Jump to content
House Price Crash Forum
interestrateripoff

European Car Sales Slump To Record Low

Recommended Posts

http://www.theguardian.com/business/2013/sep/17/european-car-sales-slump-to-record-low-live

Europe's car industry has suffered another dire month as sales in its troubled automobile industry slumped to an alltime low.

Eight months into the year, fewer cars have been sold than in any year since 1990, according to new data from the European Automobile Manufacturers Association. It reports that new registrations have fallen by 5.2% since January, to just 7,841,596 units across the whole of Europe.

It's the carless recovery.

Share this post


Link to post
Share on other sites

http://www.acea.be/index.php/news/news_detail/passenger_car_registrations_-5.2_over_eight_months_-5.0_in_august

Full data from here.

After a 5.0% increase in July, new passenger car registrations declined by 5.0% in August. The month of July counted on average one more working day across the EU, while August totaled one less. Eight months into the year, demand for new cars amounted to 7,841,596 units, or 5.2% less than in the same period last year.

In July, Italy was the only major market to shrink (-1.6%), while growth reached +0.9% in France, +2.1% in Germany, +12.7% in the UK and +14.9% in Spain. In total, 982,544 new cars were registered in the EU, or 5.0% more than in July 2012.

In August, downturn prevailed across significant markets, resulting in an overall 5.0% decline in the EU. The UK was the only major market to expand (+10.9%), while the German contracted by 5.5%, the Italian by 6.6%, the French by 10.5% and the Spanish by 18.3%. The EU* totaled 653,872 new car registrations in the month of August.

From January to August, most major markets faced a downturn ranging from -3.6% in Spain to -6.6% in Germany, -9.0% in Italy and -9.8% in France. The UK was the only one to perform better than in the first eight months of 2012 (+10.44%). New registrations fell by 5.2% over the period this year, totaling 7,841,596 units, representing the lowest January to August level ever recorded**.

* EU27, data for Malta unavailable

** since the beginning of the series in 1990

Share this post


Link to post
Share on other sites

Are there big corporate buyers?

Yes, that is probably the answer - fleet buyers etc. But does no other country in Europe have fleet buyers? Why are we up so much when everywhere else is down?

Share this post


Link to post
Share on other sites

Just who the f**k is buying all these new cars in the UK, and where is the money coming from? @GenuinelyBemused

zugzwang was onto it pretty quickly on this site, here's a quote from June which reveals the likely source, although there are other articles I cannot find

[quote

....

]'Best deals since 1979'

John Leech, UK head of automotive at KPMG, says that a number of factors are driving the increase.

"The new-car market in the UK continues to be buoyed by substantial discounts offered by car manufacturers directly to consumers, such as 0 percent finance. Analysts at CAP Automotive recently claimed that motorists are enjoying the best new-car deals since 1979," he said in a statement. "Secondly, UK banks are midway through settling PPI mis-selling compensation claims with UK consumers, which have averaged 2,700 pounds per claimant over the past two years and totaled 9 billion pounds so far. These one-off lump sums have released pent-up demand for cars."

He added that these factors are likely to remain in place for the coming months.

....

Read more: http://www.autonews.com/article/20130606/ANE/130609933/uk-new-car-sales-rise-for-15th-successive-month#ixzz2f8qTDmJ4

A wall of PPI money, average payout being similar to a car deposit for a PCP (lease deal), has been pouring into the UK households most likely to be consumers. This has also created an effect where residuals on cars at the end of the PCP term are higher than were expected since others can use PPI money to buy used, consequently leaving people with 'equity' to take to a new deal.

The proportion of cars being bought on PCPs is very high at present. It looks hugely vulnerable to a change in PPI payouts, there is a very good correlation between them, allowing for a delay in being paid:

jcnj.jpg

lb9e.jpg

Share this post


Link to post
Share on other sites

I have had a chat with quite a few of my Sons friends who are all driving new small cars they have got them on PCP plans, when

I ask them about what they are going to do when the PCP contract ends and they need to come up with some dosh to settle it.

At that point they just look at me and roll their eyes back. "I will get another new one you dummy" they say.

You could'nt make this up. They have been conditioned to rent, affordabillity is everything wheather it be cars, phones, houses, as long

as they can have it now and afford it each month they could'nt care less.

Oh and I was in Bill Smith Motorcycles in Chester all the bikes in there had PCP available (even on some not quite new stuff) Fecked I tell ya.

Edited by andygivenup

Share this post


Link to post
Share on other sites

Just who the f**k is buying all these new cars in the UK, and where is the money coming from? @GenuinelyBemused

Very few people I believe.

From memory,70% of new cars sold through dealerships use finance and of these 60%+ are PCP's,25% HP,10% leased.Ergo,cash deals/finance provided outside the dealerships, are roughly 30% of sales.

More here; Finance and Leasing Association (FLA)

Edited by Sancho Panza

Share this post


Link to post
Share on other sites

Just who the f**k is buying all these new cars in the UK, and where is the money coming from? @GenuinelyBemused

motability scheme for the disabled accounted for around 250,000 new car sales in 2012. At least six in my road sporting new september plates.

Share this post


Link to post
Share on other sites

I have had a chat with quite a few of my Sons friends who are all driving new small cars they have got them on PCP plans, when

I ask them about what they are going to do when the PCP contract ends and they need to come up with some dosh to settle it.

At that point they just look at me and roll their eyes back. "I will get another new one you dummy" they say.

You could'nt make this up. They have been conditioned to rent, affordabillity is everything wheather it be cars, phones, houses, as long

as they can have it now and afford it each month they could'nt care less.

Oh and I was in Bill Smith Motorcycles in Chester all the bikes in there had PCP available (even on some not quite new stuff) Fecked I tell ya.

PCP's aren't that bad really as they normally offer lower interest rates(than HP/personal loan),a 'guranteed future value', and you're not paying interest on the GFV.

Depreciation and the fact that older cars cost more to run mean that it may not be such a bad option depending on the terms of the agreement.

I realise this might be seen as heretical to say on here.

Share this post


Link to post
Share on other sites

I have had a chat with quite a few of my Sons friends who are all driving new small cars they have got them on PCP plans, when

I ask them about what they are going to do when the PCP contract ends and they need to come up with some dosh to settle it.

At that point they just look at me and roll their eyes back. "I will get another new one you dummy" they say.

You could'nt make this up. They have been conditioned to rent, affordabillity is everything wheather it be cars, phones, houses, as long as they can have it now and afford it each month they could'nt care less.

Oh and I was in Bill Smith Motorcycles in Chester all the bikes in there had PCP available (even on some not quite new stuff) Fecked I tell ya.

If you accept that you'll never own it and will be forever renting what's the problem? It's an "asset" that can't be took off you.

Isn't that be and end all of all decisions. The price of new cars means there has to be a subsidy otherwise the majority can't afford them.

If you are low mileage driver these types of deals might make financial sense. Plus it allows many people to afford a car they otherwise would never be able to "buy".

Edited by interestrateripoff

Share this post


Link to post
Share on other sites

PCP's aren't that bad really as they normally offer lower interest rates(than HP/personal loan),a 'guranteed future value', and you're not paying interest on the GFV.

Depreciation and the fact that older cars cost more to run mean that it may not be such a bad option depending on the terms of the agreement.

I realise this might be seen as heretical to say on here.

you pay interest on the total loan....you are only paying down a part of it so your capital repayments are lower, so making the monthly payments lower...you end up with what they used to call a balloon payment to make.

dealer gets a bung up front too.

Share this post


Link to post
Share on other sites

you pay interest on the total loan....you are only paying down a part of it so your capital repayments are lower, so making the monthly payments lower...you end up with what they used to call a balloon payment to make.

dealer gets a bung up front too.

Driverschoice.co.uk

'Why the monthly payments are lower

The monthly repayments are lower because of the Guaranteed Future Value (GFV). As part of the process of calculating the repayments, the lender estimates what they think the car might be worth at the end of the contract. Then, using that information, the lender sets a minimum figure at which they guarantee the car will be worth. That’s called the ‘guaranteed future value’ (GFV).

The GFV, along with any deposit you pay, will be deducted from the price of the vehicle and your monthly payments are then calculated on the balance, plus interest on the balance and interest only on the GFV.

So your monthly payments are lower because you’re not repaying the GFV during the agreement. What happens with the GFV is explained above in the ‘How a PCP works’ section above.

Share this post


Link to post
Share on other sites

Is it really that shocking, the average household income has shrunk while those that had plenty of money before the crash have even more now thanks to a booming asset and commodity market.

The result has been a boom in demand for luxury cars and goods and a shrinking mass market for average joe cars and goods.

The British economy is now being driven by very very low wages, fear of insecurity and foreign money. In the end this is going to lead to the collapse of the British way of life, the NHS, public service, education and all the other things that people value about this country. For the British economy to flourish it must be much much more inclusive.

Share this post


Link to post
Share on other sites

And lets be honest here, how many of us could afford a spanking new Range Rover at a starting price of around £75,000 or even a Range Rover Discovery. Then work down and even the average family car these days is close to £16,000. Is it any wonder that people are not buying new cars.

Share this post


Link to post
Share on other sites

Driverschoice.co.uk

'Why the monthly payments are lower

The monthly repayments are lower because of the Guaranteed Future Value (GFV). As part of the process of calculating the repayments, the lender estimates what they think the car might be worth at the end of the contract. Then, using that information, the lender sets a minimum figure at which they guarantee the car will be worth. That's called the 'guaranteed future value' (GFV).

The GFV, along with any deposit you pay, will be deducted from the price of the vehicle and your monthly payments are then calculated on the balance, plus interest on the balance and interest only on the GFV.

So your monthly payments are lower because you're not repaying the GFV during the agreement. What happens with the GFV is explained above in the 'How a PCP works' section above.

I think thats what I said.IO on the Balloon (GFV)..of course, you havent borrowed the deposit from this lender.

Guaranteed Future Value sounds better than a Balloon payment....they are the same, but one is a value, the other a payment....according to the spin of marketing.

Share this post


Link to post
Share on other sites

Whichever way it is cut, a PCP contract on a new car means the holder swallows the depreciation one way or another. There are other compensations- driving a new car, no MOT hassles, likely to be reliable etc etc, but it is certainly not a 'cheap' option imo. Perhaps 'the most affordable way of driving a new car' but that's not quite the same as cheap.

You pays yer money and takes yer choice.

I'm looking forward to lots of bargain used cars around 2016-2020 when the scrappage lot start hitting 7 years old or so and the PPI-related sales following closely behind.

Share this post


Link to post
Share on other sites

Whichever way it is cut, a PCP contract on a new car means the holder swallows the depreciation one way or another. There are other compensations- driving a new car, no MOT hassles, likely to be reliable etc etc, but it is certainly not a 'cheap' option imo. Perhaps 'the most affordable way of driving a new car' but that's not quite the same as cheap.

You pays yer money and takes yer choice.

I'm looking forward to lots of bargain used cars around 2016-2020 when the scrappage lot start hitting 7 years old or so and the PPI-related sales following closely behind.

Not suitable for everyone I know, but I'm totally converted to zipcar. I didn't get around to buying a car when I first moved to Toronto so I joined zipcar as a stop-gap for when I needed to go places that weren't easy by public transport. After 3 months of doing that I realised that I was spending about 25% of what I used to spend on motoring and with non of the hassle. I can't recommend it highly enough for anyone living in a city who doesn't need a car for commuting.

Share this post


Link to post
Share on other sites

They get to the end of the contract and the GFV is say 4k, options are give them 4k and have the car, give them the keys and walk away,

or and I suspect this will be the most popular one use the car against another PCP plan. Simples trapped.

Share this post


Link to post
Share on other sites

PCP's aren't that bad really as they normally offer lower interest rates(than HP/personal loan),a 'guranteed future value', and you're not paying interest on the GFV.

Depreciation and the fact that older cars cost more to run mean that it may not be such a bad option depending on the terms of the agreement.

I realise this might be seen as heretical to say on here.

Driverschoice.co.uk

'Why the monthly payments are lower

The monthly repayments are lower because of the Guaranteed Future Value (GFV). As part of the process of calculating the repayments, the lender estimates what they think the car might be worth at the end of the contract. Then, using that information, the lender sets a minimum figure at which they guarantee the car will be worth. That’s called the ‘guaranteed future value’ (GFV).

The GFV, along with any deposit you pay, will be deducted from the price of the vehicle and your monthly payments are then calculated on the balance, plus interest on the balance and interest only on the GFV.

So your monthly payments are lower because you’re not repaying the GFV during the agreement. What happens with the GFV is explained above in the ‘How a PCP works’ section above.

Sorry but you've contradicted yourself there.

PCPs are just scrap metal arbitrage with a bonus for the banks thrown in.

And people laugh at fixed rate mortgages :rolleyes:

Edited by 7 Year Itch

Share this post


Link to post
Share on other sites

They get to the end of the contract and the GFV is say 4k, options are give them 4k and have the car, give them the keys and walk away,

or and I suspect this will be the most popular one use the car against another PCP plan. Simples trapped.

Exactly, the expectation is that the car is worth more than the GFV but they're not going to give you the cash so you either have to pay up the balloon payment and sell it to get the money or take your 'profit' by putting it toward a new car and paying PCP payments for anohter 3 years ad infinitum

Share this post


Link to post
Share on other sites

Exactly, the expectation is that the car is worth more than the GFV but they're not going to give you the cash so you either have to pay up the balloon payment and sell it to get the money or take your 'profit' by putting it toward a new car and paying PCP payments for anohter 3 years ad infinitum

Thats my take on it, encouraging people to again pay for something they can't afford.

I don't remember seeing any 19/20 year olds driving new cars when I was a lad.

Wait till Tesco/Asda start doing PCP plans for the weekly shop.

Share this post


Link to post
Share on other sites

Sorry but you've contradicted yourself there.

PCPs are just scrap metal arbitrage with a bonus for the banks thrown in.

And people laugh at fixed rate mortgages :rolleyes:

Point taken,my explanation was poor and confused.

Share this post


Link to post
Share on other sites

I don't remember seeing any 19/20 year olds driving new cars when I was a lad.

I'm sure you're right, but it's a minority of 19/20 year olds doing this. In general driving a car is becoming less common among under-30s, in both the UK and most of the developed world:

In Britain, the percentage of 17- to 20-year-olds with driving licences fell from 48% in the early 1990s to 35% last year.

http://www.theguardian.com/politics/2011/sep/25/end-of-motoring

Edited by Dorkins

Share this post


Link to post
Share on other sites

Advisor Perspectives 12.9.13

'Automakers in the U.S. economy are getting a significant amount of attention these days because they are selling more cars. In August, total light vehicle sales by the automakers in the U.S. economy increased 17% from a year ago. They sold more than 1.5 million cars in August compared to 1.28 million cars last August. (Source: Motor Intelligence, last accessed September 10, 2013.)

Since the Federal Reserve introduced its easy monetary policies, there has been a significant increase in auto loans to the subprime borrowers -- those with a low credit score of less than 620 -- compared to the prime borrowers -- those with a credit score of 760 and above. (Reminds me of the housing crisis we saw in the U.S. economy not too long ago.)

In the second quarter of 2009, there was $10.8 billion of outstanding auto loans to the subprime borrowers in the U.S. economy. Fast-forwarding to the second quarter of 2013, this number stood at $21.2 billion -- an increase of more than 96% in just a matter of a few years. In the same period, the amount of auto loans to prime borrowers only increased 38%! (Source: Federal Reserve Bank of New York web site, last accessed September 10, 2013.)

Unfortunately, the problem doesn't end there. Auto loans continue to increase in the U.S. economy. In the second quarter of this year, auto loans as a whole increased to $92.0 billion -- the highest level since the third quarter of 2007. (Source: "Household Debt and Credit Developments in 2013 Q2," Federal Reserve Bank of New York, August 2013.)'

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   224 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.