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Ex company / lease cars

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  • motorguy
    motorguy Posts: 22,611 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Car_54 wrote: »
    Sounds like a conspiracy theory ...

    Indeed. Its an internet myth that wont go away.
  • Gwendo40
    Gwendo40 Posts: 349 Forumite
    motorguy wrote: »
    Indeed. Its an internet myth that wont go away.

    Well people try to dismiss it as a conspiracy theory, but I believe I'm correct in saying that something like 80%+ of all new car ''sales'' are some form of lease/PCP deal, and I'd imagine with a large proportion of those deals the customer will take the option of a another new car at 3 years old as they can't afford/don't want to buy the car outright.

    Surely this means the market should be awash with cheap secondhand 3 year old cars by now? And yet in fact, the cost of those type of secondhand cars has generally risen over time with the proliferation of leasing/PCPing.
  • k6chris
    k6chris Posts: 784 Forumite
    Part of the Furniture 500 Posts Name Dropper Photogenic
    Gwendo40 wrote: »
    Well people try to dismiss it as a conspiracy theory, but I believe I'm correct in saying that something like 80%+ of all new car ''sales'' are some form of lease/PCP deal, and I'd imagine with a large proportion of those deals the customer will take the option of a another new car at 3 years old as they can't afford/don't want to buy the car outright.


    Surely this means the market should be awash with cheap secondhand 3 year old cars by now? And yet in fact, the cost of those type of secondhand cars has generally risen over time with the proliferation of leasing/PCPing.


    The car industry makes more of their profit from selling finance / extras / dealer servicing, vs selling the car itself. These sales are easier to make when a customer is getting the warm fuzzy feeling of buying a new car. PCP and leasing deals create a very profitable annuity stream, with many people taking out another deal when their PCP / lease comes to an end.

    A flood of cheap 2-3 year old cars would reduce the appeal and economics of buying new and kill that revenue stream above. It would impact residual values, which would in turn impact PCP / leasing costs, further putting pressure on the ability to sell new cars.



    Long term storage of a percentage of these cars helps protect residuals and controls nearly new car pricing. Once the stored car is no longer a 'threat' to the above model, for example a new model of the car has been released, you will see them being batched up, auctioned and being sold to car supermarkets etc.


    At some point, this model will break down, but we're not there yet, so whilst people are happy repeat PCP or leasing every 2-3 years, the control of residuals and management of the alternative (buying a 3 year old car) will continue. It's not conspiracy, it's business!
    "For every complicated problem, there is always a simple, wrong answer"
  • Herzlos
    Herzlos Posts: 15,892 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 25 January 2020 at 9:34AM
    Leave companies are buying the cars in bulk so saving huge figures against RRP.
    Even at 3 years old the cars are worth about 45% the RRP, and will potentially be depreciating by £200+ per month.
    Then theres all the other hassle, you need to transport them to storage, pay for storage and then transport them back to auction, when you could just transport them back to auction.

    Would you, as a lease company, store hundreds of cars to rot and depreciate to keep the new price up?

    Plus, the dealer network is full of 3 year old cars.

    The runways full of cars are usually new ones off a container, which aren't depreciating because they haven't been registered yet.
  • noclaf
    noclaf Posts: 977 Forumite
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    It's not surprising how many ex-lease cars end up at the car supermarkets given how popular leasing has become...the challenge is finding one that hasn't been ragged silly by 3/4 different drivers and as mentioned already then flogged as 'one owner'.

    Out of interest is there much difference in quality of stock between say Car Giant or Arnold Clark?
  • motorguy
    motorguy Posts: 22,611 Forumite
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    AdrianC wrote: »
    They're certainly stored short-term, for logistics reasons - but just pause and think about the costs - both in terms of the amount of money's-worth of stock and depreciation - of storing sufficient cars for long enough to actually distort supply and demand in the used car market nationally...

    Totally it.

    Depreciation alone on a 3 year old car would be an easy £200 a month.

    To think that someone would choose to keep, say 10,000 cars in a field for a year, incurring all those storage costs, each car looking at maybe £2,400 depreciation in that year, not being able to use that money to fund other PCP deals, refurbishment costs after a year and then HOPE the car has went up in value because you did that. :eek: Absolutely crazy.
  • motorguy
    motorguy Posts: 22,611 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 25 January 2020 at 11:18AM
    Gwendo40 wrote: »
    Well people try to dismiss it as a conspiracy theory, but I believe I'm correct in saying that something like 80%+ of all new car ''sales'' are some form of lease/PCP deal, and I'd imagine with a large proportion of those deals the customer will take the option of a another new car at 3 years old as they can't afford/don't want to buy the car outright.

    Surely this means the market should be awash with cheap secondhand 3 year old cars by now? And yet in fact, the cost of those type of secondhand cars has generally risen over time with the proliferation of leasing/PCPing.

    Yes, but your conspiracy theory relies on all those cars being handed back to the finance company. Most arent. They're traded back in to a dealer and some are bought outright by the owner (for want of a better phrase).

    Wheres your evidence that used cars have went up in value? The used market IS awash with good quality 1-3 year old cars.

    A three year old Golf with average miles can be bought on Autotrader from a dealer for under £10K.

    I'd honestly say theres never been a better time to buy used cars.

    EDIT: Also worth noting that on ANY thread you read about someone VTing or returning a car at the end of the PCP agreement it is always BCA or another auction house who pick the car up, ie, its going straight to auction.
  • kmb500
    kmb500 Posts: 656 Forumite
    Eighth Anniversary 500 Posts Name Dropper
    Gwendo40 wrote: »
    Well people try to dismiss it as a conspiracy theory, but I believe I'm correct in saying that something like 80%+ of all new car ''sales'' are some form of lease/PCP deal, and I'd imagine with a large proportion of those deals the customer will take the option of a another new car at 3 years old as they can't afford/don't want to buy the car outright.

    Surely this means the market should be awash with cheap secondhand 3 year old cars by now? And yet in fact, the cost of those type of secondhand cars has generally risen over time with the proliferation of leasing/PCPing.


    The market IS awash with cheap 3 year old cars...
  • Car_54
    Car_54 Posts: 8,845 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    Gwendo40 wrote: »
    Well people try to dismiss it as a conspiracy theory, but I believe I'm correct in saying that something like 80%+ of all new car ''sales'' are some form of lease/PCP deal, and I'd imagine with a large proportion of those deals the customer will take the option of a another new car at 3 years old as they can't afford/don't want to buy the car outright.

    Surely this means the market should be awash with cheap secondhand 3 year old cars by now? And yet in fact, the cost of those type of secondhand cars has generally risen over time with the proliferation of leasing/PCPing.
    Let’s imagine it’s true (it isn’t, but bear with me). Since no single leasing company would have enough volume to influence the market, there has to be a criminal conspiracy between a number of companies. Hence “conspiracy theory”
  • Gwendo40
    Gwendo40 Posts: 349 Forumite
    kmb500 wrote: »
    The market IS awash with cheap 3 year old cars...


    Well I suppose these 3 year old cars appear to be ''cheap'' in comparison to the price of new cars... but that's only because the rrp of new cars has been greatly inflated by the proliferation of cheap and easy credit through pcp, leasing etc etc.
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