Buy outright & DIY vs PCP

fred246

According to Whatcar a Jaguar XF 3.0D Luxury costs £31667 (target) and is worth £16825 after 3 years. That's £4947 per year in depreciation. Does a PCP or leasing deal reduce that depreciation? The implication would be that the company either bought cars far cheaper or sold them for much more. Does the company not have a profit margin? They quote the 3 year running cost to be £9243. I can't get my running costs to anything like that. Anyone know what that includes? That's how I originally got interested in this subject. Whatcar quoting £8K a year to run a car. I thought 'no way I pay nothing like that.' My total including fuel, insurance absolutely everything is £3K a year.

motorguy

fred246 wrote: »

According to Whatcar a Jaguar XF 3.0D Luxury costs £31667 (target) and is worth £16825 after 3 years. That's £4947 per year in depreciation. Does a PCP or leasing deal reduce that depreciation? The implication would be that the company either bought cars far cheaper or sold them for much more. Does the company not have a profit margin? They quote the 3 year running cost to be £9243. I can't get my running costs to anything like that. Anyone know what that includes? That's how I originally got interested in this subject. Whatcar quoting £8K a year to run a car. I thought 'no way I pay nothing like that.' My total including fuel, insurance absolutely everything is £3K a year.

???? Thats not a current model car, and the cheapest 3.0d lists at nigh on £50K. What Car? are listing the 2.0d Prestige at £31K ish.

https://www.whatcar.com/make/jaguar/xf/saloon/versions

fred246

The point is that if you have a car that depreciates from £30k to £15k in 3 years someone has to pay £5k a year in depreciation. That's going to cost over £400 a month not £250. £522 would give the company some profit. Doesn't sound unreasonable.

motorguy

fred246 wrote: »

According to Whatcar a Jaguar XF 3.0D Luxury costs £31667 (target) and is worth £16825 after 3 years. That's £4947 per year in depreciation. Does a PCP or leasing deal reduce that depreciation? The implication would be that the company either bought cars far cheaper or sold them for much more. Does the company not have a profit margin? They quote the 3 year running cost to be £9243. I can't get my running costs to anything like that. Anyone know what that includes? That's how I originally got interested in this subject. Whatcar quoting £8K a year to run a car. I thought 'no way I pay nothing like that.' My total including fuel, insurance absolutely everything is £3K a year.

Yes - thats exactly what happens. The leasing company goes direct to the manufacturers and maybe buys say, 500 cars. They automatically save the dealerships £5k+ margin as it never goes near the dealers and they will get a huge discount from the manufacturer on top of that. Some of the leasing company deals are structured that up front the manufacturer will commit to a buy back price too.

What does the manufacturer get out of this?

• Increased market share
• Production lines keep rolling
• Perhaps shift end of line cars before a facelift
• Revenue
• More of their cars out there on the road
• Move stock

Even just looking at the recently expired Arteon deal (from What Car? leasing interestingly)

https://www.hotukdeals.com/deals/volkswagen-arteon-15tsi-dsg-24-month-lease-560280-what-car-leasing-3169405

Total ammortised price - £5,602 over two years = £233 a month.

1. Very slow moving car - has not been the seller they'd hoped
2. No doubt VW had a stock pile of them
3. Gets the car on the the road and "out there"
4. VW will buy them back and resell them to their franchised dealers down the line.

Even getting a hefty discount off a new one, you're not going to get one for much less than £25,500.

https://broadspeed.com/new_cars/Volkswagen/Arteon/Choose_Number_Of_Doors/Fastback/petrol/Choose_Engine_Size/Choose_Transmission

https://www.drivethedeal.com/buy-a-new-car/VOLKSWAGEN/ARTEON%20FASTBACK/index.html

Would you really like to bet you could get £20,000 for one in two years time?

And yet the leasing company are making money, VW are making money and the customer can get a better-than-depreciation deal.

motorguy

fred246 wrote: »

The point is that if you have a car that depreciates from £30k to £15k in 3 years someone has to pay £5k a year in depreciation. That's going to cost over £400 a month not £250. £522 would give the company some profit. Doesn't sound unreasonable.

Fred, you really need to think outside the box here. You're thinking about one person going in and buying one car. These fleet people are buying maybe 500 of the things and never go near a dealer and thus avoid their £5,000+ markup and get a ££,£££ discount per unit on top of that too. They're maybe taking just £500 profit per unit but still getting themselves £250,000 profit. Jaguar might even be lending them the money to do it (and at rates that are unheard of to you or i) and probably buying the cars back at an agreed now fixed price.

Plus the deal was there - it was a valid deal. Just because you cant get your ahead around it doesnt mean there wasnt people making money doing it.

https://www.hotukdeals.com/deals/jaguar-xf-portfolio-2yr-lease-deal-199month-for-24-months-674775-total-1st-choice-vehicle-leasing-3125983

fred246

Wouldn't really want to get a nice Jag and then be limited to 5K miles a year.

motorguy

fred246 wrote: »

Wouldn't really want to get a nice Jag and then be limited to 5K miles a year.

You're not limited. They can vary the miles on the contract before hand. Puts price up only a little usually.

Still a cracking deal.

I only do around 6k per year and that's only if I'm going to a clients site. If I'm WFH it would be less.

fred246

I'd never really thought of buying a car saying "I'll buy whatever is cheap today". I always work out exactly what I want to start off with. You'll only every get a 'cracking deal' when the car is in oversupply. They wouldn't discount a model in high demand. I suspect with car sales down discounts would be good now. I'd hate having to guess what mileage I might do in the next year and guessing which scratches, marks etc I was going to argue about at the end.

motorguy

fred246 wrote: »

I'd never really thought of buying a car saying "I'll buy whatever is cheap today". I always work out exactly what I want to start off with. You'll only every get a 'cracking deal' when the car is in oversupply. They wouldn't discount a model in high demand. I suspect with car sales down discounts would be good now. I'd hate having to guess what mileage I might do in the next year and guessing which scratches, marks etc I was going to argue about at the end.

Yes. Absolutely. Thats why leasing doesnt suit everyone. Doesnt suit me either by the way. If i'm buying a car i will have a very precise specification in mind.

As you say the very best deals are on particular cars, so your typical leaser wanting the best deal will have a broad sweep like "i want a 5 door golf sized hatchback" and then see what deals fit. Thats not to say there arent cracking deals if someone happens to want a 2.0TDI A4 S Line - there are many about and much competition.

Mileage wise - i would recommend someone over estimates their miles and pays close attention to the excess mileage charge before signing. Theres no issue going over miles - if its a vast change it might be best to ring the leasing company and change the mileage / payment to suit or it might work out cheaper to pay the mileage at the end.

Scratches and scuffs wouldnt worry me - i'm very particular about my cars anyway and they are subject to fair wear and tear BVRLA guidelines, so theres quite a lot would fall under wear and tear anyway. If it was a bigger scuff or scratch i'd be getting it repaired anyway as i'm particularly fussy.

One thing i did notice though is you're only looking at it from YOUR perspective. Just because it doesnt work for you doesnt mean it doesnt work for other people - it doesnt make them wrong. I wouldnt lease but that doesnt stop me being able to see why a lot of people do.

Same with PCP deals. Some quite attractive, palatable offers out there so i can see why people might chose to use that product, even though i have no need for it personally.

fred246

motorguy wrote: »

Just because it doesnt work for you doesnt mean it doesnt work for other people.

They do seem to be a cause of a lot of anguish on the forum. People taking out deals getting into negative equity, wanting to change their car early, not understanding them. They may work for some people, but seem to cause a lot of trouble for many.