RS246.com Forum :: The World's #1 Audi R, S and RS Enthusiast Community

"The Bank of England estimates the annual growth rate of dealership finance has been around 20% since 2012."

Anybody else think this is bonkers?

https://www.theguardian.com/money/2017/ ... mer-credit

Once rates start picking up, might get a lot harder to shift new cars!


Sent from my iPhone using Tapatalk

YES! It is. BUT. For the consumer it makes a lot of sense, it's hard to not take some of these deals, they're better than the depreciation. I'm on track to hand mine back without even changing the tyres.

Then how are they making money?

Or is it through the WBAC style "there's a scratch here, we're taking 500 quid off for it" when you give it back?

Dunno. Don't care. BUT. It's just wasteful and that is irksome but I'm not going to live forever, so it'll be my children's problem.

bam_bam wrote: ↑

Wed Sep 27, 2017 9:48 am

YES! It is. BUT. For the consumer it makes a lot of sense, it's hard to not take some of these deals, they're better than the depreciation. I'm on track to hand mine back without even changing the tyres.

It is the depreciation. Plus interest.

I think you make the point though - the deals seem hard to turn down as the monthly payments can be low.

There's some research out there that the manufacturers (US ones in particular) have begun to get unrealistically high GFV's to keep monthlies low as finance rates pick up, increasing incentives, extending contract length, lending to worse quality borrowers, but then are losing more and more on the trade-ins and delinquencies. US used car prices are actually near record levels (I'm assuming because of those high GFVs), but still not enough to keep deals in positive equity. They're aiming to offset these factors with the profit on the initial sale (prices have been increasing), and on the finance (taking on more debt). They're also shifting to SUV's and light trucks as they're more profitable (90% of the Detroit manufacturers profits this year have been from these segments).

There are signs worldwide sales have peaked and are slowing now. Interest rates are on the up, so finance will get more expensive. It's a hard time to be a (traditional) auto manufacturer!

Bottom line is that the future for the traditional auto manufacturer looks bleak, and there looks like a credit bubble forming.

Morgan Stanley have written a lot on this, nicked a few charts...

The last graph shows the inevitable outcome, a collapse in used car prices.
Plus someone, somewhere will take a big financial hit, probably a fair way down in the financial "food chain" and it will then hit the banks and we'll all have to pay somehow.

How much of the EU car sales figures are being depressed by UK car sales figures, though? I thought the EU was getting good growth in car sales while UK sales have been in decline for a few months now.

So, i agree with a lot that has been said here, but the consumer who'll be impacted will be the ones who exit a well priced PCP in 3(ish) years time in to an horrifically priced deal...

anyone who accepts a high GFV should just stick out the deal to the end, as this will be their best option of getting out without the impact of negative equity...one other impact will be a high GFV will mean less and less people reach the 50% mark for an early termination...

Take home point...PCP a super car now before you get stung! im sure the maths works out!

Don't underestimate the amount of profit margin the OEM has in a car.

The biggest issue for OEM's is not PCP finance, it's the investment and business model required to meet the future mobility market, I.e electric and autonomous vehicles


Sent from my iPhone using Tapatalk

"Britain’s car industry is facing its first drop in annual sales since 2011, after suffering a sharp drop in demand last month."

https://www.theguardian.com/business/li ... f91939b8aa

FaisalJ wrote: ↑

Thu Oct 05, 2017 9:09 am

"Britain’s car industry is facing its first drop in annual sales since 2011, after suffering a sharp drop in demand last month."

https://www.theguardian.com/business/li ... f91939b8aa

Isn't this just the hangover from the "record" quarter the industry saw at the end of Q1 2017. Sales were at an all time high due to tax changes and manufacturers offers, effectively mortgaging the business for Q2 and 3?