Car Prices... what the...

L9XSS

Ok I had my car valued  online by the supplying dealer, I then used the WBAC configurator.
My original supplying dealer has enhanced last weeks offer by an additional £1600. Im looking to walk away with £9000. It’s to good not to do the deal. We have 3 other older cars so won’t be re entering the market for a while. I’m going back to the  bangernomics thread!

Grumpy_chap

The current used car prices are a function of supply & demand.

This is impacted in large part by reported reductions in the flow of new cars.  I say reported as, around these parts at least, there seem to be a very high number of 20, 70, 21 plate (i.e. post-COVID) cars.

So, has the total number of cars on the road declined?  Have there been more cars scrapped than replaced by new?  To a significant level?

I do acknowledge, the total number of cars listed for sale has dropped, usually well over 1/2m listed and now meaningfully below 400k:

I know some say that may be due to the popularity of the particular site, but that popularity won't vary significantly in a short time-frame of comparison.

Herzlos

I think the most likely reason for the reduction is people who are just not upgrading when they otherwise would have been rather than there being a real reduction in the number of cars on the road.

I'm not sure how the reduction in new car sales will correlated to the number of scrapped cars and the overall number of cars on the roads, but it'll at least mean less in circulation now.

Then, more significantly, a reduction in new car sales *now* means a corresponding reduction in used cars later. So if new car sales are down in 2021, then there will be less 1 y/o cars on the market in 2022, less 2 y/o cars in 2023 and so on, which will keep used car prices higher for a few years due to the reduced demand.

Grumpy_chap

Herzlos said:

I think the most likely reason for the reduction is people who are just not upgrading when they otherwise would have been rather than there being a real reduction in the number of cars on the road.

I am inclined to agree, but surely that is "net neutral" in the supply and demand equation.  One less used car made available, one less demand for a new (or used) replacement vehicle.

Herzlos

Only if all purchases are equal. If your budget only covers a 3 year old car, then a reduction in supply of 3 year old cars but an increase in supply of new cars is irrelevant to you.

Though with Brexit, Covid and the chips shortage, there's also somewhat of a reduction in supply for new cars too.

TonyMMM

My daughter in law took her 2yr old Kia in for a service a couple of weeks ago - the dealership seemed to have  positioned a salesman in the service department just to approach customers dropping off recent models to see if they might be interested in selling their cars back to them ( not really trying to get them to trade-in for a new car, but offering cash deals just to buy)....she was amazed how high the value suggested was.

Grumpy_chap

This current situation with low supply of used cars really cannot be sustainable - it can't be long before new car production increases to take up the slack (and we'd potentially then even have a glut of excess new cars once backlogs are cleared).

I walked past the local Lexus dealer last week and thought the forecourt was virtually empty - their online site listed 44 cars for sale.  (Not sure how many cars they normally hold.)

Today, the website lists 23 cars, though I counted only around a dozen or so actually on the forecourt overnight.  Makes sense that the remaining cars are used by staff.

If they sell as many more cars this week than they re-stock, they will sell right out!

Whether selling (and buying) at premium or not, the business is not viable if they simply do not have stock.

Ibrahim5

I went to a local dealership this week and they had no stock and said they couldn't get any. I had started looking at new cars through brokers because the savings buying used are so little now. I felt a bit sorry for them asking if they would match a broker's price but the answer was an emphatic NO.

sheslookinhot

If you order a car from a broker, does it not come from a dealer ?

Ibrahim5

sheslookinhot said:

If you order a car from a broker, does it not come from a dealer ?

Yes but not your local dealer. The broker finds a dealer that's willing to accept a smaller margin in return for a large number of customers. We had to drive to another country  (Wales) last time to pick it up. We had a nice day out though and I would be more than happy to use a broker again. When you get a new car it's quite nice to have a good drive in it anyway whilst saving thousands.