look on sytner or the Mercedes used website your type of car seems to be selling for a really good price still. They have a 64 plate with 20,000 miles on the clock, same colour & model as yours up sale with a price tag of £22,500.

£15k is probably abit of a low offer, but what’s there to lose. They can only say no.

 

[oldguy57]

Sytner came back with a valuation of £13,000???? That works out at nearly £830 a month the car is losing in valuation, I thought as guide it was around £300 a month.

It is a large lump to lose , I agree, but that's the problem with changing new or nearly new cars on a frequent basis. If , for example , you were to keep the car for 10 years and it was worth £2k at the end I guess that would be (relatively) cheap motoring with a nice car. Selling privately might be the answer as others have said. Having said that spare a thought for the first owner of my Cl - drove it 8000 miles and lost iro £105,000 in depreciation.

 

[SW18]

...spare a thought for the first owner of my Cl - drove it 8000 miles and lost iro £105,000 in depreciation.

That’s phenomenal, £13 for every mile driven!

 

[fabes]

It is scary how much money you can (and people do) lose on cars

I lost £2k a year on my CLK by buying from a trader and then trading it in to another (the best way to lose value, but needs ‘musted’…) Manageable, but still painful!

I am keeping the E Class Coupe for many, many years and indeed the QQ+2 will not be changed either.

The PCP culture does provide us a supply of these nearly new cars and this will dry up if they start to increase the monthlies or deposits to cover the reduction in GFV as stated above. Car buying habits will change, but is this purely a UK model of car buying?

I wonder how our fellow European car owners purchase cars? Is it the same across the channel?

 

[Eddy77]

It is scary how much money you can (and people do) lose on cars

I lost £2k a year on my CLK by buying from a trader and then trading it in to another (the best way to lose value, but needs ‘musted’…) Manageable, but still painful!

I am keeping the E Class Coupe for many, many years and indeed the QQ+2 will not be changed either.

The PCP culture does provide us a supply of these nearly new cars and this will dry up if they start to increase the monthlies or deposits to cover the reduction in GFV as stated above. Car buying habits will change, but is this purely a UK model of car buying?

I wonder how our fellow European car owners purchase cars? Is it the same across the channel?

Nope, very different in France at least. My Family live there and new premium cars are rare as finance is super expensive. You actually need a really good income to finance a new Mercedes in France. Prices are roughly double what we would pay over here. As a result very few are around second hand and prices for second hand cars are mega high. My 2008 CLK 350 would be at least EUR15,000 probably more. Second hand late 90s Xantias cost EUR4,000! French brands are heavily subsidised but premium German cars are properly rare outside Paris,

 

[oldguy57]

Nope, very different in France at least. My Family live there and new premium cars are rare as finance is super expensive. You actually need a really good income to finance a new Mercedes in France. Prices are roughly double what we would pay over here. As a result very few are around second hand and prices for second hand cars are mega high. My 2008 CLK 350 would be at least EUR15,000 probably more. Second hand late 90s Xantias cost EUR4,000! French brands are heavily subsidised but premium German cars are properly rare outside Paris,

Blimey - I'm not sure what's worse.

 

[Eddy77]

France is how uk was in 1980s when it comes to cars. Only the wealthy have premium brand cars...your average man on the street drives a 5-10 year old Renault or similar. It’s how it was here not so long ago!

 

[Gbrowncls55]

Don't forget that in the listed sale price there is always room for say a 10% discount (or 10% increase in trade in offer) with tough buyers in order to get the deal done. That is the level their margin is probably set at. If they don't have to give the discount its happy days for the dealer.
I hate depreciation but love nice cars so its older high quality cars (that I couldn't afford new) at the bottom of their depreciation curve or close to it. Good low mileage examples are always out there if you take a bit of time to look.
Of course I'd love a NEW car again (had them as company cars M5s 911s etc) but the thought of setting fire to that much money in the first few years is too upsetting. But thank god enough people don't mind so I can buy their cars 5 years later.

 

[Quincross]

This is pretty much why I won't buy a new car and in general only buy 7-10yr old 'nearly top of the range' cars.

My S Class with all the toys was a shade over £81,000 when new having seen the invoice. 9 years @ 10k miles a year later and I bought it for £8k on a private sale. Because it's a privately bought luxury car is been pampered, and has more tech than your average new car. More importantly, looking at the invoices all the major niggles and defects were sorted by the 54k mile mark so that was someone else's problem.

Sure, I can't say I've got a brand new motor - but personally I care more about day-to-day reliability as I've never been into that kind of thing. Heck I drive vintage and classic cars at weekends mostly! That said loads are into the latest reg, it's just horses for courses!

 

[Oldbarrack]

According to the SMMT, new car sales to end November are down 5.0% compared with 2016. Used car sales are up 0.1%.

Yes, CAP-HPI are telling a similar story, but cumulatively 2016 and 2017 have been very strong and profitable years with targets exceeded, hence all the mergers and takeovers.

You're being low-balled by the dealer as MB (and all car manufacturers) are IN THE SH1T over the next few years.　

A big % of new Mercedes are financed through MB Financial Services. To get the volume sales, leases have been written at ludicrously low rates of interest and with unrealistically high Residual Values (RVs) priced in. That's why the monthlies have gone so low on new cars, because all you are doing in financing the difference between the sale price and the RV, plus some interest ( at a low rate).　

BUT, and here's the rub, three years down the line MB Financial Services are in serious trouble as they are under water on the deal. All car manufacturers have done this in the last few years - effectively robbing Peter to pay Paul.　

The cars are not worth the RV that was priced in.　

At the same time, huge volume of cars coming off finance and not enough demand for used cars is HAMMERING prices.　

Thirdly, most cars coming off finance are diesel, and demand for that has dropped off dramatically.　

Basically, all vehicle leasing companies are in a lot of trouble. The worst culprits are the manufacturer-owned finance companies.　

It's a massive problem in the industry which is being hushed up!

This isn't conjecture....I know, as I am the FD of a leasing company. Thankfully, my company does not lease vehicles, but many of my competitors do and the writing is on the wall. Tough times ahead. Unfortunately for us the consumer, that means the end of mega-cheap car finance deals is nigh as the era of unrealistic pricing is coming to an end. What it might mean longer term is a recovery in used car prices....but not for a while.

This is very similar to what happened in Latvia a few years ago.
Being a very small former Eastern Bloc country however, they got some form of EU tax dispensation through the EU and sent the cars to the various Scandinavian markets in order not to disrupt used car values.

If the number of manufacturer cars being returned from PCH contracts gets too far out of hand, I can envisage a number of 'Trade / By Invite' only auctions in Shoreham happening again, in the same way as many cars were disposed of in 2009 after the financial crash.

 

[Deleted member 6183]

You may find that if you went after that £18.5K car they'd bump your offer up by 2K.

And therein would lie the hard truth of the market for diesel cars right now. Stock probably higher than they want because it's moving more slowly. Higher risk. They are scared to lower sticker prices as it reduces the headline value of all their similar stock. They will low ball any offers on trade-ins that will increase that stock.



That 'extra £2K' didn't just magic itself from nowhere and sticking it on the back end of the deal protects the sticker price by that amount.

I'd guess the dealer was working on at least a £2K gross margin - add in £2K extra you saw on the trade-in and that means at least £4K difference between sticker price and real trade in offer on the same car. If your car s now just opt of warranty then that will add to the cost of selling on as AU. Slow market ties up capital and there is the risk diesel prices slip devaluing their stock. So that adds to the cost. So today maybe a £5K spread between sticker price and trade in offer.

Smoke and mirrors is an appropriate way to describe it.

 

[fabes]

Nope, very different in France at least. My Family live there and new premium cars are rare as finance is super expensive. You actually need a really good income to finance a new Mercedes in France. Prices are roughly double what we would pay over here. As a result very few are around second hand and prices for second hand cars are mega high. My 2008 CLK 350 would be at least EUR15,000 probably more. Second hand late 90s Xantias cost EUR4,000! French brands are heavily subsidised but premium German cars are properly rare outside Paris,

That's interesting, thanks
So ex company cars are where the supply comes from that I see (and ex taxis of course.....)

Personally I hope my own personal mindset changes to hold onto this car longer than my usual 3 year cycle through a mixture of maturing in age, but also getting the car I really wanted
A few people I know will struggle as they are obsessed and into the £250 a month car club though
There will be withdrawal symptoms or some will go into real debt........

 

[Deletedmember130310]

When I’m changing, I say to the saleman, “I’m only interested in the size of cheque to change”.

I don’t mind whether they up my p/x or reduce the sticker price.