Will used car prices ever come down?

vm1468

9 year old Mazda 2 owner.  Owned for 6 years and it’s been faultless until MOT showed corrosion under the car - the difference between last year and this year is bad according to my mechanic and he reckons there is around a year left in the car before I have to start ripping up the carpets and seats to weld it back together!!

I fell into the PCP lure but after serious look at my finances I’m pulling out (within the 14 days) as I just cannot justify £287 for the next 4 years!  It feels like too much of a huge chunk of my “leftover money”.

Trade in/selling my car I’ll get around £4300 for it.  The same spec/model is being sold for £8000 (ish).  I paid £5998 in 2017!

I just feel that every time I look at cars they’ve increased again and there isn’t any sign of it calming down :-(

Grumpy_chap

vm1468 said:

9 year old Mazda 2 owner.  Owned for 6 years and it’s been faultless until MOT showed corrosion under the car - the difference between last year and this year is bad according to my mechanic and he reckons there is around a year left in the car before I have to start ripping up the carpets and seats to weld it back together!!

I fell into the PCP lure but after serious look at my finances I’m pulling out (within the 14 days) as I just cannot justify £287 for the next 4 years!  It feels like too much of a huge chunk of my “leftover money”.

Trade in/selling my car I’ll get around £4300 for it.  The same spec/model is being sold for £8000 (ish).  I paid £5998 in 2017!

I just feel that every time I look at cars they’ve increased again and there isn’t any sign of it calming down :-(

Yes, used  car prices will normalise down, but I can't say when.  There are some signs of that starting now.

You need to split this up into tow decisions:
  A - Do I keep or sell the current car (now)?
  B - If I sell, what do I replace the car with?

It is a double-edged sword, though.  You purchased a car for £6k, kept the car for 6 years and can now sell for £4k.  That is £2k depreciation, only £300 per year for the time you've owned the car. 
That depreciation is only one month of PCP payment per year to have the car.  I'd say that that this car has done you a fantastic service and sell while the opportunity is good.
That is even after you have owned the car to the point where the corrosion means only one year left for the car or a large cost to keep it on the road.  
The next owner will pay £4k and, from what you've said, only get 1 or 2 years from the car (unless they spend lots to weld it back to one piece - corrosion is usually the one thing that really does mean the end of a car IMO).  The next owner will see depreciation of £2k per year (reduced by whatever scrap value they can get at the end).
That all probably makes this a great time to sell.

The challenge, then, is finding the next car.
I'd agree that the PCP hamster wheel is not a great way to acquire a new car (unless you must have / want a brand new car, even then it is not for everyone).
In choosing the next new car, start with defining the needs and wants from the next car - how many people? how much luggage?  how many miles?  what type of miles?  how long you hope to keep?  how much savings do you have to buy with?
Those answers will then start to narrow down the options and also allow you to assess the age (hence budget) for the next car.

JKenH

vm1468 said:

9 year old Mazda 2 owner.  Owned for 6 years and it’s been faultless until MOT showed corrosion under the car - the difference between last year and this year is bad according to my mechanic and he reckons there is around a year left in the car before I have to start ripping up the carpets and seats to weld it back together!!

I fell into the PCP lure but after serious look at my finances I’m pulling out (within the 14 days) as I just cannot justify £287 for the next 4 years!  It feels like too much of a huge chunk of my “leftover money”.

Trade in/selling my car I’ll get around £4300 for it.  The same spec/model is being sold for £8000 (ish).  I paid £5998 in 2017!

I just feel that every time I look at cars they’ve increased again and there isn’t any sign of it calming down :-(

Have you considered a used electric car? Prices have fallen dramatically in the last 6 months due to oversupply while in the ICE car market prices have risen due to shortages in supply. There seems to be a floor of about £4K for older EVs like the Nissan Leaf so you probably won’t get much more depreciation beyond that and if you can plug in at home and only make short journeys you can save a lot on running costs (fuel/maintenance/VED). 

Edit: as an example here is a 2017 30kWh NissanLeaf with a 100 mile summer range (about 75 miles in winter) for £7.5k. They are quite roomy and good to drive. 
https://www.autotrader.co.uk/car-details/202302164319814

force_ten1

the used car prices will never come down to what they were pre Covid 

the new car prices have risen by around 26% and are going to keep going up due to inflation. and used cars will remain high to reflect the higher price of the new cars   

from march 2020 the lease car market ground to a halt and for nearly six months hardly any lease cars were registered. and then numbers were very low for the next six months. the 2020 lease cars would be coming back off lease this month but they aren't out there and that applies right up to march 2024. so the big hole in the numbers of 2020 lease cars is going to skew the market for at least another year 

motorguy

vm1468 said:

9 year old Mazda 2 owner.  Owned for 6 years and it’s been faultless until MOT showed corrosion under the car - the difference between last year and this year is bad according to my mechanic and he reckons there is around a year left in the car before I have to start ripping up the carpets and seats to weld it back together!!

I fell into the PCP lure but after serious look at my finances I’m pulling out (within the 14 days) as I just cannot justify £287 for the next 4 years!  It feels like too much of a huge chunk of my “leftover money”.

Trade in/selling my car I’ll get around £4300 for it.  The same spec/model is being sold for £8000 (ish).  I paid £5998 in 2017!

I just feel that every time I look at cars they’ve increased again and there isn’t any sign of it calming down :-(

I take it you hadnt actually taken delivery of the car?

motorguy

force_ten1 said:

the used car prices will never come down to what they were pre Covid 

the new car prices have risen by around 26% and are going to keep going up due to inflation. and used cars will remain high to reflect the higher price of the new cars   

from march 2020 the lease car market ground to a halt and for nearly six months hardly any lease cars were registered. and then numbers were very low for the next six months. the 2020 lease cars would be coming back off lease this month but they aren't out there and that applies right up to march 2024. so the big hole in the numbers of 2020 lease cars is going to skew the market for at least another year 

I would concur with this.

The hole in used car numbers is something like 2 million cars.  That will never be recovered.

Higher car prices are here to stay.  

vm1468

No I’m within the 14 day cooling off period from ordering the car.  

diystarter7

Hi

Used car prices are much lower than several months ago and espcially some electric models. You will get somewhere the cars are diffuclt to osurce new etc that still have hgher prices

New car rrp are massively up but as are the discounts now o certain models. With a bank, i trouble and high-interest rates, as things stand prices will go lower
However, with the pound worth a lot less in your poacket over the last few years due to the monopoly money printing policy by this government and Liz Truss's couple weeks in office whereas expected she almost blew up the financial system, as pound is worth less, cars will be lower but not as lower as they were about 3 years ago

PCP etc etc, never for me its moey down the drain unless you do high miles etc, in

Btw - when the cars used to rust a lot easier, every 3 weeks or so when i washed the car i used to hosepipe the underside of the car, the mot guy said a couple of times that my car looked new underneath - keeps rust away to an extent.

Good luck

mgfvvc

force_ten1 said:

the used car prices will never come down to what they were pre Covid 

Never is a long time  and predictions are hard, especially of the future.

With Tesla likely to build around 2 million cars this year they are doing serious damage to the legacy car makers sales. Legacy car makers may have to discount to boost demand and that would impact used ICE car prices in the same way that Tesla's recent price drops dented used Tesla prices.

Will things really play out that way? I certainly don't know, but I wouldn't bet against it. You have to decide what works for you now, as nobody can guarantee the state of the market in a year, or 2 years, or 5.

macman

Has the corrosion come up on the MOT as a advisory yet? If not, I'd be seeking another opinion on it. Mazda's are usually pretty bullet-proof. What's the mileage?

Herzlos

force_ten1 said:

the used car prices will never come down to what they were pre Covid 

the new car prices have risen by around 26% and are going to keep going up due to inflation. and used cars will remain high to reflect the higher price of the new cars   

from march 2020 the lease car market ground to a halt and for nearly six months hardly any lease cars were registered. and then numbers were very low for the next six months. the 2020 lease cars would be coming back off lease this month but they aren't out there and that applies right up to march 2024. so the big hole in the numbers of 2020 lease cars is going to skew the market for at least another year 

Not just the lease cars - all new car sales are / will be drastically down from 2020 until at least 2024 due to supply issues and manufacturers just producing less, which means there won't be many filtering onto the used markets.

That'll leave a long tail of supply that'll impact the used car market for easily 10 years (because there won't be many 6-10 year old cars available then).

Couple that with the people who aren't changing cars out of choice; the ones that always change at x years but for financial reasons are holding onto it for longer, and that'll skew the age/availability of cars on the market.