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Has anyone noticed how much new car prices have gone up in the last 10 years or so vs wages and the pretend government inflation rate?    I was mooting this last night after walking past a local Ford show room with a new Fiesta, a model with a bit of bling on it, with a price tag of circa £20k.    I came to the conclusion that the reason they have gotten away with it is purely on account of how car leasing for real people (as opposed to companies) has become the normalised way to 'own' a car.    After thinking this, then going forward, what is going to happen to new car sales and the industries that back them up?. People wont be so keen in future taking on these liabilities now that they realise that their incomes are not secure and anyone can end up unemployed and poor just like the people they previously despised.   This will be true for lots of the things we indulge in via debt and mortgages. 

To note, I have never bought a new car and in fact bought a 3 year old Ford Focus 1.5D (so I can tow a boat)  last year with 20K on the clock for less than half of what it was new.

 

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52 minutes ago, steve99 said:

Has anyone noticed how much new car prices have gone up in the last 10 years or so vs wages and the pretend government inflation rate?    I was mooting this last night after walking past a local Ford show room with a new Fiesta, a model with a bit of bling on it, with a price tag of circa £20k.    I came to the conclusion that the reason they have gotten away with it is purely on account of how car leasing for real people (as opposed to companies) has become the normalised way to 'own' a car.    After thinking this, then going forward, what is going to happen to new car sales and the industries that back them up?. People wont be so keen in future taking on these liabilities now that they realise that their incomes are not secure and anyone can end up unemployed and poor just like the people they previously despised.   This will be true for lots of the things we indulge in via debt and mortgages. 

To note, I have never bought a new car and in fact bought a 3 year old Ford Focus 1.5D (so I can tow a boat)  last year with 20K on the clock for less than half of what it was new.

 

Days gone by you’d walk past a forecourt and have a look at prices versus what you could afford. Out walking the dog we go past Volkswagen, Citroen, Mercedes, Audi, and the screen prices fluck me! So either I’m out of touch, or yes they’ve gone ballistic. 

A mate’s dad tried to buy a car in America. He said to the dealer “what’s your best price?” Dealer said 299 dollars. He asked again. Dealer gave the same answer. When he eventually got through to the dealer that he actually wanted to buy a car for cash and drive it away, the dealer was floored, didn’t know what to say! Cars are x amount per month! Looks like UK has gone the same way.

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New car prices seem to have completely detached themselves from the 'official' UK inflation figures over the last few years.  I was in a dealership last year waiting for them to sort out my car and wandered around the showroom to keep myself amused.  A brand new Fiesta with a few toys but not a range topper was a few quid shy of £20,000; it seemed a trifle pricey to my mind.

I needed a hire car in December and it happened to be a mid range Focus.  Quite a nice car and impressive in many ways so out of curiosity I looked up the list price, I think it was around £23,000 - bonkers.

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I'm astonished by the cost of cars on people's driveways.. Those big XC Volvos, can be £60k plus.. You've got to earn £100k PAYE (give or take) to have £60k to spend.

So yes, must just be to put us all on finance deals. I'm surprised the market for 3-4 year old "exec" cars isn't much cheaper; given the supply must be massive. Maybe people hanging on once the hire period is over..

Edited by monkeyman1974
typo
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My theory is the leasing is much more profitable than selling outright.   The actual cost if you add everything up including the balloon payment is very high.  In some cases I don’t think they want to sell for cash at all, why sell something for a cash price when you can lease it out and make more, these vehicles will be coming to an auction near you in the coming months:)

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The car production costs are similar now over all models yes the lower end of the spectrum is ridiculous no one pays 20k for a fiesta and infact i would not pay that for any ford and vauxhall forget it they are worthless cars with no resale value. 

you need to be very strict with offers and really bank dealers down. my car was 25k list i managed to get 40% off a 10 month 8k mile car. it worked out cheaper than the same model of car and better specked than the first generation of car i bought 13 years earlier. 

brand new cars are inflated but 2nd hand are about the same. 

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6 minutes ago, monkeyman1974 said:

I'm astonished by the cost of cars on people's driveways.. Those big XC Volvos, can be £60k plus.. You've got to earn £100k PAYE (give or take) to have £60k to spend.

So yes, must just be to put us all on finance deals. I'm surprised the market for 3-4 year old "exec" cars isn't much cheaper; given the supply must be massive. Maybe people hanging on once the hire period is over..

no one pays list 

https://www.hotukdeals.com/deals/volvo-s90-20-t4-momentum-plus-4dr-geartronic-25723-at-new-car-discount-3465782 

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21 minutes ago, satsuma said:

My theory is the leasing is much more profitable than selling outright.   The actual cost if you add everything up including the balloon payment is very high

Of course it is.  Possibly mileage and damage charges too.

It would be interesting to know how the prices compare too: do you get as good a deal on the price either way?

 

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1 hour ago, satsuma said:

My theory is the leasing is much more profitable than selling outright.   The actual cost if you add everything up including the balloon payment is very high.  In some cases I don’t think they want to sell for cash at all, why sell something for a cash price when you can lease it out and make more, these vehicles will be coming to an auction near you in the coming months:)

Not wrong; at the bulk rates that these lease companies pay for stock, yes it can be rather profitable (good old financialisation, once again).

I managed 19% off with a cash price March last year for a new car, but yes it was a bit of a "foreign" concept to most dealers for sure.  

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IT is worth mentioning some lease companies will often sell the car to you at the end of the deal for typically a very competitive price.  The only catch is, it cannot be in your name (e.g. the wife instead) to circumvent the rules in some cases at least (?! dont ask).

So financialisation can in occasion benefit the buyer.

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3 hours ago, steve99 said:

...   I was mooting this last night after walking past a local Ford show room with a new Fiesta, a model with a bit of bling on it, with a price tag of circa £20k.    I came to the conclusion that the reason they have gotten away with it is purely on account of how car leasing for real people (as opposed to companies) has become the normalised way to 'own' a car. 

'Fiesta' was just a name recycled, the 7th generation bears little resemblance to the budget enrty level model of the late 1970's. Now for urbanites,  a 'supermini' is not necessarily a budget entry level car anymore, they are high spec now. 

   A lot of dealer's margins are from finance, upgrades, extended warranties, service plans  -  selling just a base model for cash isn't very profitable, never has been. Not sure there is any big changes there.   

2 hours ago, longgone said:

 Big cars tend to depreciate fastest,  also higher running costs and for resale I'd go for the top spec Ford rather than a less popular base model barge any day.    

Actually I'd have neither,  I'd (very carefully) buy a classic or affordable exotic and keep a £1000 runabout plus a motorcycle or two. 

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Yeah, brand new cars seem to be very pricey. Perhaps it's just inflation and its just me having a very 1990s pov of what things cost. A bit like house prices! ? My late mum seemed to be the same. Whenever she used to interrogate me about the cost of something I bought, she would often respond with "How much?!!". It's like she expected things to cost the same as they did during decimalisation. ?

The current Suzuki Jimny: it was a brand new model in 2018 and the starting price was £16 k. Suzuki now want £19.3k for one (unless they deleted the base model?). 

https://cars.suzuki.co.uk/new-cars/jimny/

Entry level Fiesta sized Mazda 2 in Zanussi white and 74 bhp engine is £16k. 

 

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The difference between entry level cars, basic Ford or Vauxhall and the more 'premium' German brands seems to have reduced a lot. So now there is very little saving, either in buying outright or financing a cheap car which probably explains why there are more premium cars around today compared to 30 years ago. Back then a BMW was less common.

So there may have been little or no inflation in BMW prices, but high inflation in Ford prices. Though I don't have price lists for the past 30 years to check unfortunately.

 

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2 hours ago, Patfig said:

Be interesting to see how prices hold up now Hertz is sinking

There's already panic re: 2nd hand market USA https://wolfstreet.com/2020/05/20/used-vehicle-market-begins-to-unfreeze-pent-up-supply-looms/

34 minutes ago, Tulip_mania said:

The difference between entry level cars, basic Ford or Vauxhall and the more 'premium' German brands seems to have reduced a lot. So now there is very little saving, either in buying outright or financing a cheap car which probably explains why there are more premium cars around today compared to 30 years ago. Back then a BMW was less common.

Absolutely, had multiple hire cars and the Vauxhalls were strangely the ones that impressed me most; have really caught up with the Germans (for A to B purposes).  Only problem is the lease market has been littered with cheap german lease deals since 2008 onwards ... and ofcourse "everyone wants a german badge".

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12 hours ago, steve99 said:

Has anyone noticed how much new car prices have gone up in the last 10 years or so vs wages and the pretend government inflation rate?    I was mooting this last night after walking past a local Ford show room with a new Fiesta, a model with a bit of bling on it, with a price tag of circa £20k.    I came to the conclusion that the reason they have gotten away with it is purely on account of how car leasing for real people (as opposed to companies) has become the normalised way to 'own' a car.    After thinking this, then going forward, what is going to happen to new car sales and the industries that back them up?. People wont be so keen in future taking on these liabilities now that they realise that their incomes are not secure and anyone can end up unemployed and poor just like the people they previously despised.   This will be true for lots of the things we indulge in via debt and mortgages. 

To note, I have never bought a new car and in fact bought a 3 year old Ford Focus 1.5D (so I can tow a boat)  last year with 20K on the clock for less than half of what it was new.

 

I recently turned down a job in a company very closely related to car sales for this reason... Currently work for an automotive manufacturer and I can see the writing on the wall... our sales are down 75% this period and likely more the next period... My company appear to be panicking... 

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8 hours ago, Tulip_mania said:

The difference between entry level cars, basic Ford or Vauxhall and the more 'premium' German brands seems to have reduced a lot. So now there is very little saving, either in buying outright or financing a cheap car which probably explains why there are more premium cars around today compared to 30 years ago. Back then a BMW was less common.

So there may have been little or no inflation in BMW prices, but high inflation in Ford prices. Though I don't have price lists for the past 30 years to check unfortunately.

 

 Foreign cars have always been popular in UK, even in the 70's,  often thought as the golden era of British car manufacturing, we had a trade deficit on cars with Germany - a point often overlooked by those claiming that EU membership has disadvantaged our motor industry.

 I was looking for some numbers too but couldn't find anything. I know I did a rough calculation for a current price on a 1970's Triumph Stag and some 80's jap motorcycles, seems about the same in terms of cost. 

 

2 hours ago, warpig said:

I recently turned down a job in a company very closely related to car sales for this reason... Currently work for an automotive manufacturer and I can see the writing on the wall... our sales are down 75% this period and likely more the next period... My company appear to be panicking... 

 Expect heavy price discounting now as huge amounts of unsold stock gathers,  our slightly unbalanced manufacturing profile tipped towards high end luxury brands makes us even more vulnerable here.  This could be the biggest jolt for the industry since the oil crisis.

 Read 'em and weep.

 https://www.smmt.co.uk/vehicle-data/car-registrations/

 

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I'm amazed people are even managing to see the RRP for new cars, I can't remember the last time I saw any from of advert that displayed it... it's now all about the monthlies.

Does the debt junkie feel they can afford £xxx per month? I the answer is yes then then the RRP is utterly irrelevant to them.

I believe around 80-90% of new car ''sales'' are now PCP/Lease agreements.

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2 hours ago, nome said:

I'm amazed people are even managing to see the RRP for new cars, I can't remember the last time I saw any from of advert that displayed it... it's now all about the monthlies.

Does the debt junkie feel they can afford £xxx per month? I the answer is yes then then the RRP is utterly irrelevant to them.

I believe around 80-90% of new car ''sales'' are now PCP/Lease agreements.

It's worse that that, deals are tied to credit agreements and are not available to cash buyers. When I bought my current car I had to take out a finance agreement and cancel it after a month to get a manufacturer supported deal of over £5K.

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52 minutes ago, Bruce Banner said:

It's worse that that, deals are tied to credit agreements and are not available to cash buyers. When I bought my current car I had to take out a finance agreement and cancel it after a month to get a manufacturer supported deal of over £5K.

I've been the same with my last 5 car deals. Cancelled within 14 days and keep the discounts. Dealers absolutely hate it. Last car I bought I saved 13k. Audi dealer actually half joking told me not to come back. I thought it was a good time to remind him he threw in the 3 year service plan and ceramic paint job for free to seal the deal. 

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49 minutes ago, Bruce Banner said:

It's worse that that, deals are tied to credit agreements and are not available to cash buyers. When I bought my current car I had to take out a finance agreement and cancel it after a month to get a manufacturer supported deal of over £5K.

Yep, we have also found this. Cash is no longer king for car purchases - they'd much rather you take out a credit agreement because this is where they are making much of their money, or their systems are so geared to it now that they have no easy way of negotiating cash deals.

1 hour ago, Ghostly said:

There's probably a significant difference in running costs for Ford or Vauxhall (servicing and parts) versus BMW, etc.  Not sure if PCP includes servicing or not?

Lease deals do include servicing, and are also priced according to the resale value of the car at the end of the deal - so deals for more luxury brands can be relatively cheaper than for brands that don't hold their value as well.

We're still in a 10 year old Focus that we bought at a place that shifts on cars from the mobility scheme after the original owner has had them for a couple of years. That's a fairly cheap way to get a recent second hand motor, as well as expired PCP deals where the owner moves onto another new car - the 3 year old cars are then sold on, having had maintenance paid for etc during the lease. Madness to buy new, but I'm glad enough people still do. Cars in general seem to be a bit of a "solved problem" now; they just work better and for so much longer than they used to, and rust issues etc are far rarer. I think 20, or even 10 years ago you'd not want to be driving a 10 year old family car unless you had to, but ours is still fine, even though list price now is probably about a grand. We will probably will pick up a newer model this year or next, and just keep the old one as a second car since it's hardly worth selling for what we would get for it.

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  • 419 Brexit, House prices and Summer 2020

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