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Car Dealers - And The Uk Treasury - Will Miss Ppi Payouts

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http://www.theguardian.com/business/blog/2014/mar/06/car-dealers-will-miss-ppi-payouts

February's car sales were up 3% on the same month last year, according to the Society of Motor Manufacturers. That sounds like a healthy increase – until the January figure is taken into account. In the first month of the year car sales increased by 7.6%, and the average increase across last year was 10.8% on the year before. So February marked a dramatic slowdown in car sales growth.

Carmakers are putting on a brave face now there are signs of a broader recovery. While the market for private cars has calmed down, the appetite among Britain's business community to replace their ageing car fleets is increasing, albeit slowly.

Evidence from the sales data shows Mondeo man/woman is making a comeback. And these people provide a fillip to the industry, not only because the cost of sale per car is lower (though the discounting might be higher), but also because Mondeos are roomy cars with chunky price tags. When Britain's biggest selling car is the compact and unfussy Ford Fiesta, shifting a few Mondeos off the forecourt will mean gin and tonics all round for the garage sales staff.

Analysts at IHS Automotive reckon the fall in private demand will ultimately prove such a large drag on sales that last year's sales total of 2,264,737 vehicles will rise by only 1.5% this year before falling back in 2015.

One reason is the slowing stream of high street bank compensation payments for PPI mis-selling. There has been widespread speculation that people have used their PPI payments, which average £3,500, as down payments on new cars, for which the average deposit is – you guessed it – £3,500.

Still I'm sure when mortgage miss-selling cases take off we can really get the economy moving....

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I remember -I think it was Zugzwang-posting on this last year.

Made me laugh at the time.

For some reason,it made me think of Oscar Wilde and foxhunting

'the unspeakable chasing the uneatable.'

Edited by Sancho Panza

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http://www.theguardian.com/business/blog/2014/mar/06/car-dealers-will-miss-ppi-payouts

Still I'm sure when mortgage miss-selling cases take off we can really get the economy moving....

The FCA publish monthly PPI refunds, but the data are 3 months out of date (latest fig is Nov 2013):

http://www.fca.org.uk/consumers/financial-services-products/insurance/payment-protection-insurance/ppi-compensation-refunds

Nice to see the industry being candid enough to state what the major stimulus is, and probably the key driver of their latest 'innovations' in car buying. They appear to have made hay when the sun shines, selling new cars to people with a low monthly finance on the basis that unless they can cough up a substantial GFV on expiry of the contracted term, they will be stuck without a motor but with some 'equity' to take into a new one. Had some of these people bought used outright, the industry may have only got 1 private sale out of the PPI money; this way will lock in some people for many future sales on the basis they can't walk away if they need a car.

Anecdotally, I've been keeping an eye on used prices around the £1,500-£2,500 mark(upper bound is around the average PPI payout) and it seems that the choice on offer is generally quite poor at the moment. Seems reasonable PPI is at fault. Not seriously in the market for a car at present. Happy to sit out the end of the PPI stream.

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The FCA publish monthly PPI refunds, but the data are 3 months out of date (latest fig is Nov 2013):

http://www.fca.org.uk/consumers/financial-services-products/insurance/payment-protection-insurance/ppi-compensation-refunds

Nice to see the industry being candid enough to state what the major stimulus is, and probably the key driver of their latest 'innovations' in car buying. They appear to have made hay when the sun shines, selling new cars to people with a low monthly finance on the basis that unless they can cough up a substantial GFV on expiry of the contracted term, they will be stuck without a motor but with some 'equity' to take into a new one. Had some of these people bought used outright, the industry may have only got 1 private sale out of the PPI money; this way will lock in some people for many future sales on the basis they can't walk away if they need a car.

Anecdotally, I've been keeping an eye on used prices around the £1,500-£2,500 mark(upper bound is around the average PPI payout) and it seems that the choice on offer is generally quite poor at the moment. Seems reasonable PPI is at fault. Not seriously in the market for a car at present. Happy to sit out the end of the PPI stream.

The whole area of new car finance / leasing / whatever seems such a shark-infested pool I won't go near it. I honestly couldn't see myself buying a brand new car, it seems to start at perhaps £15k for a 'family' car nowadays. Clearly there must be lots of people richer than me..

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The whole area of new car finance / leasing / whatever seems such a shark-infested pool I won't go near it. I honestly couldn't see myself buying a brand new car, it seems to start at perhaps £15k for a 'family' car nowadays. Clearly there must be lots of people richer than me..

Car companies seem to be selling finance more than cars - that is what they go on about in their adverts a lot of the time. Just waiting for the fiannce tap to be turned off and they will all be squealing and pissing about not having customers.

Edited by onlyme2

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Car companies seem to be selling finance more than cars - that is what they go on about in their adverts a lot of the time. Just waiting for the fiannce tap to be turned off and they will all be squealing and pissing about not having customers.

Yes.. even with standard HP, they stick on 'Credit arrangement fee', 'Final purchase fee' and whatever, got burned once with this years ago (loan amount £3k, total repayments about £4k over 3 years).

Some of the new car 'deals' are a joke.. put down a huge deposit, pay a small monthly payment for 3 years then have to come up with another huge sum. Must work for some people.. I always worry about what happens if circumstances are reduced.. can't do without the car, but the payments could be crippling. At least if it's a car you own outright it's not going to get repossessed.

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Yes.. even with standard HP, they stick on 'Credit arrangement fee', 'Final purchase fee' and whatever, got burned once with this years ago (loan amount £3k, total repayments about £4k over 3 years).

Some of the new car 'deals' are a joke.. put down a huge deposit, pay a small monthly payment for 3 years then have to come up with another huge sum. Must work for some people.. I always worry about what happens if circumstances are reduced.. can't do without the car, but the payments could be crippling. At least if it's a car you own outright it's not going to get repossessed.

Tailor made for PPI refunds:

Citroen DS3 Offer:

DS3 DStyle Plus 1.6 VTi 120

With a £1299 deposit and only £199 per month payments.

Cash price £16,070

Customer deposit £ 1299

Dealer contribution £2725

Total advance £12,166

Total finance charge £2,676

Total amount payable £14,842

36 payments of £199.56

Final payment £6359

And a nice big final payment to slim down the chances of getting off the credit treadmill.

At end of 3 years, the lessee has paid £1299 + 36* £199 = £8,473 and has about £2k 'equity' above the final payment price, looking at current used prices (see link below). I guess the fact that these deals make negotiating on the initial asking price impossible means that a couple of grand is immediately available to give the impression of a good deal. The dealer contribution may be nothing more than what they would discount to a normal cash buyer in any case.

http://www.ebay.co.uk/itm/11-61-Citroen-DS3-1-6-VTi-120-DStyle-3Dr-Auto-GREAT-EXAMPLE-WITH-LOW-MILEAGE-/281230997790?pt=Automobiles_UK&hash=item417aac791e

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Tailor made for PPI refunds:

And a nice big final payment to slim down the chances of getting off the credit treadmill.

At end of 3 years, the lessee has paid £1299 + 36* £199 = £8,473 and has about £2k 'equity' above the final payment price, looking at current used prices (see link below). I guess the fact that these deals make negotiating on the initial asking price impossible means that a couple of grand is immediately available to give the impression of a good deal. The dealer contribution may be nothing more than what they would discount to a normal cash buyer in any case.

http://www.ebay.co.uk/itm/11-61-Citroen-DS3-1-6-VTi-120-DStyle-3Dr-Auto-GREAT-EXAMPLE-WITH-LOW-MILEAGE-/281230997790?pt=Automobiles_UK&hash=item417aac791e

New model sheen will have worn off after 3 years from now so that £2k equity could be much near to nil,

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I got a cheque entirely out of the blue the other day for 'government mismanagement' in the case of the Equitable Life debacle.

Obviously it nowhere cleared what I lost but I think I might frame the letter.

Perhaps that's the next big compo stimulus.

The problem with investment compensation as a stimulus is that the people receiving the redress won't be the types to blow it, and the numbers affected will be much smaller.

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New model sheen will have worn off after 3 years from now so that £2k equity could be much near to nil,

Indeed, but I guess they can tune the deals to suit the best guesses of residuals. Extend the term or up the monthly a touch.

Edited by The Knimbies who say no

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PCP has more than doubled in 2 years. Coincidence?

Quite an interesting presentation can be found at the link of the bottom of this page, especially the presentation from page 56 onwards.

Stats on PCP are on Page 67:

Clicky

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Tailor made for PPI refunds:

And a nice big final payment to slim down the chances of getting off the credit treadmill.

At end of 3 years, the lessee has paid £1299 + 36* £199 = £8,473 and has about £2k 'equity' above the final payment price, looking at current used prices (see link below). I guess the fact that these deals make negotiating on the initial asking price impossible means that a couple of grand is immediately available to give the impression of a good deal. The dealer contribution may be nothing more than what they would discount to a normal cash buyer in any case.

£16k for a freakin' supermini..

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£16k for a freakin' supermini..

£160K for a freakin' skanky flat bult out of as much recycled crap as possible.

Still, good job the bankrupt of england can meet the inflation target, if only their their bent, contorted and fraudulent view of the world.

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PCP has more than doubled in 2 years. Coincidence?

Quite an interesting presentation can be found at the link of the bottom of this page, especially the presentation from page 56 onwards.

Stats on PCP are on Page 67:

Clicky

Cracking link, thanks. The presentation you cite for PCP stats is well worth a look, the conclusions seem sensible- that a 'PCP returns timebomb' is a plausible scenario for the used market as PPI cash drops off into 2015.

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Cracking link, thanks. The presentation you cite for PCP stats is well worth a look, the conclusions seem sensible- that a 'PCP returns timebomb' is a plausible scenario for the used market as PPI cash drops off into 2015.

Wheels fell off in 2007/08

Scrappage came along in 2009/10

Ppi came along in 2013/14

2015/6????

Edited by 7 Year Itch

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Wheels fell off in 2007/08

Scrappage came along in 2009/10

Ppi came along in 2013/14

2015/6????

Could be a growing headache for Osborne heading into May next year if the PPI cash wanes and the car market wilts with it, allowing the façade of recovery to slip a little.

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Yes.. even with standard HP, they stick on 'Credit arrangement fee', 'Final purchase fee' and whatever, got burned once with this years ago (loan amount £3k, total repayments about £4k over 3 years).

Some of the new car 'deals' are a joke.. put down a huge deposit, pay a small monthly payment for 3 years then have to come up with another huge sum. Must work for some people.. I always worry about what happens if circumstances are reduced.. can't do without the car, but the payments could be crippling. At least if it's a car you own outright it's not going to get repossessed.

Depends.

You could, for instance, buy a new Skoda at 0% on a PCP, and buy it outright at c. 40% residual after value after 3 years and keep it forever. The only interest you'd pay then would be on the final payment, or pay cash outright depending on the int. charge versus the opp. cost etc.

If it is the case that PPI has been driving these PCP deals, then you'd expect the deals and competition to hot up over the coming months as well. Some excellent small cars around now like the VW Up/Citigo.

Jeremy Clarkson (classic sucker) buys a Merc SL AMG

James May (smart) buys a Fiat Panda

Edited by R K

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Wheels fell off in 2007/08

Scrappage came along in 2009/10

Ppi came along in 2013/14

2015/6????

Mew innit.

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Some excellent small cars around now like the VW Up/Citigo.

'Excellent' is hardly the word. Utilitarian, practical, efficient perhaps - but not excellent. A Nissan GTR is excellent (an absolute bargain at only around £75,000). Or a Ferrari etc.

Edited by Errol

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'Excellent' is hardly the word. Utilitarian, practical, efficient perhaps - but not excellent. A Nissan GTR is excellent (an absolute bargain at only around £75,000). Or a Ferrari etc.

I'd put that in the 'sucker' category.

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Car companies seem to be selling finance more than cars - that is what they go on about in their adverts a lot of the time. Just waiting for the fiannce tap to be turned off and they will all be squealing and pissing about not having customers.

Both General Motors, and Ford have huge finance divisions! The finance is more profitable than the cars! :blink:

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Exactly my experience .. I went to four different garages to buy a van, when I asked for the best price I got a lecture on leaseing/HP etc .. ended up giving them my card and telling them to phone me when they had a price. The only ones who did were Citroen and they gave me price but told me they had a demonstrator for significant discount.

I told them I would have it and made an appointment .. the chap was a bit phased and after tryingto sell me credit said "Well it's not as if you are just going to make a debit card payment for £9500 is it"

I did .. and because I have prewarned the bank it went through ..

I got the feeling that I was not a popular bunny though ..

My experience of car dealers recently (this was Audi) is that they struggle to even give you a price on a car. They want to know what your 'monthly' budget is, etc.

We ended up doing the deal for cash on a demonstrator but it was like pulling teeth - you can tell they really wanted to finance it, not just sell it.

Even when the deal was done they tried to up-sell warranties, and special paint treatments,etc

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My experience of car dealers recently (this was Audi) is that they struggle to even give you a price on a car. They want to know what your 'monthly' budget is, etc.

We ended up doing the deal for cash on a demonstrator but it was like pulling teeth - you can tell they really wanted to finance it, not just sell it.

Even when the deal was done they tried to up-sell warranties, and special paint treatments,etc

The pain analogy is good! No I just want the car! Please sell it to me! ;)

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