Used Car Prices Go Into Freefall

Mr. Pseudonym · 13-08-2008 11:08am #1

http://www.irishtimes.com/newspaper/motors/2008/0813/1218477437743.html

It doesn't make for pretty reading for those in the trade.

Mad Dog · 13-08-2008 11:16am

Like the house prices it is now a buyers market and great for consumer.

Can't say I have a whole lot of sympathy though with the motor trade who have been having it too good for so long now.

Marcus.Aurelius · 13-08-2008 11:20am

Can't say I'm feeling sorry for them. Second hand cars have been selling at inflated prices for too long anyway.

Good news!

De Hipster · 13-08-2008 11:23am

Karma really exists?!

Ferris · 13-08-2008 11:26am

Marcus.Aurelius wrote: »

Can't say I'm feeling sorry for them. Second hand cars have been selling at inflated prices for too long anyway.

Good news!

Unfortunately it seems like its the big dealers with prestige cars that are the worst hit so its them that are in trouble (e.g. Orwell Motors, Owen Crinnigan Motors).

The dodgy dealers selling crates on the Nass rd won't be hit as hard because, in percentage terms, they lose less money.

While I have no particular affection towards car dealers I do feel sorry for someone who runs into hard times through something that is beyond their control.

Speedy007 · 13-08-2008 11:39am

It's only a buyers market if you don't have a car to trade in. If you do, then you'll be very disappointed at how much a dealer will be prepared to give you for it!

Marcus.Aurelius · 13-08-2008 11:41am

Ferris wrote: »

Unfortunately it seems like its the big dealers with prestige cars that are the worst hit so its them that are in trouble (e.g. Orwell Motors, Owen Crinnigan Motors).

The dodgy dealers selling crates on the Nass rd won't be hit as hard because, in percentage terms, they lose less money.

While I have no particular affection towards car dealers I do feel sorry for someone who runs into hard times through something that is beyond their control.

I usually buy old prestige cars myself, (mostly Lexus), and their prices have been artificially inflated for a good while now, there's feck all market for them and still they're overpriced, even considering their build costs. Their servicing and other maintenance costs are colossal, and the dealers are all too ready to sell a car for 9,000 that would cost 3000-4000 to put right, and 9,000 is 1.5 times what its worth if it was perfect.

No sympathy. The crappy dealers will feel it too as they're ignored when people see the lower cost to value ratio of the higher specced models on offer now.

Ferris · 13-08-2008 11:49am

Marcus.Aurelius wrote: »

1.5 times what its worth

Sure every industry is at that, Just look at tesco's ffs.

You still don't want to see dealers out of business, what happens to customers warranties etc. Also you are forgetting about people who have big bucks in high end motors and are losing their shirt.

I'm not affected personally, I saw this slump coming and kept my cash in the bank, but it does affect peoples personel lives and thats a pity.

Marcus.Aurelius · 13-08-2008 12:03pm

Ferris wrote: »

Sure every industry is at that, Just look at tesco's ffs.

Tesco don't sell TVs that need 50% of their value spent again to bring them up to safe spec.

You still don't want to see dealers out of business, what happens to customers warranties etc. Also you are forgetting about people who have big bucks in high end motors and are losing their shirt.

I'm not affected personally, I saw this slump coming and kept my cash in the bank, but it does affect peoples personel lives and thats a pity.

Warranties are maintained by the motor manufacturer afaik, so is that really an issue?

Stephen · 13-08-2008 12:08pm

Its an issue for used cars where the manufacturer's warranty has expired. Garages will typically offer their own 6-12 month warranty on decent used cars. If they go bust that warranty won't be honoured anywhere.

furtzy · 13-08-2008 12:10pm

De Hipster wrote: »

Karma really exists?!

Used to get well pissed off by some of the trade-in prices I've been offered over the years by the very dealers who sold me the new car in the first place. Remember one guy who wanted to sell my trade-in for 5k more then he offered me even after making money on the new car he wanted to sell me as well. All this and the money he made off me when selling me my trade-in originally.

Was planning on buying new in January 09 but can't be bothered now. My car is now worth around 3-4k less as a trade-in after the VRT changes than what is owed on it. Makes more economic sense for me to hold onto it until its paid off or until its value is worth more than what is owed. Talking to my mates this seems to be case with a lot of people. That all adds up to some bleak times ahead for car salesmen....however their parts and servicing departments will do better as people hold on to the cars longer.

Marcus.Aurelius · 13-08-2008 12:11pm

Stephen wrote: »

Its an issue for used cars where the manufacturer's warranty has expired. Garages will typically offer their own 6-12 month warranty on decent used cars. If they go bust that warranty won't be honoured anywhere.

Hadn't thought of that :eek:

The cars I usually buy get a 3 month engine and gearbox, but if you can't check these parts yourself, maybe you shouldn't rely on their warranties.

RobAMerc · 13-08-2008 12:12pm

problem is dealers are talking about how they have knocked 5k off the value of cars - but they are knocking 10k off trade ins

Ferris · 13-08-2008 12:14pm

Marcus.Aurelius wrote: »

Tesco don't sell TVs that need 50% of their value spent again to bring them up to safe spec.

I take your point. We do however have something called a free market, the car dealers were only charging what people would pay so its hardly their fault. Thats whats gone wrong for them now, we aren't prepared to pay as much.

The timescale of this change has been very short however which would be tough on any business (even Tesco's:D).

gabgab · 13-08-2008 12:16pm

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,

Very few people, unless in an industry themselves that has a refurbishing or reconditioning and then resale element to it really understand the costs involved in refurbishing a car and turning it into a profit,

A business has to make a profit,

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

Ferris · 13-08-2008 12:23pm

gabgab wrote: »

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

brayblue24 · 13-08-2008 12:28pm

gabgab wrote: »

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,

A fair point but what about his one. I toyed with the idea of trading my Audi
A4 for a smaller diesel and decided to look at the VW Golf and the Ford focus. I got a cash price for the Golf in a main dealer and he was to get back to me "within the hour" (last Friday) with a trade in allowance for my car.

I then went to a main Ford dealer and got a cash price for the Focus. He looked at my car and offered me €10K (bought in January for €27K) and even then I had to tell him twice it was not a Passat he was looking at ( he even looked up VW in Glasses Guide). I left when he started staring into space telling me he wasn't thinking straight that day.

My point here is that while I don't expect a reasonable trade in neither has bothered to get back to me about a cash deal and in both cases I told them I had a buyer interested in my own to make sure they did ring me back.

Alun · 13-08-2008 12:28pm

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

If your maths is that bad you don't deserve to stay in business

150 x 10k = 1.5 million x 10% = 150k

Ice_Box · 13-08-2008 12:30pm

Buying from the UK seems to be the done thing now. People know that a UK Mazda 6 has better spec that the Irish Mazda 6 and it costs less. Dealers need to stop this paddy spec versions of cars.

dubmick · 13-08-2008 12:32pm

I'm going looking at a car at the weekend that is priced at €19,950. I've no car to trade in so I'm hoping to get it for €18k. Too optimistic?

Tanabe · 13-08-2008 12:33pm

Ferris wrote: »

We do however have something called a free market, the car dealers were only charging what people would pay so its hardly their fault.

I blame the government. Free market/trade in EU? Not when it comes to motor vehicles. We get charged with an illegal, double taxation called VRT. Fact. No need for anybody here to even dispute that.

gabgab wrote: »

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

What's that I.....can you hear something....? Oh yeah.....it's the world's smallest violin playing for the car dealer/s you are referring to there.

gabgab · 13-08-2008 12:37pm

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

Yep, and plenty of people out there in that boat.

Stevie Dakota · 13-08-2008 12:39pm

Finally VRT is biting the government (and everyone else on the way) back. With prices being distorted by this tax for years we just had to suck it up. Now with the latest changes it has focused minds due to the devastating effect the reduction has had on second hand values. Even with the changes you can still buy better cars cheaper in the UK and given how price conscious we all are now I can see this only increasing. Only when VRT is scrapped altogether can the auto industry here start to re-build itself and compete on an even playing field. Until then dealers and punters will continue to suffer and we only have the Government to thank.

Aye Kero · 13-08-2008 12:40pm

If there was a bloodbath and massive price cuts we'd have been reading about it here for weeks. I'd like someone to find me a family / executive second-hand car from a main dealer that is actually priced in line with market conditions and not dealer expectations. All I see is sh1te talk about De Conomy. Does me an O'Leary and plays the violin...

Ferris · 13-08-2008 1:18pm

Alun wrote: »

If your maths is that bad you don't deserve to stay in business

150 x 10k = 1.5 million x 10% = 150k

oooop's:o

alias no.9 · 13-08-2008 1:25pm

Ferris wrote: »

Imagine having 150 used cars worth avg. 10k each (not unusual) and having to drop them in price by 10%. Thats a 1.5million loss in revenue, makes for a pretty sh1tty year if you can even stay in business.

Making a loss in a period of transition is not the end of the world. When things pick up again, you'll be better positioned to benefit if you're an established business with a track record of providing quality products at good prices. The one way to ensure you will go bust is to hold firm on your unrealistic valuations meaning you won't shift any stock and therefore have zero cashflow to cover overheads.

omega man · 13-08-2008 1:29pm

gabgab wrote: »

I see these threads every now and again and mostly ignore them, everyone giving out about garage this, garage that, and delighted to see someone falling on hard times,

I see it all the time, people deciding that their car is worth an amount, and then being appalled that they are not offered it as a trade in,
Very few people, unless in an industry themselves that has a refurbishing or reconditioning and then resale element to it really understand the costs involved in refurbishing a car and turning it into a profit,

A business has to make a profit,

If I own a garage and have a stock of used, say 20 and new say 8, and some demo's I can have overheads of close to a million euro's. Just in stock alone,

I just dont buy that, sorry. A good friend of mine was offered 22K as a trade-in for his 07 GTI which he had only bought new a year ago????? And yes he did shop around, that was just about the best offer! That was aprox 15K depreciation

alias no.9 · 13-08-2008 1:33pm

dubmick wrote: »

I'm going looking at a car at the weekend that is priced at €19,950. I've no car to trade in so I'm hoping to get it for €18k. Too optimistic?

I'd be much more cheaky in that situation. Unless it's already very good value at €19,950 compared to similar cars for sale (the cost of similar from a franchised dealer in the UK plus VRT is a good gauge), I'd go for the jugular on a cash deal. Offer €16,000 cash and be prepared to walk away, tell the salesman that your offer stands, leave your number for him to get back to you. If things are as bad as they're claiming, reducing stock and generating cash flow should be the priority, even at a small loss.

-Chris- · 13-08-2008 1:47pm

omega man wrote: »

I just dont buy that, sorry. A good friend of mine was offered 22K as a trade-in for his 07 GTI which he had only bought new a year ago????? And yes he did shop around, that was just about the best offer! That was aprox 15K depreciation

Your friend went to several dealerships. They all offered similar money...

If they all offered similar money, do you think they all were looking to make MASSIVE profit off reselling the car, ignoring all elements of competition with other dealers?
Or do you think that that's possibly just what the car is worth in the current climate?

alias no.9 wrote: »

I'd be much more cheaky in that situation. Unless it's already very good value at €19,950 compared to similar cars for sale (the cost of similar from a franchised dealer in the UK plus VRT is a good gauge), I'd go for the jugular on a cash deal. Offer €16,000 cash and be prepared to walk away, tell the salesman that your offer stands, leave your number for him to get back to you. If things are as bad as they're claiming, reducing stock and generating cash flow should be the priority, even at a small loss.

I don't see these tactics working at all unless the car has been in stock for ages or the salesperson's handed in their notice and wants to screw over the dealership.

Too heavy-handed.

alias no.9 · 13-08-2008 2:00pm

AudiChris wrote: »

I don't see these tactics working at all unless the car has been in stock for ages or the salesperson's handed in their notice and wants to screw over the dealership.

Too heavy-handed.

I did say unless it's already very good value at €19,995. Otherwise it's no different to the rock bottom offers made to people looking to trade in cars. What's sauce for the goose is sauce for the gander. He mightn't drive the car away this weekend but if the dealer goes another couple of weeks without selling a car he may reconsider the offer. The market is short a healthy dose of realism and won't move until that is found.
Similar to auctioneers, many car salesmen have lost the skill of making a sale, having spent so long as 'order takers'. This will seperate the wheat from the chaff.

justfortherecor · 13-08-2008 2:03pm

As an aside, did anyone see the prices quoted for the 3yr old Porsche Cayenne Turbo in the piece? Some dealer saying it would be "€200,000" new and he cant sell it now for "€40,000"???

I'd love to see such a car.

Zube · 13-08-2008 2:12pm

justfortherecor wrote: »

As an aside, did anyone see the prices quoted for the 3yr old Porsche Cayenne Turbo in the piece? Some dealer saying it would be "€200,000" new and he cant sell it now for "€40,000"???

I'd love to see such a car.

A Turbo S Tiptronic is €210,000 new. Here's one for €110,0000, nearly 50% depreciation in a year. I can believe that 2 more years would drop that some more.

steph1 · 13-08-2008 2:27pm

Mad Dog wrote: »

Like the house prices it is now a buyers market and great for consumer.

Can't say I have a whole lot of sympathy though with the motor trade who have been having it too good for so long now.

Yeah its a buyers market all right provided you have the money or can get the money to buy

steph1 · 13-08-2008 2:29pm

Speedy007 wrote: »

It's only a buyers market if you don't have a car to trade in. If you do, then you'll be very disappointed at how much a dealer will be prepared to give you for it!

If you take a look at a lot of the adverts from dealers on carzone they are stating that the cars for sale are straight sale only and wont take trade-ins. The garages are full of cars that they cant shift. But I've no sympathy for some of these dealers. The prices being quoted for some cars with the age and mileage on them is pure ridiculous.

The last few cars that I've had I have bought privately.

omega man · 13-08-2008 3:20pm

AudiChris wrote: »

Your friend went to several dealerships. They all offered similar money...

If they all offered similar money, do you think they all were looking to make MASSIVE profit off reselling the car, ignoring all elements of competition with other dealers?
Or do you think that that's possibly just what the car is worth in the current climate?

Fair point. Is that a fair price for such a car though? No is the answer. He was buying another new vw and they basically wanted as much out of him as possible. These dealers just seem to want cash deals at the moment. What happened to the good old days of getting even a semi fair trade-in offer? I hope to see 'some' of these so called main dealers get a good swift boot over the next year or so. They are supposed to be in the business of buying and selling, not just selling.

maidhc · 13-08-2008 3:49pm

AudiChris wrote: »

Too heavy-handed.

No such thing. I once walked into a main dealer with no trade in and a bag of cash looking for a new car. The would hardly bid me the time of day, and when I told them their price wasn't good enough (and it was a few k off the best going) I was told to go elsewhere.

i'm sorry, but it is nice to see a little pain at times!

-Chris- · 13-08-2008 4:14pm

omega man wrote: »

Fair point. Is that a fair price for such a car though? No is the answer. He was buying another new vw and they basically wanted as much out of him as possible. These dealers just seem to want cash deals at the moment. What happened to the good old days of getting even a semi fair trade-in offer? I hope to see 'some' of these so called main dealers get a good swift boot over the next year or so. They are supposed to be in the business of buying and selling, not just selling.

No it's not a fair price, but it's what the car is worth apparently. All dealers have to price a trade-in with the next owner in mind, and they all felt the next owner would pay €24k max and so offered €22ish.

It's not that they wanted to get as much out of him as possible, it's that they wanted to be able to price the trade-in keenly on their forecourt and not be the subject of another "look at this car and how overpriced it is, the dealer must be trying to fleece someone" thread.

In the current economic climate, either dealers price trade-ins lower and get slagged for not offering enough, or they price them high and ask for big money on the forecourt (and again get slagged off for being unrealistic). There's no winning at the moment.

maidhc wrote: »

No such thing. I once walked into a main dealer with no trade in and a bag of cash looking for a new car. The would hardly bid me the time of day, and when I told them their price wasn't good enough (and it was a few k off the best going) I was told to go elsewhere.

i'm sorry, but it is nice to see a little pain at times!

I feel that agrees with my point - you were heavy handed, they wouldn't deal with you.

I don't care how bad it gets, if someone's rude or ignorant to me, I won't want to deal with them. I certainly won't want to win them over or make the experience special for them.

If it gets bad enough that I have to entertain people who treat me disrespectfully or who try and bully me, I'll move job. Customers pay me for my expertise, their money can't buy my dignity.

Conversely, if someone's polite and respectful and realistic about what I can and can't do, I'll go out of my way to provide them with good pricing and great service.

You catch more flies with honey than vinegar - and that applies to customers as much as salespeople.

maidhc · 13-08-2008 4:31pm

AudiChris wrote: »

I feel that agrees with my point - you were heavy handed, they wouldn't deal with you.

I wasn't, I was quite polite. The price was just wrong, i.e. a similar dealer was selling an identical car for four figures less. I suggested their price was wrong (without mentioning any specifics) and I was told that was the best they could do.

Main dealers are no more entitled to make a living than farmers/builders/businesspeople etc etc in tough times. If they can't hack it then they will (and should) go to the wall.

Biro · 13-08-2008 4:43pm

AudiChris wrote: »

I feel that agrees with my point - you were heavy handed, they wouldn't deal with you.

I don't care how bad it gets, if someone's rude or ignorant to me, I won't want to deal with them. I certainly won't want to win them over or make the experience special for them.

If it gets bad enough that I have to entertain people who treat me disrespectfully or who try and bully me, I'll move job. Customers pay me for my expertise, their money can't buy my dignity.

Conversely, if someone's polite and respectful and realistic about what I can and can't do, I'll go out of my way to provide them with good pricing and great service.

You catch more flies with honey than vinegar - and that applies to customers as much as salespeople.

I don't know about that. If times were as hard as some dealers are crying about, you'd take a deal as money is money, and a straight sale is money directly in the pocket. I can't see how he could be so ignorant as to be insulting. Some people don't have much of a personality. If every sales guy took your sensitive attitude then no famous person in the whole world would be able to buy anything. Imagine Niaomi Cambell coming in to your garage - based on your comments above you would lock the door on her approach. (Wouldn't blame you!), but I'd bet she'd get pampered and waited upon and sold what she came for because think of the advertising! Money will wilt most principals! Maybe I don't flash enough of it. I'm polite, I still get ignored.

dubmick · 13-08-2008 5:19pm

I just put the car details on the vrt site and came back with a open market value of €18,610

I might offer €17,000 for it

rabbitinlights · 14-08-2008 8:22pm

Whats the market like in the UK, What sort of discount could you get from dealers? Im looking at 2004 Audi A3 for about the st£11K mark.

ytareh · 14-08-2008 10:44pm

Was in a well known Fiat main dealer today where they had a 3 Door (Yuck!)OLD SHAPE 2005 Toyota Yaris on sale for (wait for it !) 10500 euro .A NEW one lists at 14175 so presumably you could pick one up for under 14k euro and a new Toyota Aygo is under the selling price of their scaldy gouged wheel trimmed Yaris.
Now just to confirm that was a 2005, two thousand and five,THREE door, old shape Yaris for 10.5k euro and it was NOT a mint example by any means .I couldnt believe they would have a car in their showrooms with wheel trims in such a state but that disbelief pales into insignificance compared to the price.
So we are reading about car prices in 'Freefall'?I think this sort of thing just shows that the dealers think that the average punter is an utter IDIOT .

SALESMAN:
"Oh yes we are prepared to offer you a 3 grand trade in on your 93 Fiat Cinquecento against our Yaris so thats 7 and a half ...hey we'll call it 7 grand to change "

'GORMLESS' PUNTER :
"Ah Jaysis youre jokin and all the other garages were only offering me 50 euro !Where do I sign?

PS An awful lot of dealers on Carzone etc seem to be blissfully unaware that there were meant to be ANY price decreases in July...

PPS Oh My GOD!Just checked on Carzone and there is ANOTHER dealer also selling a silver 3 door Yaris 2005 for 10.5k euro...his has 50k miles on the clock -at least the Fiat guys has only 18k miles -although it is on English plates ("No mystery about this cars history...")And there are two other dealers looking for 9950 for one -Seriously is there anybody in their right mind who would pay anything remotely this money for a 2005 3dr Yaris ???!!!Am I just being greedy ...expecting them to practically give it away ?!

rambo10 · 02-09-2008 4:31pm

Joker wrote: »

Can't say I'm feeling sorry for them. Second hand cars have been selling at inflated prices for too long anyway.

Good news!

your a sad person to have an attitude like that. if your smart you can always get a good deal and a good car. its their job to make profit,i agree there are waaaay too many dodgy car dealers out there but believe it or not, they aren't all robbers and gangsters and as for over inflated prices! there not trying to keep them, price----demand ring any bells with you?

Used Car Prices Go Into Freefall

Comments