New Car Deflation

[crashmonitor]

In the present climate of European car manufacturers dumping their excess (mainly small cars) on the UK (since the Europeans themselves aren't buying) I have noted an anomoly in the new car price to the second hand forecourt dealer price on smaller older cars (say 04-06 plate).

Examples of dumping new cars are the Peugeot 107 at £7690, the Suzuki Alto at £5750 and the Skoda Fabia at £8999. Much lower price tags than at any time in the last few years.

The effect is that it drags down the price of nearly new.....Skoda Fabia 10 plate-under 5K, Citroen C1/Peugeot 107 12 plate under 6K.

Therefore you are getting an anomoly where older comparable cars are being peddled in the trade at forecourt prices of around 3K for a nine year old small car, when the comparable one year old model is now selling for 6K.

This is where the inverted depreciation comes in. Does it make sense to suffer more depreciation for the priviledge of running an older car from year 9 as opposed to year 1.

I suppose it does make sense to the car dealer who has to make a margin on the older car, whereas the European manufacturers are dumping new cars on the UK at a loss.

Can't be a bad thing for Uk plc that we export premium Mini Coopers, Land Rovers and top end Toyotas (be it foreign owned) where there is presumably still a profit margin, and we take back cars dumped on the UK market at a huge loss to our European partners.

Edited April 25, 2013 by crashmonitor

[mikthe20]

and we take back cars dumped on the UK market at a huge loss to our European partners.

Since our cars have steering wheels on the "wrong" side, I can't see how European manufacturers would have excess stock to dump at a loss. Either they build right hand drive cars for the "buoyant" UK market to sell at a profit (even if at a low price), or they don't build right hand drive cars at all surely.

[Guest eight]

In the present climate of European car manufacturers dumping their excess (mainly small cars) on the UK (since the Europeans themselves aren't buying) I have noted an anomoly in the new car price to the second hand forecourt dealer price on smaller older cars (say 04-06 plate).

Examples of dumping new cars are the Peugeot 107 at £6790, the Suzuki Alto at £5750 and the Skoda Fabia at £8999. Much lower price tags than at any time in the last few years.

The effect is that it drags down the price of nearly new.....Skoda Fabia 10 plate-under 5K, Citroen C1/Peugeot 107 12 plate under 6K.

Therefore you are getting an anomoly where older comparable cars are being peddled in the trade at forecourt prices of around 3K for a nine year old small car, when the comparable one year old model is now selling for 6K.

This is where the inverted depreciation comes in. Does it make sense to suffer more depreciation for the priviledge of running an older car from year 9 as opposed to year 1.

I suppose it does make sense to the car dealer who has to make a margin on the older car, whereas the European manufacturers are dumping new cars on the UK at a loss.

Can't be a bad thing for Uk plc that we export premium Mini Coopers, Land Rovers and top end Toyotas (be it foreign owned) where there is presumably still a profit margin, and we take back cars dumped on the UK market at a huge loss to our European partners.

Don't have much opinion on the main thrust of your post, but can you really get an Alto for that price? That's almost disposable motoring, even if the thing falls apart during its first MOT.

[Executive Sadman]

Dunno. Whenever ive checked out prices over the last few years ive seen Suzuki/Nissan Altos or Citroen C1s theyve been at £5995. The suziki/nissans are actually made in India now.

More impressive to me is a brand new Insignia for little over £12k.

Thats a big car with sat nav, alloys, cruise all the goodies and supposedly built in Germany (probably just stick the badge on there!)

http://www.honestjohn.co.uk/cars-for-sale/search/New/Vauxhall/Insignia/?p2=13000

[cashinmattress]

In the present climate of European car manufacturers dumping their excess (mainly small cars) on the UK (since the Europeans themselves aren't buying) I have noted an anomoly in the new car price to the second hand forecourt dealer price on smaller older cars (say 04-06 plate).

Examples of dumping new cars are the Peugeot 107 at £6790, the Suzuki Alto at £5750 and the Skoda Fabia at £8999. Much lower price tags than at any time in the last few years.

The effect is that it drags down the price of nearly new.....Skoda Fabia 10 plate-under 5K, Citroen C1/Peugeot 107 12 plate under 6K.

Therefore you are getting an anomoly where older comparable cars are being peddled in the trade at forecourt prices of around 3K for a nine year old small car, when the comparable one year old model is now selling for 6K.

This is where the inverted depreciation comes in. Does it make sense to suffer more depreciation for the priviledge of running an older car from year 9 as opposed to year 1.

I suppose it does make sense to the car dealer who has to make a margin on the older car, whereas the European manufacturers are dumping new cars on the UK at a loss.

Can't be a bad thing for Uk plc that we export premium Mini Coopers, Land Rovers and top end Toyotas (be it foreign owned) where there is presumably still a profit margin, and we take back cars dumped on the UK market at a huge loss to our European partners.

I don't think mainstream car manufacturers have been actually profitable in decades, in terms of retail forecourt sales.

Price is artificial; remove their massive tax breaks and subsidies and we'd be paying four times the price for cars.

Financing, after market, and service are their bread and butter, in that order IIRC. Mostly finance though, by a huge margin.

[crashmonitor]

Since our cars have steering wheels on the "wrong" side, I can't see how European manufacturers would have excess stock to dump at a loss. Either they build right hand drive cars for the "buoyant" UK market to sell at a profit (even if at a low price), or they don't build right hand drive cars at all surely.

What they have done is switch to right handers to keep their staff employed, and selling something is better than nothing.

[mk1mini]

Not sure I agree with any of this post. Please show examples.

[spongeh]

Don't have much opinion on the main thrust of your post, but can you really get an Alto for that price? That's almost disposable motoring, even if the thing falls apart during its first MOT.

Not sure I agree with any of this post. Please show examples.

The Alto on the Suzuki website is £5999 OTR at the moment, I don't think it's too far off to think you could get another £250 off at the dealers to secure a deal.

http://www.suzuki.co.uk/cars/cars/offers-and-finance/new-car-offers/alto-offers/alto-range-vat-free

[Guest eight]

The Alto on the Suzuki website is £5999 OTR at the moment, I don't think it's too far off to think you could get another £250 off at the dealers to secure a deal.

http://www.suzuki.co.uk/cars/cars/offers-and-finance/new-car-offers/alto-offers/alto-range-vat-free

Yeah I just checked, I got a bit over excited as I pictured in my mind the Splash, which I quite like, and not the Alto, which looks like a car that costs six grand.

Can't say I've ever seen a Kizashi on the roads.

[crashmonitor]

Not sure I agree with any of this post. Please show examples.

My car got written off by a third party last week so I was in the market to buy. The insurance assessor paid out £3060 based on forecourt value on an 04 plate fiesta.

Indeed I found 04 plate Corsas, Fiestas etc. on at around 3K on the forecourt. Smaller older cars can go for even more because of zero tax and 60 as oposed to 40mpg.

The new car prices were as I have quoted...Fabia £8999, Alto £5750 and Peugeot £7690* at Pentagon, Derby (Peugeot) and Clock Garage, Spondon, Derby (Fabia and Alto).

I settled for a 12 plate 107 at £5999. comparable 107s with a 05 plate are £3500.

(*sorry I originally did a typo on the Peugeot price)

Edited April 25, 2013 by crashmonitor

[mk1mini]

My car got written off by a third party last week so I was in the market to buy. The insurance assessor paid out £3060 based on forecourt value on an 04 plate fiesta.

Indeed I found 04 plate Corsas, Fiestas etc. on at around 3K on the forecourt. Smaller older cars can go for even more because of zero tax and 60 as oposed to 40mpg.

The new car prices were as I have quoted...Fabia £8999, Alto £5750 and Peugeot £7690* at Pentagon, Derby (Peugeot) and Clock Garage, Spondon, Derby (Fabia and Alto).

I settled for a 12 plate 107 at £5999. comparable 107s with a 05 plate are £3500.

(*sorry I originally did a typo on the Peugeot price)

I'm still not seeing this as an example of new car dumping. The Peugeot 107 has always been a cheap car, this review from 2005 shows that prices start from £6995. http://www.carpages.co.uk/peugeot/peugeot-107-22-05-05.asp

The 107 isn't in the same 'class' as the Fiesta or Corsa's, if you were comparing a 2004 Ford Ka with these prices you'd get a more realistic comparison.

[crashmonitor]

I'm still not seeing this as an example of new car dumping. The Peugeot 107 has always been a cheap car, this review from 2005 shows that prices start from £6995. http://www.carpages.co.uk/peugeot/peugeot-107-22-05-05.asp

The 107 isn't in the same 'class' as the Fiesta or Corsa's, if you were comparing a 2004 Ford Ka with these prices you'd get a more realistic comparison.

Well if you are comparing like with like, the best price I could get on an 08 plate Citroen C1 (5 door) was £4644 at Evans Halshaw, Chilwell. The slightly more favoured Peugeot 107 (5 door) came in at a mere £1350 for a four year newer plate. You do the depreciation maths and there is no sense in it.

The selling prices of 9 year old cars bears no relation to the original ticket price. The most expensive olders cars can be the zero tax 60mpg super minis and not top end family cars.

Edited April 25, 2013 by crashmonitor

[crashmonitor]

Yeah I just checked, I got a bit over excited as I pictured in my mind the Splash, which I quite like, and not the Alto, which looks like a car that costs six grand.

Got to agree with you a dated dashboord and basically no rear passenger space. In my normal driving position it becomes a three seater. The Peugeot 107 has no boot space but has passenger space.

[mk1mini]

Well if you are comparing like with like, the best price I could get on an 08 plate Citroen C1 (5 door) was £4644 at Evans Halshaw, Chilwell. The slightly more favoured Peugeot 107 (5 door) came in at a mere £1350 for a four year newer plate. You do the depreciation maths and there is no sense in it.

The selling prices of 9 year old cars bears no relation to the original ticket price. The most expensive olders cars can be the zero tax 60mpg super minis and not top end family cars.

The Aygo / C1 / 107 is a slow depreciating car due to its efficiency and reliability, well done for buying a good car which represents good value for money. But I don't see this as an example of cars getting dumped on the UK market from the EU or anywhere else.

[crashmonitor]

The Aygo / C1 / 107 is a slow depreciating car due to its efficiency and reliability, well done for buying a good car which represents good value for money. But I don't see this as an example of cars getting dumped on the UK market from the EU or anywhere else.

Just my thoughts that if Peugeot are having to let these go at £7690 new (Pentagon, Derby), with a dealer margin, they are not going to be making any money on them. Similarly with the £5750 Alto at Clock Garage, Spondon. I think I am correct that new prices are now at there lowest level ever in real terms and the Euro troubles have a lot to do with it. Certainly the C1/ Aygo./107 triplets were more money two years ago when i was looking.

I seem to be getting quite a bit of disagreement from others too about the thrust of the thread. However, I believe we are experiencing new car deflation and the best deals are to be had on new/ nearly new cars as opposed to older 04-06 plates. Just my experience from a week of buying, but nothing scientific, so I stand to be corrected.

Edited April 25, 2013 by crashmonitor

[Guest eight]

Just my thoughts that if Peugeot are having to let these go at £7690 new (Pentagon, Derby), with a dealer margin, they are not going to be making any money on them. Similarly with the £5750 Alto at Clock Garage, Spondon. I think I am correct that new prices are now at there lowest level ever in real terms and the Euro troubles have a lot to do with it. Certainly the C1/ Aygo./107 triplets were more money two years ago when i was looking.

I seem to be getting quite a bit of disagreement from others too about the thrust of the thread. However, I believe we are experiencing new car deflation and the best deals are to be had on new/ nearly new cars as opposed to older 04-06 plates. Just my experience from a week of buying, but nothing scientific, so I stand to be corrected.

I suppose you'd need to get somebody on the inside to spill the beans on what the actual manufacturing cost is. You can buy a washing machine for £300. Is a Suzuki Alto > 20 times washing machine? I'd say probably less than that in terms of complexity, and material volume.

[MongerOfDoom]

Examples of dumping new cars are the Peugeot 107 at £7690, the Suzuki Alto at £5750 and the Skoda Fabia at £8999. Much lower price tags than at any time in the last few years.

The effect is that it drags down the price of nearly new.....Skoda Fabia 10 plate-under 5K, Citroen C1/Peugeot 107 12 plate under 6K.

I haven't noticed the pricedrop you say you see, and certainly don't recall those cars being "much" more expensive than now. It could be that I only ever look at the cheapest spec available.

It has long appeared to be the case that 1-year old small cars get advertised on the forecourt for roughly the same amount as new. Some of the prices were very clearly just made up without any care, such as when there were three similarly old cars with vastly different mileages on offer at the same time for the same price. I never understood who bought the 2nd hand ones. BTW, about once a year I get a leaflet saying they would give me 20% off a new car (they call it VAT-free, and it's also advertised in the press). That presumably means there is an enormous amount of slack in the new prices too.

If someone on here knows how these things work, please tell us.

[crashmonitor]

It has long appeared to be the case that 1-year old small cars get advertised on the forecourt for roughly the same amount as new.

Certainly true of the Altos that are £5750 new or around the £5250- £5500 for a year old. If you step up to a C1/107/Aygo then you are in for around £1750 drop from £7690- £6000 for a year old model. It's after year one that the depreciation then seems to stand still and you get the anomoly of losing less from year 1 -scrappage per annum, than say year 7-scrappage per annum (not that keeping a car that long is a likely scenario)

As for being able to get the price down on the advertised price.,sure they are going to give you a discount if you are going to take on HP and pay thousands in interest . As a cash buyer you have no lee-way as far as main dealers are concerned, the price is usually the price on the windscreen if it is a popular car such as the aforementioned triplets.

Edited April 25, 2013 by crashmonitor

[R K]

Agree with OP.

You can now pick up a 1 yr old Golf for around £10k.

Keep that for, say, 15 years, and you have an almost brand new golf for c. £50 a month. Not much more than the cost of a smart phone rental.

Peak car.

[Guest eight]

Agree with OP.

You can now pick up a 1 yr old Golf for around £10k.

Keep that for, say, 15 years, and you have an almost brand new golf for c. £50 a month. Not much more than the cost of a smart phone rental.

Peak car.

My chance visit to the Suzuki website has seen me spending thr afternoon speccing up a new Jimny for myself ahem, "the wife". I'd now say it's 50/50 whether I actually buy one or not.

Curse you Crashmonitor!

[The Eagle]

My chance visit to the Suzuki website has seen me spending thr afternoon speccing up a new Jimny for myself ahem, "the wife". I'd now say it's 50/50 whether I actually buy one or not.

Does your wife live in some remote mountain hut in the middle of nowhere?

I mean why else would she need a car designed for off road use, when there are far more comfortable cars available for normal town use... The Jimny is a real small off-roader (with suspensions designed for off road use that would be quite uncomfortable on normal roads), not some kind of fashion SUV that vaguely looks like an off-roader.

[Tankus]

Hyundai i10 new from £6995 ....same price as I paid new 1 year ago ....great little car for the price ..... less "stylish" perhaps than the 107/c1 but more for your money and better refinement ......

[ts86net]

This is where the inverted depreciation comes in. Does it make sense to suffer more depreciation for the priviledge of running an older car from year 9 as opposed to year 1.

Spot on - have just noticed this too last weekend helping a friend decide on his next car.

Fiat Panda's being the example and found on Autotrader.

Also, found the insurance to be a small amount cheaper on the newer models.

[winkie]

Bought second hand cars privately but also here not an ad but worth a look......never bought a new car.

[19 year mortgage 8itch]

Agree with OP.

You can now pick up a 1 yr old Golf for around £10k.

Keep that for, say, 15 years, and you have an almost brand new golf for c. £50 a month. Not much more than the cost of a smart phone rental.

Peak car.

Have you kept a car for 15 years?

(I would be surprised if you could buy a nice 1 year old gold for 10k but can't say its something i check. Match spec is a minimum though, 1.2 or 1.4 turbo? Do they still put a NA engine in the golf?

Edited April 25, 2013 by SeeYouNextTuesday