Second-hand cars are gaining rather than depreciating in value due to a shortage in supply, an industry-wide research company has found.
CAP Motor Research Ltd, which provides valuation data to the car industry, said the usual 15%-a-year depreciation of used car prices has been reversed.
Companies delaying replacing their fleets and the government scrappage scheme has led to a shortage in supply.
This year the average family car has increased in value by about £600.
Full story here: news.bbc.co.uk/1/hi/business/8251920.stm
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It's swings and roundabouts though.
All this year I've been toying with the idea of changing car, and I've noticed used prices slowly rising
I have a 04 Seat Leon, and at the beginning of the year the online "what's it worth" websites were giving it a value of around £2,900-£3,000. Looking at it today it is apparently now worth around £3,400 - £3,500.
So relatively, nothing has really changed
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Nothing has changed? Only that we should all re-mortgage our houses and buy secondhand cars, keep them for three months and sell them. As an asset class they seem to be hard to beat.
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> Only that we should all re-mortgage our houses and buy secondhand cars, keep them for three months and sell them. As an asset class they seem to be hard to beat.<
Indeed, nothing changes. It was the British re-mortgaging their houses to buy cars that caused a lot of the present economic troubles in the first place.
An asset is only really a store of value if you don't have to borrow, and hence pay interest to someone else, to finance it.
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The upward pressure o late model car prices will increase when VAT increases on 1 January. Especially if it goes to 20%, which it probably should if there is to be any serious attempt at fixing public finances.
I've been looking at a 2009 XC70 this morning, by which I am very tempted, and wondering whether it will be cheaper to buy now than nearer to, or after, the deadline.
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I totally agree, as I've been watching this happen for months on the price of a used Focus at the car Supermarkets.
The credit crunch has given us SOME good deals on new cars, but definately not on decent used cars - least not on cars people actually want.
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>Borrow money at 2.5%, buy asset that increases in value by 25% in a year. What's not to like?<
Oh puhhhlease.
Borrow money at 2.5 per cent against a house and repay - possibly - forever (or beyond an average lifetime, anyway). Asset increases in value by 25 per cent for six months then drops to zero over next few years.
What is it with Brits? How long and just what will it take for them to face economic reality?
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Sorry?
Cost of finance 2.5%, asset appreciates at 25%.
Fill yer boots lad.
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You buy a used car that appreciates in value for a short term but its value eventually drops to zero over 10 years. You finance this by taking an extra 25,000 on your mortgage at 2.50% over 25 years. That will eventually cost you 15,625 interest plus of course the repayment of capital. You have paid 40,625 for a long forgotten "asset". Not much of a bargain really.
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Methinks Nsar is pulling your leg.
For starters, try and borrow any money from any lender and you will find that they want to charge you an arrangement fee and/or an administration fee, plus a final redemption fee and/or a deed processing fee. All that lot may cost you far more than any temporary increase in value of a 2nd hand car.
Then there is the not so small matter of the difference in the buy and sell prices, to allow for the dealer's margin.
BTW, according the BBC link above, "In April, used-car magazine Parker's reported that for the first time in the UK new cars were cheaper than used ones."
Edited by jbif on 12/09/2009 at 23:00
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Our flexible mortgage (2.5%) allows overpayments and payment holidays without penalty so borrowing a few thous for a short term dabble would cost me nothing to arrange other than extra interest for a couple of months while the car is increasing in value at approx ten times the mortgage rate. I might have a pop.
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I might have a pop. >>
Don't forget to report back after you sell in a few months time.
Quentin Willson on BBC breakfast this morning quoted the example, IIRC, of someone buying a supercar last October and selling it recently for a profit of £200K. He also quoted the example of another then unpopular (4x4 I think) gas guzzler which is now back in demand and increased in value by a few thousand pounds.
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And for how many years do you hope that your mortgage will be 2.5 per cent?
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Is it not strange that the politicians who are shouting loudest about the damage being caused by climate change are the same politicians who choose to ignore the damage being caused to the world; by the rush to persuade the consumer to spend spend spend, and thus lead to the manufacture of more and more goods for us to throw away; while at the same time the local councils desperately try to stop us filling up the landfill sites with our discarded goods.
Yes it is , very strange; the paradox, if not to say hypocrisy involved, is breathtaking.
It's analogous to the drug addict being encouraged to lose his addiction by buying more drugs so as not to economcally disadvantage the drug pusher & those who rely on the drug pushers' spending power, while at the same time being punished for his drug taking.
Impossible, insane, Kafka-esque.
At the heart of this (leaving aside the little local 'difficulty' with indebtnessness of people & nations) is the idea that aspirations & populations can keep on growing aided by the magic of technology, that will somehow reduce the damaging environmental impact of all this to 'sustainable' levels.
It's all a dream & a dangerous fantasy. The total value of money & assets spread throughout the world bears no relation to the earth's ability to manifest & maintain those assets.
There's an obvious & simple prescription for all this. It will mean us all living on drastically reduced (real) wages & developing nations abandoning their slash & burn economic policies, while curbing the unrealistic expectations that everyone in the world will drive a car, have a washing machine, TV etc. Brutal, but true.
Edited by woodbines on 13/09/2009 at 09:41
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At the heart of this (leaving aside the little local 'difficulty' with indebtnessness of people & nations) is the idea that aspirations & populations can keep on growing aided by the magic of technology that will somehow reduce the damaging environmental impact of all this to 'sustainable' levels.
Spot on, Woodbines.
This has been evident for decades to anyone who actually studies the resources available and the rate at which we are consuming them. However, politicians who tell it like it is don't do well in elections, because people prefer to believe the feelgood notions that a growing population can all somehow keep on taking bigger and bigger slices of a shrinking cake.
That's partly because if we can't keep on make the cake bigger, pressure grows to consider how can divide it up more efficiently and more fairly. There are some powerful vested interests who wouldn't like that.
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Mike read my posts more carefully...I'm talking about buying and selling on within the space of a few months.
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But it's nothing but number-crunching, isn't it? You are still left with something that will have no value in the long term, and the chance of a 'profit' only if you manage to sell it again at exactly the right time.
Better to pay down the mortgage in the face of the crunch to come - or am I not allowed to mention the elephant in the room...
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No, you misunderstand completely. The asset appreciates in value in the short term. How long is the risk. If you sell before this run ends, you come out on top then you have more cash to pay down your mortgage.
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