Is PCP destroying the used car market?

[lukemk5gti]

I'm not sure if the UK is offering the same PCP schemes as Ireland but in the last couple of years I've seen countless people driving around in brand new cars since any average Joe can no afford a brand new 2017 golf with an attractive trade in and low monthly payments.

I've noticed for the first time here in Ireland that a golf R dropped below the 30K mark and a mk7 GTI with really high spec for just over 20K from a main dealer. (remember we have far less cars in Ireland so typically our prices are higher due to demand).

It looks like the new PCP scheme may be the problem or at least a contributing factor to the huge drop in second hand car prices. I suppose this is good for those that can't afford the latest model but bad for those who drove their brand new car out of the showroom and after a year it's worth half as much as it was.

[grey golfster]

Don't know Ireland, but would tend to agree with you.
Interesting thought...

We have been having chats at work (not motor trade!) About what will happen to our used motors in the future, once we all have moved into new lease/PCP/rental cars....?

Another reason why I will be renting my next new car, not buying outright,  especially as it's likely to be a diesel 4x4 auto, with all the tax/carbon bollox that that brings nowadays.
 Braced for a shafting!
At least on rental i can budget now, on the basis of today's knowns, and any coming tax or emissions related problems will not be mine in 2020!

This is despite me having poo-poo'd these deals in the past. On a new car that you only plan to keep short term rentals are a no brainer, cheaper than the predicted depreciation on some vehicles atm.
Will be sure to get gap insurance tho!

[FJ1000]

Regardless of how you finance it, there is no avoiding the massive hit you take on depreciation on buying a new car. It's the main reason I doubt I'll ever buy a new car. All PCP is, is a way to net off the purchase price and selling price by using the car as collateral, and funding the difference (I.e. The depreciation) at current low interest rates.

As a rough rule of thumb, most cars will lose 40-60% of their value in the first 3 years. You're still paying that even if it's spread out in monthly payments.

If you're concerned about warranty, perhaps buy a 2 year old car. But otherwise, if you think used cars are cheap, why not buy one of those rather than a new car?

Also keep in mind, PCP financing is also available on used cars.


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[lukemk5gti]

I do agree that they depreciate when leaving the showroom but I honestly think that used car prices have reached an all time low due to the influx of new cars through PCP.

I suppose those selling their 2 year old cars are now hit even harder...

[FJ1000]

I do agree that they depreciate when leaving the showroom but I honestly think that used car prices have reached an all time low due to the influx of new cars through PCP.

I suppose those selling their 2 year old cars are now hit even harder...

So take advantage- buy used!


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[lukemk5gti]

I do agree that they depreciate when leaving the showroom but I honestly think that used car prices have reached an all time low due to the influx of new cars through PCP.

I suppose those selling their 2 year old cars are now hit even harder...

So take advantage- buy used!


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Strongly considered it there... Flip up between a toyota GT86, a 2013 GTI or for a further few grand I could get an R

Great time to buy cars, bad time to buy houses though which is what I'm currently looking to do!

[grey golfster]

Is PCP destroying the used car market?

I'm a prime example of that being true...just leased a new SUV (VW Tiguan), that I need (not want - a big difference to me). This is my first SUV, and first lease...lease not PCP, as I have no intention of buying it at contract end, so why pay the premium?
Doing my man-maths means I think it will cost me about £4k more over 3 years, against buying similar car 3 yrs old (A local indy wanted 12k for a similar 2009 Tiguan, lower spec). Free road tax & breakdown, will only need 2 services (1 major) in 45k miles, so that's all it will be getting (so much for FDSH - again?). No MOT...Just need to try to keep interior relatively clean (seat covers?) and dents/kerbing minimised (keep Mrs GG out of it as much as poss - easier as I'll take it away for my work).
Another "unseen" plus is that I have no worries at all about the future of Diesel cars, and their residual values being affected by politics - VW or otherwise! I wouldn't "invest" £33K of my own money on that particular bet atm.
Of course there is no way to avoid the big depreciation hit on new, but you can try minimise your exposure. My lease figures show 45% loss on list over 3 yrs.
I'm willing to pay for that convenience - at the moment.
And finally...It's one thing spending my time off enjoyably attending to my Eddy, another entirely having to fix an unloved (by me) secondhand SUV. As evidenced by state of wifey's Fiat 500! It gets services and nowt else - life's getting too short!
Think it will work for me in this scenario...but will let you know in 3 yrs!

[lukemk5gti]

Is PCP destroying the used car market?

I'm a prime example of that being true...just leased a new SUV (VW Tiguan), that I need (not want - a big difference to me). This is my first SUV, and first lease...lease not PCP, as I have no intention of buying it at contract end, so why pay the premium?
Doing my man-maths means I think it will cost me about £4k more over 3 years, against buying similar car 3 yrs old (A local indy wanted 12k for a similar 2009 Tiguan, lower spec). Free road tax & breakdown, will only need 2 services (1 major) in 45k miles, so that's all it will be getting (so much for FDSH - again?). No MOT...Just need to try to keep interior relatively clean (seat covers?) and dents/kerbing minimised (keep Mrs GG out of it as much as poss - easier as I'll take it away for my work).
Another "unseen" plus is that I have no worries at all about the future of Diesel cars, and their residual values being affected by politics - VW or otherwise! I wouldn't "invest" £33K of my own money on that particular bet atm.
Of course there is no way to avoid the big depreciation hit on new, but you can try minimise your exposure. My lease figures show 45% loss on list over 3 yrs.
I'm willing to pay for that convenience - at the moment.
And finally...It's one thing spending my time off enjoyably attending to my Eddy, another entirely having to fix an unloved (by me) secondhand SUV. As evidenced by state of wifey's Fiat 500! It gets services and nowt else - life's getting too short!
Think it will work for me in this scenario...but will let you know in 3 yrs!

Hopefully down the line things might do a 180! Did you mention in a previous post that you (your wife) were one of the first to get the fiat 500? I think I had asked because my gf was looking for something small i.e. A1, 1 series, fiat 500. She didn't end up getting one but on the same note we're possibly renting one to use for a few days in Barcelona... Anything I should know?

[grey golfster]

Fiat 500 - yes that was one new car that we did reasonably well out of.
Mrs GG saw it, and after 20 years of cheap plain jap family hatches for her and kids, she decided "she had to have one".
We ordered Aug 2008 I think, and due to sky high demand and the "fanbase" that developed, within 6 months Fiat had increasd the price by £2k!
To be fair it has done quite well - now on 98k miles, and only real issues have been typical - Italian electrics mostly. No rust 
Service/parts costs peanuts (I can do discs and pads in 20 mins for about £40).
Planning to run it into the floor...it's a bit of a mess now.
Daughter had one too, that was very similar to mine, but she decided to change (to a Polo) because the Fiat scared her on the motorway - too lightweight, short wheel base makes it directionally unstable.
All in - would recommend 500 for nipping about. Ideal hols car; why not try a cabrio for a few quid extra? You'd be well up on GF brownie points!

I have always asked for a UP! recently and they are similalry very good.