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A glut has used-car depreciation accelerating

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Re: A glut has used-car depreciation accelerating

#21

Post by beejiu »

In the UK, many cars sold in the past few years are under a so-called Personal Contract Plan (PCP). These are basically sub-prime loans for cars where you lease the car for the difference between its purchase price and its projected depreciated value at the end of the term.

https://www.theguardian.com/business/2017/jun/10/car-loans-p...

One of the UK regulators recently warned about the exposure to these loans. "An initial fall in prices could lead to a surplus of used cars coming to the market, which could further weaken prices and cause material losses to lenders through their GFV risk." (http://www.bankofengland.co.uk/pra/Documents/publications/re...)

Re: A glut has used-car depreciation accelerating

#22

Post by ProfessorLayton »

Its looking even worse (Or better for a buyer) for electric cars. A cursory craigslist search shows a 2014 Fiat 500e for ~7.5k @33k miles and Nissan Leafs for as little as ~5k @42k miles. All with clean titles.

A used Model S 60 (2013) can be found for ~40k @60k miles, which I think is good but not great, especially considering the quality issues early on.

I'm waiting to pounce on 1st generation electric cars that will be hitting the used market when the Model 3 is mass produced. The reason I haven't bought yet is that my current hybrid is fine and I expect used electric car prices to drop even further.

Re: A glut has used-car depreciation accelerating

#23

Post by afinlayson »

This may be temporary, as services like Uber/Lyft increase, and the possibility of Autonomous Vehicles driving down the cost of those services. This would cause the volume of new cars needed to dramatically fall, leading to increased cost of those new vehicles. This would increase the value of used vehicles that are currently priced in.

Would love to hear differing opinions :)

Re: A glut has used-car depreciation accelerating

#25

Post by jrs95 »

ng12 wrote: post #5

Actually it's not because I don't think about the value of my car. It's not an investment, it's an expense.

This is true, but the value of your car plays an important role in that expense. And expected depreciation is an important factor to consider when buying a car.

Re: A glut has used-car depreciation accelerating

#26

Post by discreditable »

hkmurakami wrote: post #18
Glyptodon wrote: post #7

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?

In short, the cash for clunkers initiative made used car stock plummet. This lead to used car prices going up.

At least, I think that's what GP is hinting at.

Re: A glut has used-car depreciation accelerating

#27

Post by adventured »

aianus wrote: post #19
sbierwagen wrote: post #10

Earlier quoted context omitted.

I don't disagree that you can pay $15K for a used car, I doubt that the average price of a used car is $15K. The average price of the first 30 used cars for sale by owner on the Seattle craigslist is $5,896: https://seattle.craigslist.org/search/cto Average price of the first 30 by dealer however, is $21,567: https://seattle.craigslist.org/search/ctd But who would be dumb enough to buy a used car from a lot?

Why is it so dumb to buy a used car off the lot? I bought an Audi off lease last year. It's still under warranty, free maintenance (until 80k km), low mileage (37k km), fully loaded with options, and I saved $20k vs a new one.

> Why is it so dumb to buy a used car off the lot?

It's not. The parent doesn't appear to understand the used car market in the US. Most people are not buying their used cars for $6,000 off of craigslist, that's a good way to end up with a pile of junk. It's a bad idea to buy a mid-value or higher used car outside the CPO or remaining original warranty programs if you can help it, ideally from a dealer.

Re: A glut has used-car depreciation accelerating

#28

Post by blawson »

hkmurakami wrote: post #18
Glyptodon wrote: post #7

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?

Combination of really low interest rates on new cars, and used cars becoming more rare due to cash-for-clunkers and maybe other programs.

I don't think is was the case that used cars were literally more expensive, just that with 0% financing everywhere vs paying cash for used, or vs used car loan rates, you were probably better off getting a new car.

Re: A glut has used-car depreciation accelerating

#29

Post by shyn3 »

copperx wrote: post #16
Glyptodon wrote: post #7

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

That doesn't even make sense, unless there are not enough cars being produced. The only situation I remember like that was with the Prius, when gas prices were $4/gal.

Right after the recession, maybe a year, or two later, there wasn't an inventory for used cars and the prices were high. It seemed people were not selling their used cars because they couldn't buy new ones. All the used cars, few years old, were almost the same as MSRP (This was in Canada).

Re: A glut has used-car depreciation accelerating

#30

Post by [deleted] »

hkmurakami wrote: post #18
Glyptodon wrote: post #7

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?

[deleted]
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