See Baskerville's input above for an accurate resume of how economists might interpret what is just beginning now to happen. Rising prices won't be in the equation.
I'll be on standby when the price of luxury cars plummets - and two fingers to global warming and to government liars who just want to raise taxes behind the screen of environmental concern - but what happens if my bank goes bust and takes my assets with it in the meantime?
Just as well now that no-one can really remember the nasty details of what happened more than 70 years ago.
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Just as well now that no-one can really remember the nasty details of what happened more than 70 years ago.
>>
Marmon Roosevelts going for the price of a sack of flour and a side of bacon for ragged Wall Street traders to feed their starving families on you mean?
Get the Marmon Roosevelt now, worry about your bank going bust later.
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>Get the Marmon Roosevelt now, worry about your bank going bust later. <
Mm, that one must be well in line for that special accolade for cars that do fewer mpg than they have pistons - 16 cylinders wasn't it?
Probably the biggest two fingers of all to the environment fascists...
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I was listening to a programme on Radio 4 the other month that said that the 1987 stock market crash caused the values of second hand luxury cars such as Porsches to drop by 50% overnight.
I can beleave that the values of many classic cars halved overnight, but they were ridiculously over-valued in the first place, I seem to re-call Ferrari Testarossa's being valued at £250,000! Anything that was more sensibly valued would have been more stable.
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>Zm
Right. That was when classic car price soared to silly heights and even new 911s kept their value ridiculously well.
It was a car pricing bubble - which burst. (it affected everything even MGBs:-).
This time it's a house price bubble... so new house build slows down and eventually supply/demand is restored.
As for secondhand prices to rise? Well if selling to idiots I suppose so.. but when new cars are only £6-7k there is a ceiling..
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In the event of a real recession second hand prices won't rise, in fact they'll probably all fall, but 2nd hand gas-guzzlers will fall by much more.
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I have recently being helping a relative to source a new car. She wants something that is really cheap to run and settled on a Fiat Panda Multijet 1.3 This is just the sort of car you would think will be in demand. It seems not though. Every dealer approach offered to discount, and there are lots of pre-regs around. She has now ordered one from the factory (with a load of options including air-con, roof bars, extra speakers and so on) for an OTR price of under £7300, which is about £2300 off the list price. I think there is so much overcapacity at the car companies that they are desperate to keep their production lines moving and are selling cheap as possible. The growth of factories in eastern europe and asia contributes to this. In fact it could be that new cars will get even cheaper in a recession and so push down the price of secondhand cars even further.
Classic cars are a special case, but probably there is a bubble there too, as with property. There is much talk about property prices holding up because of a lack of supply. In my part of the world there are loads of empty city centre apartments that developers are seeking to off load and more are half-way through being built. I think we are in for a nasty downturn soon. I think anything in the high VED band or with high fuel consumption will take a tumble. The first owner can usually afford to pay up, but the potential second owner is likely to be the guy whose mortgage, fuel and power bill has just gone up and decides he really just needs something to get him to work, rather than wanting to pay extra for performance and luxury.
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Well if selling to idiots I suppose so.. butwhen new cars are only £6-7k there is a ceiling..
But since when has the price of low-end brand new cars dictated the value of all used cars? On that basis we would all have driven Lada's would'nt we?
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The basis of my thesis is that currently a perfectly nice, family-sized repmobile of 8 years old, Vectra, Mondeo etc. FSH, clean and tidy can be picked up for £500.
£100 will get you a Micra with T&T.
Fifteen years ago, when the world was less prosperous, Bangernomics meant driving an unpleasant banger that was rust-riddled and permanently not working. These days it means driving a car that might be half way through its life.
A good (bad) economic slowdown will surely improve the market for these cars.
Edited by Mapmaker on 21/03/2008 at 16:19
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>That was when classic car price soared to silly heights and even new 911s kept their value ridiculously well.
It was a car pricing bubble - which burst. (it affected everything even MGBs:-).<
Classic car prices are now ludicrous once again - here's looking forward to the crash...
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The price of second-hand cars will ultimately be dictated by the price of new cars. No-one will buy a one year old car when £500 more will get you a new one, and ten year old cars will always be dirt cheap no matter how many years they might still have in them or how cheap they are to repair.
The price we pay for cars is governed by the year digits on the registration plate. I cannot see anything changing that.
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In the UK, all new cars are overpriced, before tax. If the recession bites, there might just be a return to sanity. In addition to reducing the existing UK marginal willingness to pay more, there might even be an effective investigation into the oligopolies that fix the UK and the whole EU market. I look forward to the demise of a number of fat-cat distributors.
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In the UK all new cars are overpriced before tax.
Well our taxes must be low then. Just look at what the Danish motorist has to pay. Our car prices are quite reasonable when you compare with many other countries (Denmark, Australia, Singapore, Norway).
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That's because they levy high taxes, you nit! Not to mention they have no car assembly of note. In most cases no car assembly at all. Your lovely MX5 sells in Japan for less than 2/3 of the price commanded here, as do most Japanese cars. And the home market is RHD. Treasure island is creative accounting.
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That's because they levy high taxes you nit! Not to mention they have no car assembly of note. In most cases no car assembly at all. Your lovely MX5 sells in Japan for less than 2/3 of the price commanded here as do most Japanese cars. And the home market is RHD. Treasure island is creative accounting.
So what if they levy high taxes and our taxes are relatively low compared with theirs? The British consumer pays a FRACTION of what customers in many other countries pay in order to get a car ON THE ROAD, and yes in some countries like Japan, the on the road costs are lower. To a consumer, it is the on road cost that matters, I could'nt give a toss if a car price was made up of 30% car and 70% tax, as long as what we were paying on the road was reasonable!
OK, our brand new cars are not the cheapest in the world, but other countries are a damn site dearer, so why are you moaning?
Look at it this way, if you were the person in chrage of deciding car prices around the globe for a manufacturer, you would be trying to charge the maximum you could get away with - pre tax - in any given country. So in the UK, where car taxes are still quite low (I hope Alastair Darling is not reading this), you would set a higher pre tax price, whereas in Denmark you would have to set a much lower pre tax price to offset some of the cost to at leat make your product slightly sellable. You would need to charge more (pre tax) in countries such as ours to balance the poorer margins that you would receive from sales in other places. Horses for Courses and all that...
I get really annoyed hearing ignorants carp on about 'we pay too much for cars', when in fact we don't, and we are fortunate enough to enjoy some of the cheapest used cars in the world.
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Cars are much cheaper when you consider inflation, looking at what my dads Astra cost new in 1993. It sold for ( have the invoice ) £13500 ( top of the range auto estate ).
A brand new and far better equipped current day Astra auto estate, smidgen under £13k with discount.
So in 15 years, cars dont cost a penny more, regardless of inflation. Take that into account, they are actually cheaper.
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Re "The British consumer pays a FRACTION of what customers in many other countries pay in order to get a car ON THE ROAD" That's just delusional.
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Cars used to be more expensive in the UK than mainland Europe. However, the fact that imports have prettty much dried up is evidence that this is no longer the case. In fact, with the current £/Euro rate many are underpriced in the UK and should rise to keep pace with European prices.
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Mapmaker, the reason these cars are £500 is that whilst they may be halfway through their life with proper maintenance the cost of that maintenance is now so much higher.
At one point it was worth fixing a banger, but not now. A Mondeo clutch books at about 6 hours labour plus parts where as at one time you could do one in your lunch hour. These cars are cheap because the cost of a major replacement or failure is now so prohibitive they are usually written off.
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pd - I completely disagree with you. You are mixing up cause and effect.
Cars are not cheap because repairs make them uneconomic; repair is uneconomic because cars are cheap.
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You can buy a 7 year old Saxo with under 50k miles and FSH for £1500 round us.
That car will last another 5-7 years with maintenance.
That is CHEAP.
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Why write off a £500 Mondeo because it needs a clutch for another £500?
If the rest of the car is sound and has three or four more years reliable life in it it would make economic sense to do the repair and keep it.
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because it'll be 1mm off new tyres all round, and the exhaust will be blowing a bit and held together with tape, and there's a funny noise coming from the alternator.
So there's another £300 of expense round the corner...
Maintenance is something that is done when it has to be, and not a moment earlier.
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Re "The British consumer pays a FRACTION of what customers in many other countries pay in order to get a car ON THE ROAD" That's just delusional.
Top spec Mondeo in uk (with Discount): c £22000
Top spec Mondeo in Denmark: c £50000
How is that delusional?
During the course of my other occupation, I regularly get to meet Norweigians who have travelled to the UK to attend track driving days in exotica such as Ferrari, Porsche, Lamborghini etc. I ask them if there is nowhere in Norway where they can do this sort of thing. Their reply is that there is, but it works out considerably cheaper to come here and do the driving days because in Norway it is that much more expensive; because the companies offering such days have to re-coup much higher investment costs due to the car purchase prices.
Delusional? No just fact.
I get the impression that some of us in this country won't be happy until we are able to buy a brand new Focus - or similar - for about £5k, dream on and wake up!
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I have actual, hard evidence that the value of second hand cars has risen in the last few months.
In late June I got a valuation for my 2006/55 Mazda 6 from webuyanycar.com at £4875. Today, I have had it revalued by the same website, this time at £5320. Up 445 pounds in 2 and a half months. I'm thinking about changing it for a Mazda 3 or older 323 as my wife finds it a bit difficult to park.
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up 9percent in 2.5 months ? - I wish I had investments doing that well !
Interesting comment about the 6 being difficult to park - my wife had exactly the same problem. In fact, all users of my 6 seemed to have problems, considering the minor damage each driver (including me) inflicted on it. My son eventually wrote the 6 off (it was 2 years old) and I bought a much older Primera.
It seems everyone prefers the Primera - the aircon is better and it's easier to drive and park.
It might have better brakes also ....
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Hadn't thought about a Primera. Good idea. Thanks. Going to look at a 323 today.
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And that Primera suggestion has just prompted me to do an any make, any model search within 10 miles of my house, within the valuation of my 6 and with the bits and bobs I want/need (auto, aircon etc). It's thrown up a Jag X-Type at a main Jag dealer, 51 plate with 37k miles (!) at under £4.5k. It's a 2.5 V6 petrol.
It's got rear parking sensors, so that should satisfy the missus, right? Right?
Oh no , I'm going to scratch that 323 and go have a look. Gulp. With HJ's CBC "what to look out for" close to hand.
Edited by Dynamic Dave on 04/09/2009 at 19:51
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