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Thread: Cars are going to be the next bubble

  1. #1

    Cars are going to be the next bubble

    Iíve been forced by my firm to sell my car and buy a newer one.

    I have been looking at relatively new second hand cars but the depreciation on them is often the same if not more than I can get a brand new lease for.

    For example I looked at a 1-2 year old golf that I anticipate the depreciation to be circa £130 a month if bought from a dealer. For the similar price I can lease a brand new good specced Kia for 2 years, wear and tear costs and very minimal service costs.

    Cars have never in my opinion been cheaper and when you can buy preregistered cars for circa 40% of the RRP, surely this is undermining the used car market.

    I donít know what the outcome will be, but something surely will give?

  2. #2

    Re: Cars are going to be the next bubble

    Yeah I've noticed the same.

    My current car (a Kia) was 9 months old when I bought it, and it had already lost something like 35% of its value.

    My first car (a Ford Fiesta) was even worse - something like 40% depreciation when I bought it second hand (less than a year old too).

    I'm not sure if it'll be a bubble (or at least one that'll burst), mind - plenty of people will only buy new, and usually on "risk free" PCP finance - and then keep trading in their car every 3 years. So whilst there's a good supply of cut-price second hand cars, there's also still plenty of new cars being sold as people stay on the PCP hamster wheel.

  3. #3

    Re: Cars are going to be the next bubble

    Quote Originally Posted by TheMightyBluebirds View Post
    Yeah I've noticed the same.

    My current car (a Kia) was 9 months old when I bought it, and it had already lost something like 35% of its value.

    My first car (a Ford Fiesta) was even worse - something like 40% depreciation when I bought it second hand (less than a year old too).

    I'm not sure if it'll be a bubble (or at least one that'll burst), mind - plenty of people will only buy new, and usually on "risk free" PCP finance - and then keep trading in their car every 3 years. So whilst there's a good supply of cut-price second hand cars, there's also still plenty of new cars being sold as people stay on the PCP hamster wheel.
    My Mrs dives a Kia. We lease it. Surprisingly nice car. Smooth ride, great handling and nice pick-up.

  4. #4

    Re: Cars are going to be the next bubble

    If it increases in value buy it. If it decreases lease it.

    If you went to buy a house and was told it would be worth 40% less then u paid for it in 5 years you wouldnít go near it.

  5. #5

    Re: Cars are going to be the next bubble

    Quote Originally Posted by Fine Lines View Post
    If it increases in value buy it. If it decreases lease it.

    If you went to buy a house and was told it would be worth 40% less then u paid for it in 5 years you wouldnít go near it.
    That old adage was key to rich dad poor dad books. The problem is it doesnít take into account the variations in depreciation.

    Cars depreciate - but if the lease is triple the depreciation then it doesnít stack up. At the moment, it does pay to lease but that rule of thumb isnít right 100% of the time

  6. #6

    Re: Cars are going to be the next bubble

    I'd noticed this too. I never spend big money on cars, but we may need to replace our old X3. We paid £7k for it 3 years ago (when you might assume that depreciation may already have done its damage - it was 9 years old at the time), and it's worth less than £2k now. By the time you've factored in insurance, tax, service etc it will have cost us about £230-£250 a month. And it is no exactly the epitome of driving excellence either - it was an old car that gives a very bumpy ride. The cost would have been far, far higher if we'd spent more at the outset on a newer car.

    Anyway - I've been having a look and while £7k would seem to go further now than it did when we bought it, but I can get a new Qashsqai on my work's car scheme for less than £300 a month, and that includes insurance for whomever I want (£25 excess), service, MOT etc. It's a no-brainer really.

  7. #7

    Re: Cars are going to be the next bubble

    Quote Originally Posted by WJ99mobile View Post
    I’ve been forced by my firm to sell my car and buy a newer one.

    I have been looking at relatively new second hand cars but the depreciation on them is often the same if not more than I can get a brand new lease for.

    For example I looked at a 1-2 year old golf that I anticipate the depreciation to be circa £130 a month if bought from a dealer. For the similar price I can lease a brand new good specced Kia for 2 years, wear and tear costs and very minimal service costs.

    Cars have never in my opinion been cheaper and when you can buy preregistered cars for circa 40% of the RRP, surely this is undermining the used car market.

    I don’t know what the outcome will be, but something surely will give?
    If you lease a car then be prepared to lease cars for the rest of your life.

    I buy a car from new, keep it for 12 years and have 9 years of not having to pay any loan fees or anything else. Never understand why people change perfectly good cars just because they are a bit old, or have as many as 40,000 miles on the clock. My Golf, bought in 2006. 14 years old, 178,000 on the clock. I finished paying for it in 2009. Yes, it is starting to rattle, yes it has knocks and dents, but it gets me from a to b. Drove around Europe in it last August.

  8. #8

    Re: Cars are going to be the next bubble

    just finished paying off my car after 1 of those PCP schemes

    thinking of leasing a small car something like a fiesta ,corsa or hyundia until electric cars become the norm

    what type of monthly outlay would I be looking at on a lease for a small car ?

  9. #9

    Re: Cars are going to be the next bubble

    Quote Originally Posted by MOZZER2 View Post
    just finished paying off my car after 1 of those PCP schemes

    thinking of leasing a small car something like a fiesta ,corsa or hyundia until electric cars become the norm

    what type of monthly outlay would I be looking at on a lease for a small car ?

    You could lease an electric car. I think that is the only type of car I would bother leasing, until batteries last longer than 7/8 years.

  10. #10

    Re: Cars are going to be the next bubble

    Hyundai Ioniq can be leased for £320 a month, 10,000 miles, 2 year contract. Initial spend £930, and fees at £230.

  11. #11

    Re: Cars are going to be the next bubble

    well i would but not practical for me right now because of the mileage i do and waiting until batteries and charging points technology improves . I,m sort of in the know with electric cars so wouldn't lease right now anyway until about 3 years time .

  12. #12

    Re: Cars are going to be the next bubble

    Quote Originally Posted by MOZZER2 View Post
    well i would but not practical for me right now because of the mileage i do and waiting until batteries and charging points technology improves . I,m sort of in the know with electric cars so wouldn't lease right now anyway until about 3 years time .
    Yeah, sort of agree there. Hoping my next car is electric but only when batteries improve. My office has a charge point for electric cars, so it would basically be free motoring for me once I go electric.

  13. #13

    Re: Cars are going to be the next bubble

    Quote Originally Posted by Allez Allez Allez View Post
    If you lease a car then be prepared to lease cars for the rest of your life.

    I buy a car from new, keep it for 12 years and have 9 years of not having to pay any loan fees or anything else. Never understand why people change perfectly good cars just because they are a bit old, or have as many as 40,000 miles on the clock. My Golf, bought in 2006. 14 years old, 178,000 on the clock. I finished paying for it in 2009. Yes, it is starting to rattle, yes it has knocks and dents, but it gets me from a to b. Drove around Europe in it last August.
    My work forces me to have a car no older than 5 years old but I really love my VW golf. Itís a solid car.

  14. #14

    Re: Cars are going to be the next bubble

    Quote Originally Posted by WJ99mobile View Post
    That old adage was key to rich dad poor dad books. The problem is it doesn’t take into account the variations in depreciation.

    Cars depreciate - but if the lease is triple the depreciation then it doesn’t stack up. At the moment, it does pay to lease but that rule of thumb isn’t right 100% of the time
    You might pay over the odds on a lease, but it's doable and the lease ends. You drive a brand new car under full warranty. We even get free oil changes and "light" maintenance.

  15. #15

    Re: Cars are going to be the next bubble

    If you do not care about looking fancy, the lower end of the 2nd hand market is where you save big money, Bought a 8 year old corsa a while back for £1,200 drove that for 3 years sold it for £800, bought a Golf 2004 reg 110k on the clock for £600 3 years later I am on 170k and still have not spent a penny on it apart from a basic £80 service every year.

    An elderly neighbor has recently stopped driving and has a corsa (2010) which they have offered me for next to nothing, the funny thing is in 9 years he has done 28k miles! full service history. so will pick that up now for about £1k sell my golf for £500 to some teenager and the corsa should last me 5 years easily.

  16. #16

    Re: Cars are going to be the next bubble

    Bubble cars might be the future.

  17. #17
    International jon1959's Avatar
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    Re: Cars are going to be the next bubble

    Quote Originally Posted by Eric the Half a Bee View Post
    Bubble cars might be the future.
    Back to the future.

    bubble car.jpg

  18. #18

    Re: Cars are going to be the next bubble

    Finding this thread so interesting tbh.

    The mainstream car industry has been declining as the car hasn't really changed massively in a long time - got four wheels and takes you to A to B. Maybe that is why cars are so cheap, as demand is low because many people can survive on existing cars that do more-or-less the same as new ones.

    Though the post about electric cars is interesting. I reckon due to low costs for fuel, this would increase demand. But this will occur once the UK gets solid infrastructure for it, eg charging stations. This may lead to higher car prices and restarting the car industry life-cycle. Though it would be interesting to see if this causes the demand for petrol cars to fall more and therefore become cheaper. Or if petrol cars would even be viable to make by then (probably linked to the effect I just said)

  19. #19

    Re: Cars are going to be the next bubble

    Quote Originally Posted by MOZZER2 View Post
    just finished paying off my car after 1 of those PCP schemes

    thinking of leasing a small car something like a fiesta ,corsa or hyundia until electric cars become the norm

    what type of monthly outlay would I be looking at on a lease for a small car ?
    Depends on your miles and spec .

    Somewhere between 100 and 140 a month .

  20. #20

    Re: Cars are going to be the next bubble

    Quote Originally Posted by Allez Allez Allez View Post
    If you lease a car then be prepared to lease cars for the rest of your life.

    I buy a car from new, keep it for 12 years and have 9 years of not having to pay any loan fees or anything else. Never understand why people change perfectly good cars just because they are a bit old, or have as many as 40,000 miles on the clock. My Golf, bought in 2006. 14 years old, 178,000 on the clock. I finished paying for it in 2009. Yes, it is starting to rattle, yes it has knocks and dents, but it gets me from a to b. Drove around Europe in it last August.
    That principle works as long as you maintain the car well and it doesn't have any major mechanical issues .
    I rent cars on a long term basis to ordinary people , who like you ,have kept their cars longer than they should have .
    The cars have had major mechanical issues , which they have repaired and decided to keep the cars a little longer " to get their money back " this has led to further major issues and they will never get their money back .
    Modern cars are so complex electrical issues can run into thousands ( I also run a repair workshops) Believe me you can soon be in the position where the repair bill way exceeds the value of the car .
    A nice shiny new car for £2-300 a month with no worries as Nick stated seems like a dream after the pain of massive repair bills for a car that is worthless .

    Don't get me wrong it's horses for courses .

    Sounds like you have been fairly lucky , you don't do many miles despite your trip round Europe.

    I have 2 Audi estates we use for courtesy cars , both drive well and customers often comment on how well they drive with their 285,000 and 330,000 miles respectively . Thing is , if they do go wrong ... I own a garage to fix them ...

  21. #21
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    Re: Cars are going to be the next bubble

    Quote Originally Posted by NYCBlue View Post
    My Mrs dives a Kia. We lease it. Surprisingly nice car. Smooth ride, great handling and nice pick-up.
    your Mrs or the car?

  22. #22

    Re: Cars are going to be the next bubble

    Quote Originally Posted by xsnaggle View Post
    your Mrs or the car?
    My Mrs is a much better ride than the Kia.

  23. #23
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    Re: Cars are going to be the next bubble

    Quote Originally Posted by WJ99mobile View Post
    Iíve been forced by my firm to sell my car and buy a newer one.

    I have been looking at relatively new second hand cars but the depreciation on them is often the same if not more than I can get a brand new lease for.

    For example I looked at a 1-2 year old golf that I anticipate the depreciation to be circa £130 a month if bought from a dealer. For the similar price I can lease a brand new good specced Kia for 2 years, wear and tear costs and very minimal service costs.

    Cars have never in my opinion been cheaper and when you can buy preregistered cars for circa 40% of the RRP, surely this is undermining the used car market.

    I donít know what the outcome will be, but something surely will give?
    I bought new ceed just over two years ago, I went into kia on Friday with the intent of changing it for a hybrid forgot what the model is, riva, niva something like that but think I, ll stick with the ceed but a pro ceed, it's been a good car for me, also currently getting 49.6 MPG from it and whilst I'm an old fogey driver at 60 mph up and down the M4 the basic 1.6 engine lacks grunt when needing a quick overtake.

  24. #24
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    Re: Cars are going to be the next bubble

    Quote Originally Posted by jon1959 View Post
    Back to the future.

    bubble car.jpg
    Mines better than yours!


  25. #25

    Re: Cars are going to be the next bubble

    Quote Originally Posted by Jimmy the Jock View Post
    who like you ,have kept their cars longer than they should have .
    When should I have changed my car then? Just after I finished paying for it? When it got to 100,000 miles? When it passed yet another MOT without even an advisory? What is it about my car that means I have kept it for too long?

    People are being duped to stay in perpetual debt to finance companies purely to keep the car industry alive. More fool them.

  26. #26

    Re: Cars are going to be the next bubble

    When I read the title I thought for future purchases instead of a test drive you would get a voucher and then be escorted to pick the car up in a service station north of Swansea.

  27. #27

    Re: Cars are going to be the next bubble

    I was reading an article in a car magazine on a plane a few months ago , they suggested that electric cars wont ever saturate the market simply because of the charging limitations, the way they explained it was imagine a street lined both sides with parked cars or a Tower block where most of the inhabitants are car owners. Another point they made was this, imagine an overnight power cut and people woke up in the morning to an uncharged car then to make it worse there would be hundreds of cars all needing to be charged at once. Just a thought!

  28. #28

    Re: Cars are going to be the next bubble

    Quote Originally Posted by Mad as a fish View Post
    I was reading an article in a car magazine on a plane a few months ago , they suggested that electric cars wont ever saturate the market simply because of the charging limitations, the way they explained it was imagine a street lined both sides with parked cars or a Tower block where most of the inhabitants are car owners. Another point they made was this, imagine an overnight power cut and people woke up in the morning to an uncharged car then to make it worse there would be hundreds of cars all needing to be charged at once. Just a thought!
    Those arguments fall flat when you realistically look at driving habits, My neighbor has the Tesla model 3 (the cheaper one) It says it has 250 mile range, but he says he gets 200 with realistic driving.

    He commutes from Bridgend to Cardiff and back every day for work (40 miles a day) so He can drive all week mon-fri on one single charge

    The same drive in my 1.8 petrol costs me about £160 a month in petrol

    also he charges the car full in 40 minutes for FREE at the Tesla super charger by us.

    or can just drip charge it at night from the house.

  29. #29

    Re: Cars are going to be the next bubble

    Quote Originally Posted by chris lee View Post
    Those arguments fall flat when you realistically look at driving habits, My neighbor has the Tesla model 3 (the cheaper one) It says it has 250 mile range, but he says he gets 200 with realistic driving.

    He commutes from Bridgend to Cardiff and back every day for work (40 miles a day) so He can drive all week mon-fri on one single charge

    The same drive in my 1.8 petrol costs me about £160 a month in petrol

    also he charges the car full in 40 minutes for FREE at the Tesla super charger by us.

    or can just drip charge it at night from the house.
    Still doesnt help if there is a 4 hr wait to get charged Chris. As there was a few weeks ago during bank holiday

  30. #30

    Re: Cars are going to be the next bubble

    Quote Originally Posted by chris lee View Post
    Those arguments fall flat when you realistically look at driving habits, My neighbor has the Tesla model 3 (the cheaper one) It says it has 250 mile range, but he says he gets 200 with realistic driving.

    He commutes from Bridgend to Cardiff and back every day for work (40 miles a day) so He can drive all week mon-fri on one single charge

    The same drive in my 1.8 petrol costs me about £160 a month in petrol

    also he charges the car full in 40 minutes for FREE at the Tesla super charger by us.

    or can just drip charge it at night from the house.
    Lots of challenges to overcome before then. A lot of people will drive more than 200 miles often. I had to drive to Birmingham for a meeting recently, that's a 250 mile round trip.

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