The rise of the used car market

mjheathcote

mjheathcote

Centenary Club
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9,037
How long can it continue?
I've tracked the WBAC value of my BMW M140i for the last 3 years.
Doing a valuation today, the price has exceeded the valuation of over two years ago.
But today, its twice the age, and twice the mileage!!
It's so tempting to 'cash in', and hold off a replacement until the market stabilises, downwards.
But will it?
Can't continue rising, but will it level off?
If leveling off no point cashing in.
Was watching an analysis on YouTube in the US car trade, and the conclusion is that the car trade in 3 years will be in crisis.
All those buying today at inflated values will be in so much negative equity in 3 years time, after the market returns to normal, that they won't be able to get themselves into the next car, even rolling over their negative equity will be too much for the financial lenders to allow.
Basically saying if you need a new car today, lease it.
I was surprised a colleague at work buying an Audi S3 a couple of weeks ago for £25K, on a 66 plate, with 30K miles.
That's more than I paid for my 17 plate M140i three and a half years ago with only 3K miles!
 
D Walker

D Walker

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9,827
Sort of in the same boat. Wife wants to change her car but I’m loathe too at the moment. HaVe convinced her to wait a year. Had my fingers crossed as I meant 2!!
 
Froddy

Froddy

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I think we’re on the edge of a deflationary bust, and that the inflation narrative is short-term. If this happens, everything will tumble.

As far as cars are concerned, I think the long-term outlook for desirable exotics is very exciting indeed as electrics are forced upon us - I think petrol engined examples will be very collectible, and if I had loads of cash I’d be buying every decent V8 I could find!
 
Froddy

Froddy

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Scaf said:
Isn’t this a little like house prices, no one wins unless they cash in at the top and don’t buy.
No point in the M140 going up if it’s replacement has also gone up ;)
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I think that’s a very good point.

I suppose the questions are: where will the bottom be if/when we have a deflationary bust, and where did you get in? These will define where you stand, going forward.

If it happens (and I’m not saying it will), EVERYTHING will tumble, and it will be a test of faith (to hold your exotic) and a test of phlegm (to buy more) …

No matter what happens, I just can’t see these cars going anywhere but up in the long term
 
gb-gta

gb-gta

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1,138
Prices of newish second hand can’t keep going up like they have been. Many are already close to the new price. True, you will be quoted 6-12 months to actually buy a new car, but who is going to pay more then new for used, for an everyday car?

Having said that, I suppose people locked into 3/4 year leases that are coming to an end are snookered. Having to take nearly new for xxx/month, so they dont see the list price versus used price anyway.

Neat trick the industry is pulling there!
 
Andyk

Andyk

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61,126
Crazy market at the moment. All Aston Martin Vantage models seen to have gone up 10k over the last few months. You could get an N400 Vantage for around 35k 6 months ago and now they are up for 48k plus. 2007/2008 Vantage roadsters from 32k now up for over 40k and Aston Martin Bristol had one up for 48k and it sold in a week….Same with the new Vantage…Cars that were 87k to 95k are now at 100k plus. Great if you have one.
 
N

nigw

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904
I think it’s down to a few covid factors, and not knowing the balance of each makes it hard to predict how long the prices will last. Firstly there’s the fact that a lot of people are wealthier than they’ve previously been - thanks to reduced outgoings and/or grants and loans. Secondly there’s the reevaluation of priorities with people making decisions on big priorities, and the “toilet roll effect” panic buying for fear of missing out. Thirdly there’s the new car supply shortage due to semi conductor shortage which is affecting used car supply. Fourthly there’s inflation.

I think the first three will correct themselves. Inflation is a bit of an unknown. With the exception of the semiconductors it’s much the same in the housing market.

I think the used car market will flatten off fairly soon, and normal depreciation will resume. The extent to which it will drop depends on how much inflation has been a contributor, but some people will get stung if they’ve bought for the wrong reasons (ie at the top of the market but expecting to financially benefit).

In the longer term, whilst supply of large petrol engined cars will reduce, demand for them will also reduce - environmental concerns, taxation and running costs, public perception and the fact that the people interested in petrol cars are getting old (us!), with fewer of the younger generations being at all interested.
 
Goodfella

Goodfella

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735
Andyk said:
Crazy market at the moment. All Aston Martin Vantage models seen to have gone up 10k over the last few months. You could get an N400 Vantage for around 35k 6 months ago and now they are up for 48k plus. 2007/2008 Vantage roadsters from 32k now up for over 40k and Aston Martin Bristol had one up for 48k and it sold in a week….Same with the new Vantage…Cars that were 87k to 95k are now at 100k plus. Great if you have one.
Click to expand...

Well it’s great if you want to sell your nice car and replace it with nothing?
 
Hawk13

Hawk13

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1,471
mjheathcote said:
It's so tempting to 'cash in', and hold off a replacement until the market stabilises, downwards.
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Exactly what I have done. Prompted by another thread re WBAC prices, I put in my details and was amazed that despite me owning for 2 years and putting on 10,000 miles, the depreciation was minimal.

I then reached out to the MD that I bought the car from and they pretty much matched the offer and so I accepted. And they have now put up my old GT for more than I bought it for 2 years ago!!
 
safrane

safrane

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16,829
They cost what they cost... if you need one you will buy, if not you will wait, or waste more money... guess its all down to self control.
 
c4sman

c4sman

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1,255
Think the other factor aside from C19 is the price of new cars. Look at things like an M3 and they’re now mighty expensive, mainly due to the fact that good finance deals are masking the increased sticker price for new car buyers. Surely that must have an impact on used market inflation?
 
N

nigw

Member
Messages
904
c4sman said:
Think the other factor aside from C19 is the price of new cars. Look at things like an M3 and they’re now mighty expensive, mainly due to the fact that good finance deals are masking the increased sticker price for new car buyers. Surely that must have an impact on used market inflation?
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I’ve always assumed this was to help manufacturers push PCP, lease deals etc - it’s finance where they make their margin. Very few people “buy” a new car now!
 
dickygrace

dickygrace

www.richardgracecars.co.uk
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7,334
nigw said:
I think it’s down to a few covid factors, and not knowing the balance of each makes it hard to predict how long the prices will last. Firstly there’s the fact that a lot of people are wealthier than they’ve previously been - thanks to reduced outgoings and/or grants and loans. Secondly there’s the reevaluation of priorities with people making decisions on big priorities, and the “toilet roll effect” panic buying for fear of missing out. Thirdly there’s the new car supply shortage due to semi conductor shortage which is affecting used car supply. Fourthly there’s inflation.

I think the first three will correct themselves. Inflation is a bit of an unknown. With the exception of the semiconductors it’s much the same in the housing market.

I think the used car market will flatten off fairly soon, and normal depreciation will resume. The extent to which it will drop depends on how much inflation has been a contributor, but some people will get stung if they’ve bought for the wrong reasons (ie at the top of the market but expecting to financially benefit).
Click to expand...

Spot on Nigel, we always agree on these things. We have reached the peak for the types of cars we sell. Most cars are now overpriced and there’s very little value left anywhere. Dealers who were asking way too much have had no enquiries and dropped the price of their cars. It’s a frequent misconception that dealers set the price of the market, they don’t, buyers do. A year ago the dearest Gen 2 Granturismo Sports were £50k, now places asking £63k for some of them. The odd one may sell but on the whole they’ll sit unsold and eventually fall in price as we approach autumn. 5 Granturismos on AT had their prices reduced last week.
 
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