Buying cars using finance (PCP)....and does it cause cars bought new to devalue faster?

[Lankan]

Do people actually buy cars for recreational purposes using finance?

If so, then the following should be of interest (36 mins long but not too bad\): The Truth About Buying Porsche GT Cars That Everyone Knows, But Is Afraid To Say

I think that video actually explains the market whipped up by speculators and also the reason why such a market exists, something that was, at best, few and far between in the late 1990s early 2000s. As a Porsche enthusiast, the pros and cons laid out are non-sensical from purely an enthusiast's point of view but they do bear some significance when looked at from purely a business perspective, which is something I thought I would never experience!

Further, the following YouTube video explains the madness of it all; that of trying to weigh up whether or not a 991 GT3 is Super Car, which again is rather bizzare!
Note that the driver is in full auto mode at all times (i.e does not change gears using the paddles): Is The 911 GT3 A Supercar?

My gripe is that Porsche has caved in and is creating cars that cater to a demographic described above. How many other manufacturers are following suit?

Discuss.

 

[Kett]

I’ve read that 9/10 cars are bought on some sort of finance. Getting commissions in selling said packages are party to this...

I try to make my own mind up on the used car market and generally ignore marketing hype.

Personally, I think the new Alpine 110 hits the sweet spot in terms of dynamism & comfort.
Although I like a manual transmission... I can foresee the ‘used market scallywags’ rubbishing the A110 and residuals plummeting to very accessible levels.

I’m amazed how badly i8 models are effected by depreciation. My kids love ‘em! Butterfly doors, eco credentials, supercar looks... but the used market hype isn’t there.

 

[Lankan]

I’ve read that 9/10 cars are bought on some sort of finance. Getting commissions in selling said packages are party to this...

I try to make my own mind up on the used car market and generally ignore marketing hype.

Personally, I think the new Alpine 110 hits the sweet spot in terms of dynamism & comfort.
Although I like a manual transmission... I can foresee the ‘used market scallywags’ rubbishing the A110 and residuals plummeting to very accessible levels.

I’m amazed how badly i8 models are effected by depreciation. My kids love ‘em! Butterfly doors, eco credentials, supercar looks... but the used market hype isn’t there.

IMO the issue is that, in this day and age, accounting and marketing departments dictate the packaging of a particular model that rolls off the production line. In Porsche's case the 996 was the start of this 'decline', but still, the motorsport models remained pretty hardcore, but, as discussed in an earlier thread, there appears to be a trend towards softening up even the motorsport models and/or making purely track-focused cars with on-road usage being less of a priority.

I agree with you, Kett. The new A110 is a great package, but, for me, the lack of a manual box is the issue, and that is a show-stopper. I have tried to get on with a paddle-shift box (when test driving an Alfa Giulia Quadrifoglio) but, notwithstanding that it was a big car, something I am also not a fan of, I simply cannot bring myself to get a car for recreational use that does not have a manual gearbox (or RWD).

 

[Kett]

I simply cannot bring myself to get a car for recreational use that does not have a manual gearbox (or RWD).

I think you’re heading towards a tweed jacket and a MX-5!

Seriously though, I think the same. There’s not a lot to choose from. The GT3 is one that ticks the boxes but the frustrations were shared in that video.

Mustangs and Z-cars don’t do it for me. 6-cyl F-Types feel short-changed. What’s left?

My advice is get an A110 when the market settles and visit Brett Autotune & Body Repairs for a manual box conversion.
: )

 

[Lankan]

I simply cannot bring myself to get a car for recreational use that does not have a manual gearbox (or RWD).

I think you’re heading towards a tweed jacket and a MX-5!

Seriously though, I think the same. There’s not a lot to choose from. The GT3 is one that ticks the boxes but the frustrations were shared in that video.

Mustangs and Z-cars don’t do it for me. 6-cyl F-Types feel short-changed. What’s left?

Ha, ha, yes, you are not too far off - already have experienced a Eunos RS-Limited (my wife has had that for a few years now, but needs quite a bit of TLC), so that is why I need to try a Lotus before I am unable to perform the obligatory gymnastics when one needs to get in and out one of those, Evora excepted, and the Exige ticks all boxes.

 

[Kett]

Exige ticks all boxes.

Were you tempted by chassis 0001?
Or are you exclusively looking at Toyota engined units?

 

[Lankan]

Exige ticks all boxes.

Were you tempted by chassis 0001?
Or are you exclusively looking at Toyota engined units?

Nice as it is, chassis 0001 is not on the radar, and neither is any other Exige S1, but certainly the Toyota engined S2's do look very appealing at the moment.

Back on topic, 'fire sales' such as the following is probably a reason such cars are being devalued at an increased rate of knots, which is a sure sign that those cars were purchased on finance and the owners are unable to maintain the monthly payments: 18-plate McLaren 720S sells for half original price

Here is another one: 2019 McLaren 600LT sells for £125,500

On another forum, I read that a 991.1 GT3 RS owner may be looking to sell it for £60,000!

 

[9810588]

Just my personal opinion: it’s not the fault of Porche, rather there are people want to make quick and easy fortune in the past two decades.

Real estate, stock market, cars... buy and sell at higher price after a short time. Finances tied to assets of highly inflated value, creating ever increasing finance bubble. Probably on the verge of blowing up and this COVID19 pandemic could be the pin prick that triggers it.

 

[10]

I simply cannot bring myself to get a car for recreational use that does not have a manual gearbox (or RWD).

That's because you haven't considered the virtues of the Volvo 480! :rofl:

But seriously, aside from some old/oldish Scandinavian and French products, I also struggle to get my head around anything without a manual gearbox/RWD, new or old.

997 GT3 for me... or maybe a T350C... :race:

 

[Lankan]

...I cannot ever see Porsche ever coming out with a NA motorsport-derived version that can be considered nimble enough to match its ancestors - as we know, the weight of a car dictates its nimbleness.

Maybe I spoke too soon - Porsche Cayman 718 GT4 RS spied

"Porsche’s most extreme Cayman GT4 yet to follow RS formula of big aero and less weight"

"...a lighter, harder and faster version of our 2019 evo Car of the Year."

"When a Cayman GT4 RS will arrive, and how much it will cost, remain the biggest mystery."

Didn't think there would be a market for an RS version of the GT4, especially since they already had the GT4 Clubsport, which is a track-only version. Would be interesting to see how this is priced when it goes into production.

That aero package makes it look mad, and whilst it may not look out of place on a race track, it would make the GT4 RS look like a batmobile if seen on the road, and a sure-fire way of losing your license quicker.

 

[Lankan]

Back on topic, this is a very timely piece on the subject Chris Harris on... car finance.

Negative equity on cars.....now there is a surprise, not!

We have already seen McLarens going for well short of their MSRP, BMW i8s values have sunk to an all-time low etc. etc.

The following excerpt from the article is rather telling...
"The easy drip of finance has become a widespread drug addiction in the UK. I still have close friends – people who are very clever – who phone me outraged that the lease deal is up on their car and they have to write a big cheque just to hand the thing back.

In the next year, many people won’t be able to write a large cheque, and then, I fear, the bubble might burst."

From what we have seen so far it is no surprise that this will most likely affect almost all of the more recent or new(ish) cars.

Thoughts?

 

[martinr82]

[mention=3507,#0000FF]Lankan[/mention]
I have always seen buying high price cars such as Bentley, Rolls Royce, Lambo, Ferrari etc etc as a kin to buying a boat/yacht, you will never make money on them. There are a few exceptions when it comes to "specials" such as the F40 (and others), which is where the Clio has its place from Renault, because it is special, one-off and probably never to be repeated. However, with the more generic high priced cars, they are always going to depreciate, like a boat. Therefore, those that can afford the depreciation will normally be able to afford the hit (at least you would assume so). This is not me saying that those who bought a £100,000 pound car should pay for their ability to buy more extravagant

What is shocking is that people are perhaps having to pay money to give a car back when its on a lease plan. I thought the whole idea of the lease plan is that the depreciation is being paid off by the lessee as set out in the terms of the lease when it was arranged, therefore meaning that the dealership/car company is at no risk of loss and also that people can be driving cars that would normally be out of their price range on straight finance.

How is it therefore possible that people are being asked to pay money to hand the car back? I thought/assumed this was the backbone of PCP?

Furthermore, if the bubble bursts on this, like the housing market going to "sheet" in 2008, then who is to blame and also who picks up the tab? because it cannot be the buyers responsibility to bail out the manufacturers/dealers for selling unsustainable finance?

Is there something in the PCP contract that says something like.... "if we deem the value of your car to be less than the GMFV we expect you to pay it?"

Such a conundrum.

Martin

 

[Kett]

I think there will be a few twists & turns in the downturn, but I suspect that most wealthy people have accrued enough assets to dig themselves out of any hole.

It’s those middle income folks driving around in ten year old £15k - £35k toys (with personal loans) who I think may struggle, particularly if the predicted job losses are accurate.

There seem to be far more 2000 - 2015 911s on the market that I ever remember. Perhaps I’m wrong?