Maybe the dealers bought the cars before the manufacturers discounted them further?
Assuming that the manufacturers have discounted at all ...
I'm up for a big MPV in March 2010 in case they are listening ...
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According to the 'experts' interviewed on the box today the likes of M&S, Arcadia, etc, all bought their Christmas stock last Spring. Interestingly, apparently the shops don't pay for this stock until after Christmas and apparently the suppliers then take out insurance on the buyers - i.e. M&S or whoever - going bust before payment.
According to the news today this insurance has almost dried up now out of fear of so many shops going bust in the New Year.
Do car dealers work like this with car makers? Or do they pay up front for kit they get into the show-rooms?
Anyhow, we should be seeing bigger discounts on cars no matter what - this is Japan in the 90s now here in the UK.
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FIAT are probably not discounting as ther cars are selling well. If I had £5k to spend for my needs I could think of nothing better than a £5k brand new Panda.
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I wanted a Panda, a Punto or one of those 500s - alas, it turned out that I would need one for each foot. Boy, are they small on the inside.
Even the new Bravo, (My last car was a Bravo and fitted me fine or I fitted it fine.), is too small for me. Southern Europeans! Pah! :-)
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From Vol 5 of the thread
So lots of scope for oil prices to fall to say $30.>>
Moneyweek is now talking about 20 bucks a barrel for oil.
At which point it may well be worth a punt if you can put the money away for a few years as, once this deflationary period is over, we will undoubtedly, most likely, have a period of inflation which will most likely see oil soar back up as World demand picks up big-time.
Problem is, this credit crisis might last another 6 - 12 months or another decade - who knows.
Edited by Dynamic Dave on 20/11/2008 at 20:51
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With the pound heading south fast, imported car sellers will struggle to discount much. It should be good for the Nissans, Hondas etc which are built here, assuming they aren't just screwed together from imported bits.
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I thought I might add something to this thread - useful or not and maybe its been covered as I havent managed to read all 600 or so replys.
One reason why the car industry is suffering and will continue to do so is because people have been able to live beyond their means using banks money. Take my works carpark for example, its full of 206's, Clio's, MINIs etc etc on late plates
driven mainly by people that are earning 12K a year at the most. They have been changing their cars every 2-3 years for the latest one, paying a large % of their salary in car payments (depreciation is probably a better term). Now, the conversations I have overheard on the car front is that they can no longer afford to take out more loans and credit and sticking with what they have or selling up before the baloon payment is due and getting something a bit older.
Everyone has a right to buy what they wish with their well earned, but the ability for someone who takes home around 1K a month after tax being able to pay 20% or so on a car is beyond reason and irresponsible lending from the finance houses.
My A4 was probably bought a lot cheaper (was 3 years old) than their 1.1 euroboxes and my salary is 3-4 times more. People have been living beyond their normal means and its coming home to roost.
I am one of those horrible people that have been predicting this for around 3 years to people who will listen. We have built the economy on debt - now a vast proportion of people have a credit card that had 1000s on it, personal loans and mortgaged their house time and time again to pay for cars/kitchens etc, there is far less borrowed money in the economy. If we lived on our 'real' money things would be a different matter.
I used to work as a compliance mgr for a company that supplied store cards and a vast majority of money spent in department stores was on tick - I fancy some new clothes, ill open a store card as I have no money at the minute!!
It had to stop and is stopping, however there is a long way still to go - madf isnt far wrong in my opinion. Without going into too much detail, I work in the loans sector now in a similar risk/compliance role and seeing more and more refinance of cards/overdrafts - only this time, customers with a less than good credit rating are having these removed as a term of their loan.
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Terrible; terrible news......
news.bbc.co.uk/1/hi/world/europe/7739319.stm
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Terrible; terrible news...... news.bbc.co.uk/1/hi/world/europe/7739319.stm
>>
A friend of mine bought one of those in the mid-eighties, a 45A. It cost £3299 I recall which was dirt cheap even then. I drove it home for him as he had not passed his test, and to say it was agricultural would have been an insult to tractors. He had no interest in cars himself and just wanted something as cheap as possible, running it for around ten years at a low mileage before it finally expired.
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the bit that amazed me is where it states 140,000 went to the US
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re "Take my works carpark for example, its full of 206's, Clio's, MINIs etc etc on late plates
driven mainly by people that are earning 12K a year at the most" yea but lots of them have partners and/or parents earning a bigger salary and/or cash in the bank
i know my missus drives a nice car way beyond her means, none of it on tick though
car market is being distorted by CO2 tax regs and ongoing company car culture
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In reply to tawse:
"Do car dealers work like this with car makers? Or do they pay up front for kit they get into the show-rooms?"
Car dealers don't usually buy their new stock from the manufacturer/distributor until they register it.
When you or I buy a new car from a dealer we pay the dealer and the dealer pays the manufacturer/distributor.
This partly explains why car dealers are not slashing prices on new cars as much as you may expect.
"Where are the 20% and 25% sales of cars from Honda, GM, Toyota, Fiat, BMW, Honda and so on?"
In the example of a £20k car. If the dealer offers you a 25% discount then you will pay them £15k cash. The dealer then has to pay the manufacturer/distributor, say, £18k (assuming that the dealer has a 10% margin). The transaction will cost the dealer £3k profit (unless there is a back end bonus) but more importantly it will cost them £3k cash now. The dealer is better off doing nothing and will continue to do so until the manufacturer/distributor lowers the wholesale price of the car to them.
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>>The transaction will cost thedealer £3k profit (unless there is a back end bonus) but more importantly it will cost them £3k cash now. The dealer is better off doing nothing and will continue to do so until the manufacturer/distributor lowers the wholesale price of the car to them.
Good point - but reminds me that they always used to be on 180 day consigment with most manufacturers, so if that still applies then they will get direct debited regardless after the car has been in stock for that time.
There could be quite a few coming up to 6 months now, and then the dealer will be in a better cash position if he sells even if it's less than the cost.
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According to one of today's papers:
Honda to close for 2 months in 2009
Honda, the Japanese carmaker, today said it will close its factory in Swindon for two months, leaving 5,000 workers without pay for February and March.
Today's move by Honda means that production in Swindon will be cut by a further 21,000, reducing overall output at the plant by 53,000. Honda's announcement follows similar inititatives in the UK by other carmakers, including Ford, who are struggling with spiralling sales.
Cash-strapped consumers are putting off large purchases such as cars as the economy shrinks and unemployment rises while cautious banks are unwilling to grant motor finance deals to borrowers.
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Can't see why people expect massive discounts because of the credit crunch.
Car dealers who go bust do so with a showroom full of cars - there's no point in selling vehicles at a loss.
If the new stock's not paid for, it goes back to the manufacturer.
If it is paid for, another dealer will take it in as new stock or pre-reg.
Used stock can always be traded/auctioned.
No dealer, going bust or not, will sell a car at less than trade price because the trade price is so easy to achieve - and no fussy retail punter/warranty to worry about.
Prices to retail customers will remain discounted, but there's not that much profit in a new car and the point is quickly reached where the dealer is better off sitting on his hands.
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We got a letter yesterday - Stratstone Saab in Manchester is closing, business transferred to Stockport. They were a joint Saab and Caddilac dealer I think. Quite a nice site and central so probably expensive to run, but not as flashy as the VW, Audi, BMW sites on the road into town. Another sign of the times I guess.
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"Halfords hopes to open 50 bicycle-only stores as credit crunch sees cycling boom"
Headline in the "other" paper
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Quote:..""No dealer, going bust or not, will sell a car at less than trade price because the trade price is so easy to achieve - and no fussy retail punter/warranty to worry about.""
Not even if it's 30 minutes before the end of a bonus calculation period?
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Not even if it's 30 minutes before the end of a bonus calculation period?
The manufacturer may be guaranteeing the bonus at the moment so there is no incentive to sell at a loss.
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And Honda Swindon is shutting down totally for Feb and March to cut production. So if you don't want what they've already built and wanted to factory order that'll delay your new Honda then.
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OK so let's wind things on a year or so to the point when the "crunch" is over and recovery it taking place. Do we think that the car industry will be changed forever, and if so how, or that they will return to their old ways?
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And what changes should we see in other sectors: banks, for example?
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Not meaning this forum, but perhaps certain others on the web,
Has anyone noticed a certain amount of schadenfreude expressed by people at the prospect of others coming financially unstuck?
Have people really been that dumb as regards credit?
I know there will be people who spend larger than wise lumps of their income on cars but why would the credit crunch affect them? Unless they lost their job, surely they could just walk back in to the car show room and say same again please. If they can manage, they can manage?
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We live in unique times. Apparently the average NON-mortgage debt in the UK is 57,000 Pounds. I don't have any credit debt so I assume someone else has my 57,000 Pounds worth.
As a nation we have never been so much in debt, both on mortgages and also on credit, plus we have never had so little savings. Millions of people are living from one pay-check to another without any reserve should they lose their jobs. Hence why Job Centres across the South East of England are being swamped with Bankers, who only a few weeks ago were amongst the highest earners in the land, unable to put food on the table or pay their mortgages. What hope is there for most on a 'normal' wage?
Then you have all the people using credit cards to pay their day to day bills.
This is credit crisis unheard peof since 1929 and perhaps even longer - perhaps ever. Problem is that most people have not figured it out yet.
We have had a decade of Governments and Banks encouraging everyone to get into debt up to their eyeballs and people have done so. Even now, with people unable to repay their bills, we have a 'solution' of solving this credit crisis by trying to get people to spend even more on credit. Madness!
This is going to get a whole lot more messy before it begins to get better. Whether this will last a year or whether it will last 20 years who knows?
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I think one of the core reasons for this, is that people on the whole (well certainly in my generation) are incredibly financially illiterate. So long as they can afford the monthly payments every upcoming month, they simply don't worry about it.
Alarming how many take such a short term view of their finances.
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tawse, do those figures for non-mortgage debt include student loans?
Edited by smokescreen on 21/11/2008 at 12:49
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I know what you are getting at smokescreen re short termism. I fear though that many are afraid to think long term. The old alligators and swamp draining analogy comes to mind. To use another, it all feels a bit like walking on cracking ice at present, difficult to concentrate on one's plans upon reaching the other side when your main concern is not falling in.
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Its very difficult for people not in the financial sector to know just what to do for the future.
Every salesperson and their dog urging people to jump one way, eg pensions, then the government of the day (term used advisedly) pinch a whole chunk from such things which shifts the goalposts again, then the inevitable downturn which wipes what little there was out.
If experts are getting stung what hope for the rest of us, hardly surprising then that many younger people just go week to week and spend an extraordinary amount of time stoned on something or other.
May as well enjoy getting the headache i suppose, the one gained from trying to fathom out what to do for the best has little enjoyment in the making, and probably gives no better result.
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tawse
Your post about credit sums up WHY I am so negative.
Brief story
Youngest son is like me: careful with money. Although he could afford to buy a new car outright he drives a £1300 Peuegeot 106 (relying on cheap mechanic me!).
One of his friends at work buys a new car on HP. After 6 months discovers he cannot afford the HP payments/running costs etc. So he sells the car and takes a £5k loss, buys a £1000 banger ...
No doubt being repeated everywhere. Lots of Mercedes convertibles for sale.. 7- 10 years old.Values like stones.. Nice to have, not essential.
DSG (Dixons/Curry) on the rack as white goods sales fall -3.4% for UK October...
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tawse Your post about credit sums up WHY I am so negative. snipped>>
I live in Swansea - average wage about 21K. In the past decade the numbers of 20K plus cars suddenly soared, then 25K cars, then 30K and higher. I found myself sat at the traffic lights in my 10 year old Fiat Brava - which I bought new on 0% Finance when I was a mega-buck IT contractor - surrounded by BMW 3s, RAV4s, CRVs and then Mercs and Merc 4x4s, etc.
On several occasions I would look across at people and get that smug snobbish glance back from someone as they eyed my car. House prices in Swansea are now lik those in the South East. I often peruse Home Counties house prices and I get a lot more bang for buck there than I would in Swansea.
I mention the above because I think that house prices became part of giant pyramid selling scheme and the increase in prices convinced people that they were rich - after all, their houses were earning more money per year than them and it was tax-free! So they MEWed to buy the exotic hols, the expensive cars, the flatscreen TVs, etc, and, dare I say it, the more financially illiterate you were the more you bought into this so I think places like my home town of Swansea are going to suffer big time - even now, there seems to be a denial about house prices falling in my area and sellers are stubborningly trying to sell houses for 2007 prices - about 4 or 5 times what they were a few years back. Probably, because some are so in debt, they have to hold out for a stupid buyer.
This is going to get a whole lot mess. I have no sympathy for the rich bankers but I do feel sorry for many, such as the Mum with the loan for the Wii, who simply was trying to do her best for her kids.
Perhaps some good will come out of all this and we will become a less materialistic society.
Oh, and all those people who made property porn ramping house prices TV shows should be flogged in public! :-)
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tawse do those figures for non-mortgage debt include student loans?
I believe so. I believe that the mortgage and non-mortgage debt is simply separated and it stands at something stupid now for the UK at about 1.3 trillion. I think the average is a bit higher now - about 60K per person. We basically have borrowed more than twice as much as the average European.
It is tragic as I believe that, apart from a percentage who are simply greedy, many people believed Brown when he said "no more boom and bust" plus, as others have pointed out, we are financially illiterate in the UK. Basic things such as balancing a cheque-book, compound interest and so-on should be taught in schools and the reality is that millions of adults have no idea. On the news yesterday they had a Woman who took a loan out to buy a Wii for her kids and ended up paying 900 quid for a Wii.
Unbridled Capitalism is basically evil and the spivs, barrow boys and hooray henrys in the City have a lot to answer for also but, sadly, they appear to have swanned off with their huge bonuses and have had no come-back. There are other EU countries where, I believe, if this had happened there then the bankers would have been in jail by now if not strung up.
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Apparently the average NON-mortgage debt in the UK is 57,000 Pounds
No. Things are bad, but not that bad. I don't think even the average amongst adults is £57K WITH any mortgage. The figures I've seen oft repeated are in the order of £10K per HOUSEHOLD excluding mortgage debt (a household can contain more than one debt holder, so per person stats. may be much less).
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Yes, my mistake - just double-checked and the average home debt is £59,715 and does include mortgage debt. The average individual debt is 30K.
From the UK Credit Action website:
Striking Numbers
£1m every 8 min
growth in UK debt
£207m
daily increase in UK debt
£59,715
average household debt
£263m
amount of interest paid in the UK daily
121
properties repossessed daily
1 person every 5 minutes
declared bankrupt or insolvent
£91
average daily decrease in house prices since October 2007
<<<
Total UK personal debt
Total UK personal debt at the end of September 2008 stood at £1,457bn.
This has increased 5.4% in the last 12 months which equates to an increase of ~ £76bn.
Personal debt has forged ahead of UK GDP which, according to latest available data, currently stands at £1,410bn having increased by 5.1% over the past year.
Total secured lending on dwellings at the end of September 2008 stood at £1,219bn.
This has increased 5.3% in the last 12 months.
Total consumer credit lending to individuals at the end of September 2008 was £238bn.
This has increased 6.0% in the last 12 months.
Total lending in September 2008 grew by £2.4bn; secured lending grew by £2.2bn in the month; consumer credit lending grew by £0.3bn.
Average household debt in the UK is ~ £9,740 (excluding mortgages).
This figure increases to £22,190 if the average is based on the number of households who actually have some form of unsecured loan.
Average household debt in the UK is ~ £59,715 (including mortgages).
Average owed by every UK adult is ~ £30,440 (including mortgages).
Average outstanding mortgage for the 11.7m households who currently have mortgages now stands at ~ £103,860.
>>>
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This is going to get a whole lot mess. I have no sympathy for the rich bankers but I do feel sorry for many, such as the Mum with the loan for the Wii, who simply was trying to do her best for her kids
Is it a necessity to buy Wii for your kid(s) when you can't really afford one??
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She was probably doing what Mums, and Dads for that matter, do for their kids - try and do the best.
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I think the fact that the government has allowed house inflation to run rampant has added to a lot of our problems. People have been allowed/encouraged to get 100% 5x salary mortgages because they feel it is the only way to get on the property ladder. Those who don't because they still can't afford anywhere, stay at home with parents or rent well into their 20's and 30's. Easy credit means they can buy the flash car, holidays and tv, credit cards pay for designer clothes. With no incentive to save because they can never afford to buy a house, they can spend the rest on binge drinking.
Ok, a bit of an exaggeration, but it was all bound to end in tears. Easy credit has fueled a buy now -pay later metality. Remember when the only thing you could get a bank loan for was a car or home improvements?
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I have no sympathy with people borrowing to fund "nice to have " items .
Stupid extravagance.
At the end of the day, the BOE and FSA were responsible for monitoring and controlling the banking system and its stability.
Everyone knew about liar loans, 5 x mortgages, self certification of income and all the other abuses.
Well now it's all being reversed.
It will take 3-8 years to reverse it all.
Any one seriously think tax cuts are going to be spent or used to pay off debt?
Of course some will spend it. But with rising unemployment the sensible will spend less.
And the rest follows..
Trying to get them (the sensible) to spend more is - as the Japanese found - like pushing on a piece of string.
The non sensible ? Some will go bust.
Edited by madf on 21/11/2008 at 14:30
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I dont really disagree with any of the valid claims and points made in this thread.
But have none of you ever been in a position where you dont have money for food and bills, let alone kids presents?
Too many years of not paying good enough wages/taxing them too much, to the lower level working man (salary around £ 11 - £ 16 k in this area and many others) was bound to result in borrowing to fund living; let alone luxuries. Add to that immigrants working for less and sending the money home not spending it here?
Houses not provided by councils so people borrowing huge amounts just to have somewhere to live.
Yeah, borrowing like that is wrong. But if you have got nothing to spend what should they have been doing?
Not everyone has been born into money, made a good living themselves, had an opportunity to better themselves etc etc. Dont forget without all the low paid workers a lot of the management types wouldnt have been earning so well!
Personally, i think, the poorer working (and non working ) person given some tax or other benefit back is going to spend it not reduce their debt. Why worry about your debt if you cant afford to pay it is a common attitude.
The only cure (and I mean ONLY) is to start making stuuf, exporting it, making money and putting money into our economy by people earning enough and then spending it.
Basic capitalism!
Edited by yorkiebar on 21/11/2008 at 15:19
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Absolutley bang on the money Yorkiebar.
Nicely put too.
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Yorkie, can I vote for you please? Can you also explain why these low paid people get taxed? We have a minimum wage but it gets taxed... ????? Could it be that Gordon likes to have us ask nicely for what is ours and to have a bit stick along the way?
JH
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We live in unique times. Apparently the average NON-mortgage debt in the UK is 57 000 Pounds. >>
Goodness, gracious! Is that £57,000 of non-mortgage debt for every man, woman and child in the country?
Why that comes to .... er... £3,420,000,000,000
Shorely shome mishtake?
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He did correct it to include mortgage debt. But that just means there are lots without mortgages (older people presumably and the young who cannot afford to buy) and those with huge mortgages.
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Two Lexus dealerships to close next month ....
According to today's Talkingmotors.com:
"[Car dealer group] Lookers has announced it will close down two Lexus dealerships next month."
"A spokesman for the group said the Brighton and Southend sites would cease trading on December 5."
"Lexus has suffered both from the economic slump and lack of new product this year. It sold fewer than 10,000 units in the first 10 months of the year - down 30 per cent on the same period in 2007."
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Why that comes to .... er... £3,420,000,000,000
drbe:
Just add up the value of these homes which are in your neck of the woods [Weybridge & Surrey]:
tinyurl.com/58uft4
lowest price: Asking price of £2,795,000
highest price: Offers in excess of £70,000,000
Edited by jbif on 21/11/2008 at 20:16
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I have to say that there is an awful lot of rubbish in this thread.
Never mind let the ill-informed purveyors of nonsense statistics have their rant.
;)
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I have to say that there is an awful lot of rubbish in this thread. Never mind let the ill-informed purveyors of nonsense statistics have their rant. ;)
At you having a go at me? It appears so as looking back at this volume of the thread I am the one who has posted the statistics today.
They are not ill-informed as they are official figures that I got from the UK Credit Action website which draws its figures from a variety of Government and Banking figures.
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It's not the statistcs that I have an issue with it is the complete lack of context and understanding that concerns me.
Saying this is the statistic - and that is bad - is meaningless drivel.
Edited by hxj on 22/11/2008 at 14:54
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>> drbe: Just add up the value of these homes which are in your neck of the woods [Weybridge & Surrey]: tinyurl.com/58uft4
According to today's Telegraph (page 7), I live in Beverley Hills!
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highest price: Offers in excess of £70,000,000
That's been on the market for 24 months. Its suspected it was built using laundered money.
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