Used Car Prices Go Into Freefall

Mr. Pseudonym

http://www.irishtimes.com/newspaper/motors/2008/0813/1218477437743.html

It doesn't make for pretty reading for those in the trade.

Mad Dog

Like the house prices it is now a buyers market and great for consumer.

Can't say I have a whole lot of sympathy though with the motor trade who have been having it too good for so long now.

Marcus.Aurelius

Can't say I'm feeling sorry for them. Second hand cars have been selling at inflated prices for too long anyway.

Good news!

De Hipster

Karma really exists?!

Ferris

Marcus.Aurelius wrote: »

Can't say I'm feeling sorry for them. Second hand cars have been selling at inflated prices for too long anyway.

Good news!

Unfortunately it seems like its the big dealers with prestige cars that are the worst hit so its them that are in trouble (e.g. Orwell Motors, Owen Crinnigan Motors).

The dodgy dealers selling crates on the Nass rd won't be hit as hard because, in percentage terms, they lose less money.

While I have no particular affection towards car dealers I do feel sorry for someone who runs into hard times through something that is beyond their control.

Speedy007

It's only a buyers market if you don't have a car to trade in. If you do, then you'll be very disappointed at how much a dealer will be prepared to give you for it!

Marcus.Aurelius

Ferris wrote: »

Unfortunately it seems like its the big dealers with prestige cars that are the worst hit so its them that are in trouble (e.g. Orwell Motors, Owen Crinnigan Motors).

The dodgy dealers selling crates on the Nass rd won't be hit as hard because, in percentage terms, they lose less money.

While I have no particular affection towards car dealers I do feel sorry for someone who runs into hard times through something that is beyond their control.

I usually buy old prestige cars myself, (mostly Lexus), and their prices have been artificially inflated for a good while now, there's feck all market for them and still they're overpriced, even considering their build costs. Their servicing and other maintenance costs are colossal, and the dealers are all too ready to sell a car for 9,000 that would cost 3000-4000 to put right, and 9,000 is 1.5 times what its worth if it was perfect.

No sympathy. The crappy dealers will feel it too as they're ignored when people see the lower cost to value ratio of the higher specced models on offer now.

Ferris

Marcus.Aurelius wrote: »

1.5 times what its worth

Sure every industry is at that, Just look at tesco's ffs.

You still don't want to see dealers out of business, what happens to customers warranties etc. Also you are forgetting about people who have big bucks in high end motors and are losing their shirt.

I'm not affected personally, I saw this slump coming and kept my cash in the bank, but it does affect peoples personel lives and thats a pity.

Marcus.Aurelius

Ferris wrote: »

Sure every industry is at that, Just look at tesco's ffs.

Tesco don't sell TVs that need 50% of their value spent again to bring them up to safe spec.

You still don't want to see dealers out of business, what happens to customers warranties etc. Also you are forgetting about people who have big bucks in high end motors and are losing their shirt.

I'm not affected personally, I saw this slump coming and kept my cash in the bank, but it does affect peoples personel lives and thats a pity.

Warranties are maintained by the motor manufacturer afaik, so is that really an issue?

Stephen

Its an issue for used cars where the manufacturer's warranty has expired. Garages will typically offer their own 6-12 month warranty on decent used cars. If they go bust that warranty won't be honoured anywhere.

furtzy

De Hipster wrote: »

Karma really exists?!

Used to get well pissed off by some of the trade-in prices I've been offered over the years by the very dealers who sold me the new car in the first place. Remember one guy who wanted to sell my trade-in for 5k more then he offered me even after making money on the new car he wanted to sell me as well. All this and the money he made off me when selling me my trade-in originally.

Was planning on buying new in January 09 but can't be bothered now. My car is now worth around 3-4k less as a trade-in after the VRT changes than what is owed on it. Makes more economic sense for me to hold onto it until its paid off or until its value is worth more than what is owed. Talking to my mates this seems to be case with a lot of people. That all adds up to some bleak times ahead for car salesmen....however their parts and servicing departments will do better as people hold on to the cars longer.

Marcus.Aurelius

Stephen wrote: »

Its an issue for used cars where the manufacturer's warranty has expired. Garages will typically offer their own 6-12 month warranty on decent used cars. If they go bust that warranty won't be honoured anywhere.

Hadn't thought of that :eek:

The cars I usually buy get a 3 month engine and gearbox, but if you can't check these parts yourself, maybe you shouldn't rely on their warranties.

RobAMerc

problem is dealers are talking about how they have knocked 5k off the value of cars - but they are knocking 10k off trade ins

Ferris

Marcus.Aurelius wrote: »

Tesco don't sell TVs that need 50% of their value spent again to bring them up to safe spec.

I take your point. We do however have something called a free market, the car dealers were only charging what people would pay so its hardly their fault. Thats whats gone wrong for them now, we aren't prepared to pay as much.

The timescale of this change has been very short however which would be tough on any business (even Tesco's:D).

gabgab

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,

Very few people, unless in an industry themselves that has a refurbishing or reconditioning and then resale element to it really understand the costs involved in refurbishing a car and turning it into a profit,

A business has to make a profit,

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

Ferris

gabgab wrote: »

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

brayblue24

gabgab wrote: »

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,

A fair point but what about his one. I toyed with the idea of trading my Audi
A4 for a smaller diesel and decided to look at the VW Golf and the Ford focus. I got a cash price for the Golf in a main dealer and he was to get back to me "within the hour" (last Friday) with a trade in allowance for my car.

I then went to a main Ford dealer and got a cash price for the Focus. He looked at my car and offered me €10K (bought in January for €27K) and even then I had to tell him twice it was not a Passat he was looking at ( he even looked up VW in Glasses Guide). I left when he started staring into space telling me he wasn't thinking straight that day.

My point here is that while I don't expect a reasonable trade in neither has bothered to get back to me about a cash deal and in both cases I told them I had a buyer interested in my own to make sure they did ring me back.

Alun

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

If your maths is that bad you don't deserve to stay in business

150 x 10k = 1.5 million x 10% = 150k

Ice_Box

Buying from the UK seems to be the done thing now. People know that a UK Mazda 6 has better spec that the Irish Mazda 6 and it costs less. Dealers need to stop this paddy spec versions of cars.

dubmick

I'm going looking at a car at the weekend that is priced at €19,950. I've no car to trade in so I'm hoping to get it for €18k. Too optimistic?

Tanabe

Ferris wrote: »

We do however have something called a free market, the car dealers were only charging what people would pay so its hardly their fault.

I blame the government. Free market/trade in EU? Not when it comes to motor vehicles. We get charged with an illegal, double taxation called VRT. Fact. No need for anybody here to even dispute that.

gabgab wrote: »

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

What's that I.....can you hear something....? Oh yeah.....it's the world's smallest violin playing for the car dealer/s you are referring to there.

gabgab

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

Yep, and plenty of people out there in that boat.

Stevie Dakota

Finally VRT is biting the government (and everyone else on the way) back. With prices being distorted by this tax for years we just had to suck it up. Now with the latest changes it has focused minds due to the devastating effect the reduction has had on second hand values. Even with the changes you can still buy better cars cheaper in the UK and given how price conscious we all are now I can see this only increasing. Only when VRT is scrapped altogether can the auto industry here start to re-build itself and compete on an even playing field. Until then dealers and punters will continue to suffer and we only have the Government to thank.

Aye Kero

If there was a bloodbath and massive price cuts we'd have been reading about it here for weeks. I'd like someone to find me a family / executive second-hand car from a main dealer that is actually priced in line with market conditions and not dealer expectations. All I see is sh1te talk about De Conomy. Does me an O'Leary and plays the violin...

Ferris

Alun wrote: »

If your maths is that bad you don't deserve to stay in business

150 x 10k = 1.5 million x 10% = 150k

oooop's:o

alias no.9

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

Making a loss in a period of transition is not the end of the world. When things pick up again, you'll be better positioned to benefit if you're an established business with a track record of providing quality products at good prices. The one way to ensure you will go bust is to hold firm on your unrealistic valuations meaning you won't shift any stock and therefore have zero cashflow to cover overheads.

omega man

gabgab wrote: »

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,
Very few people, unless in an industry themselves that has a refurbishing or reconditioning and then resale element to it really understand the costs involved in refurbishing a car and turning it into a profit,

A business has to make a profit,

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

I just dont buy that, sorry. A good friend of mine was offered 22K as a trade-in for his 07 GTI which he had only bought new a year ago????? And yes he did shop around, that was just about the best offer! That was aprox 15K depreciation

alias no.9

dubmick wrote: »

I'm going looking at a car at the weekend that is priced at €19,950. I've no car to trade in so I'm hoping to get it for €18k. Too optimistic?

I'd be much more cheaky in that situation. Unless it's already very good value at €19,950 compared to similar cars for sale (the cost of similar from a franchised dealer in the UK plus VRT is a good gauge), I'd go for the jugular on a cash deal. Offer €16,000 cash and be prepared to walk away, tell the salesman that your offer stands, leave your number for him to get back to you. If things are as bad as they're claiming, reducing stock and generating cash flow should be the priority, even at a small loss.

-Chris-

omega man wrote: »

I just dont buy that, sorry. A good friend of mine was offered 22K as a trade-in for his 07 GTI which he had only bought new a year ago????? And yes he did shop around, that was just about the best offer! That was aprox 15K depreciation

Your friend went to several dealerships. They all offered similar money...

If they all offered similar money, do you think they all were looking to make MASSIVE profit off reselling the car, ignoring all elements of competition with other dealers?
Or do you think that that's possibly just what the car is worth in the current climate?

alias no.9 wrote: »

I'd be much more cheaky in that situation. Unless it's already very good value at €19,950 compared to similar cars for sale (the cost of similar from a franchised dealer in the UK plus VRT is a good gauge), I'd go for the jugular on a cash deal. Offer €16,000 cash and be prepared to walk away, tell the salesman that your offer stands, leave your number for him to get back to you. If things are as bad as they're claiming, reducing stock and generating cash flow should be the priority, even at a small loss.

I don't see these tactics working at all unless the car has been in stock for ages or the salesperson's handed in their notice and wants to screw over the dealership.

Too heavy-handed.

alias no.9

AudiChris wrote: »

I don't see these tactics working at all unless the car has been in stock for ages or the salesperson's handed in their notice and wants to screw over the dealership.

Too heavy-handed.

I did say unless it's already very good value at €19,995. Otherwise it's no different to the rock bottom offers made to people looking to trade in cars. What's sauce for the goose is sauce for the gander. He mightn't drive the car away this weekend but if the dealer goes another couple of weeks without selling a car he may reconsider the offer. The market is short a healthy dose of realism and won't move until that is found.
Similar to auctioneers, many car salesmen have lost the skill of making a sale, having spent so long as 'order takers'. This will seperate the wheat from the chaff.

justfortherecor

As an aside, did anyone see the prices quoted for the 3yr old Porsche Cayenne Turbo in the piece? Some dealer saying it would be "€200,000" new and he cant sell it now for "€40,000"???

I'd love to see such a car.