To wait or not

TheBazman

Hi all. I am looking at a motor that is going from the 30% to the 28% category in July. So based on that I should wait to buy. Problem is the residual on my current motor (520d) is decaying at a decent rate given the changes to the price of the new 520d in July.

Very roughly, the cost of the new car would be around 2k less and the tax is going to be around 300 euro less per annum. So over 3yrs, very roughly I would lose out around 3k by not waiting. I am actually getting a better trade in on my own than I expected at the moment and I think there is a chance that if I wait until July the trade in on my own will be at least 3k worse.

I dont really see any point in waiting, unless I am missing something obvious?

Any thoughts

Cheers

pburns

Agggh I 'm in similar position but one of the cars I am considering is moving from 30% to 24%

There is a annual price hike in Bimmers coming between now and July AFAIK (presuming it's a BMW?) which should certainly nullify a VRT decrease of 2%. In the long run I think a post-July '08 car may be more attractive as a trade-in also - you might want to factor that in. I'm probably confusing you even more - I'm confused myself...:(

If you're really dying to get you new motor though and there's such a small change in it's price after July I'd think I'd move now though because I'm not 100% convinced FF won't backtrack and defer the VRT change 'til Jan '09 or pull some other stroke if pressured by the SIMI...

Ferris

Its a tough station you've got there but there are a lot of people in the same position. I know a guy who works in a large North Dublin BMW Dealer and he said that trade in values are going to have to take a hit coming up to, and after, the VRT change over. They will reflect the reduction in the price of a new 520d.

If I was you i'd give them a call and ask what they'd give you on a trade in after July, that way you can do the numbers and see how it ads up. That way you know where you are financially.

Overall tho it doesn't look good for owners of nearly new low emissions cars. My Dad is worried too as he has a 2.0L Tdi A6 and want's to change it.

galwaytt

Ferris wrote: »

Overall tho it doesn't look good for owners of nearly new low emissions cars. QUOTE]

....in hindsight, I was lucky to sell my 07 1.8Tdci Galaxy in Aug/Sept, before the budget announcement.........it'd kill me to be staring that car in the face now.

unkel

You seem to have done your sums, TheBazman. Indeed why wait for an unsure future deal when you can do one now that you're happy with. The only thing you seem to have missed is that if you buy your new car now, the future trade in price of it will be considerably lower too because of it carrying the higher annual tax. Some people in this country seem to be anal about the annual tax and they would avoid a high tax (old system) car

TheBazman

Cheers folks for the thoughts

Yeah I had thought about how some people can be anal about the annual tax alright but currently its less than 300 euro pa difference so I'm hoping that when I go to trade in in a few years time that it wont be a huge issus.

It is the cost to change that is key I suppose, and if it is the case that I'm happy with the cost to change now I should really go ahead.

( I have spoken to a dealer already about the annual hike on the price of cars anyway and they said it would be around 1%)

E92

The difference is that a brand new 520d even with an Autobox is falling from 30% VRT to 20% VRT(CO2 149 g/km) and from €590 road tax a year to €290 in July.
So I think now would be a terrible time to get one.

The manual does even better and manages €150 road tax a year and 16% VRT(CO2 136 g/km). Have a look at the VRT sticky, there is an Excel file telling you all you need to know about all BMWs(though the decreases won't be as much, but shouldn't be far off).

On the other hand a 525d or 530d is dropping from 30% to 24% with a manual gearbox(28% for an Auto, all 523i, 525i and 530i are going into 28% VRT), so maybe they're worth considering(especially as the 525d uses less fuel than the Merc E220CDI even though the 520d never mind the 525d has more power), I mean a 525d would cost €1290 to tax a year now, a manual one in July would be €430, and even an auto would be €600 or only a tenner more than a 520d presently.

Ta me anseo

Two quick things from my point of view:

I have just imported from the UK and paid about 1,800 euro higher VRT than if I had waited until July. My tax is now 539 (going to 590 from tomorrow) and it would have been 290 under the new system. I went ahead anyway for two reasons.

1) If the new VRT scales had not been announced in the budget, I would obviously had had no hesitation. I'd have bought now because I was happy with the price and I had calculated that I could afford the annual tax. The new VRT scheme hasn't changed a thing from that point of view. I'm still happy with the price and can afford it and the tax won't break the bank either. I would also have lost the best part of another grand or two on the value of my old car by waiting also. Since nothing has changed, buying now is perfectly acceptable!

2) I am very cynical I know, but I really cannot under any circumstances see Revenue maintaining the old OMSP for vehicles from 1st July 2008. I would put my money on all OMSP being revised overnight. Second hand imports will be considered more desirable and that will warrant an increase in the OMSP. New cars will never see the full benefit either for similar reasons. Either Revenue or the dealers themselves will interfere. If you have calculated that you could save 5,000 in VRT, the car will actually turn out to 2,000 cheaper with 1,000 euro worth of extras added and the grey bit in the middle absorbed by the dealer. I would hate to wait until July only to find that it made no significant difference at all and I should have bought my car in January!

Remember that VRT costs, while a Revenue function to collect, are set by SIMI. They are effectively set by the private motor industry in Ireland in order to protect the private motor industry in Ireland. Neither the government nor the car industry will accept a fall off in revenue.

As for annual tax, I can see how the higher rates will affect resale values. The threat from UK imports already exists and will increase tenfold once July has passed. I will be very interested to see how the second hand market is protected from total collapse. All the same, if the tax costs 300 euro a year extra, that might take 1 or 2 grand off the resale value if someone wants to buy the car and keep it for the usual 2 to 4 years. Considering that you won't need to worry about that for many years yet, it's hardly that significant a factor at all. The trade in price of your used car has more to do with how well you haggle than anything else!!!

Conclusion: Buy now! Enjoy the car!

E92

A car with higher road tax a year is going to be less desirable than an identical one with the new lower rates, and BMW have already promised to pass on any VRT saving in full to the consumer, so why pay more now for a car that is going to get significantly cheaper, as well as being far more desirable when the time comes to selling it on?

Okay you will get less for a trade in by waiting till July, but on the other hand if you buy now you are going to have a car that will be significantly devalued in 5 months time with the less attractive higher road tax and then when the next trade in time comes, you will have taken a huge depreciation hit?

So while you may not actually gain a lot by waiting, you will save a packet in the long run. If you buy now you will regret it bigtime in a few years time when you get tired of your current motor and want to change.

TheBazman

E92 wrote: »

A car with higher road tax a year is going to be less desirable than an identical one with the new lower rates, and BMW have already promised to pass on any VRT saving in full to the consumer, so why pay more now for a car that is going to get significantly cheaper, as well as being far more desirable when the time comes to selling it on?

Okay you will get less for a trade in by waiting till July, but on the other hand if you buy now you are going to have a car that will be significantly devalued in 5 months time with the less attractive higher road tax and then when the next trade in time comes, you will have taken a huge depreciation hit?

So while you may not actually gain a lot by waiting, you will save a packet in the long run. If you buy now you will regret it bigtime in a few years time when you get tired of your current motor and want to change.

Sorry just to clarify - I think you may have miss-read. My current car is a 520d. I am changing to a different motor (335d - at least thinking about it). I have done quite a bit of research and am pretty familiar with the other thread and your spreadsheets (v useful btw)

E92

TheBazman wrote: »

Sorry just to clarify - I think you may have miss-read. My current car is a 520d. I am changing to a different motor (335d - at least thinking about it). I have done quite a bit of research and am pretty familiar with the other thread and your spreadsheets (v useful btw)

Sorry I did indeed misread it - thought you were changing your 520d for another:D. Though what i said above still applies about buying a car in the lower VRT category(and the 335d would be falling from €1290 tax at the moment to €600 under the new system, just remember to make sure it's got EfficientDynamics, the ones without ED are a lot worse, though no worse than a rival car ofg similar engine size and power).

TheBazman

E92 wrote: »

Sorry I did indeed misread it - thought you were changing your 520d for another:D. Though what i said above still applies about buying a car in the lower VRT category(and the 335d would be falling from €1290 tax at the moment to €600 under the new system, just remember to make sure it's got EfficientDynamics, the ones without ED are a lot worse, though no worse than a rival car ofg similar engine size and power).

Hmm - here I am saying I have done my research when in fact I have made a boo boo. You are correct - it is moving into the €600 euro tax band instead of the €1000 band. That shines a different light on it again. €300 mightn't have had a huge impact in trade in value down the line, but €600 probably will. Of course, as had been said, the Govt could change things overnight to bring all tax bands into line (pre and post July motors)

unkel

@Ta me anseo:

1. There won't be a grey bit in the middle that's going to be absorbed by the dealer, as E92 rightly pointed out. See post 52 of the sticky (iirc from memory)

2. You're right that more optional extras might become standard, which increases the base price. These optional extras will become much cheaper on low VRT vehicles. Most buyers would welcome an increased spec at a discount

3. SIMI do not set the VRT. The government set the VRT rates (A). Individual car distributors set the OMSP (B). A multiplied by B is the VRT amount

E92 wrote: »

Sorry I did indeed misread it - thought you were changing your 520d for another:D

So did I! Time for some recalculations, OP

-Chris-

E92 wrote: »

Okay you will get less for a trade in by waiting till July, but on the other hand if you buy now you are going to have a car that will be significantly devalued in 5 months time with the less attractive higher road tax and then when the next trade in time comes, you will have taken a huge depreciation hit?

Not to be controversial, and I'm not an expert in second hand values, but I'm concerned as to the logic that buying a manual BMW 530d, which has low CO2 emissions and therefore a low road tax rate, will have a good resale value. Any experience that I've had is that large executive cars with large engines and manual gearboxes can suffer some serious depreciation.

All that being said, there'll probably be a significant change in how all these things are perceived by the buyer - maybe they'll focus a lot more on ecological concerns than they have historically...

E92

AudiChris wrote: »

Not to be controversial, and I'm not an expert in second hand values, but I'm concerned as to the logic that buying a manual BMW 530d, which has low CO2 emissions and therefore a low road tax rate, will have a good resale value. Any experience that I've had is that large executive cars with large engines and manual gearboxes can suffer some serious depreciation.

All that being said, there'll probably be a significant change in how all these things are perceived by the buyer - maybe they'll focus a lot more on ecological concerns than they have historically...

Under the old motor tax and VRT system, I completely agree with what you're saying, but now that we have the new system, it is very hard to predict what will happen. We're 5 months out from it and it will be quite sometime before we know how the used car market is going to react to paying more tax every single year for the privilege of an Automatic gearbox. I mean you only have to look at the mentality towards engine size, everything here is down to the lowest common denominator when it comes to engine size(smaller is always better), people think that a 1.8 Avensis type car will guzzle fuel(even though all the EU tests show that at worst they only use a fraction more fuel) compared to a 1.6, so once people see how much most Autos will be affected by road tax and VRT they could very well change their minds!

I'd say the new 'e' models coming from Audi will be far more desirable when it comes to trade in time compared to the non e models when they're both registered after July, and I would still be of the belief that a 5 series type car with no VRT and road tax penalty for an Auto would be far more desirable if registered after July(e.g. petrol 5 series have VRT and road tax penalty for choosing the Auto model).

That is a great feature of the new VRT scheme, fuel saving models like the Audi e models or Bluemotion VWs or EfficientDynamics BMWs etc will be rewarded under the new VRT scheme, so manufacturers will be rewarded for offering low emissions versions here, unlike in other countries where you will be paying more for the eco versions in a car's range.

Hopefully in the case of the 5 series, people will go for the 6 cylinder models now, because they will only cost at most €10 a year more to tax than a 520d does now(in saying that the 520d will be only €150 to tax if registered after July, though any 6 cylinder 5 series will cost almost €1300 to tax at the moment bar the 523i which is around €900 IIRC).

6 cylinders are so much nicer sounding than 4, especially when they're running on petrol:D!

-Chris-

E92 wrote: »

Under the old motor tax and VRT system, I completely agree with what you're saying, but now that we have the new system, it is very hard to predict what will happen. We're 5 months out from it and it will be quite sometime before we know how the used car market is going to react to paying more tax every single year for the privilege of an Automatic gearbox. I mean you only have to look at the mentality towards engine size, everything here is down to the lowest common denominator when it comes to engine size(smaller is always better), people think that a 1.8 Avensis type car will guzzle fuel(even though all the EU tests show that at worst they only use a fraction more fuel) compared to a 1.6, so once people see how much most Autos will be affected by road tax and VRT they could very well change their minds!

I'd say the new 'e' models coming from Audi will be far more desirable when it comes to trade in time compared to the non e models when they're both registered after July, and I would still be of the belief that a 5 series type car with no VRT and road tax penalty for an Auto would be far more desirable if registered after July(e.g. petrol 5 series have VRT and road tax penalty for choosing the Auto model).

That is a great feature of the new VRT scheme, fuel saving models like the Audi e models or Bluemotion VWs or EfficientDynamics BMWs etc will be rewarded under the new VRT scheme, so manufacturers will be rewarded for offering low emissions versions here, unlike in other countries where you will be paying more for the eco versions in a car's range.

Hopefully in the case of the 5 series, people will go for the 6 cylinder models now, because they will only cost at most €10 a year more to tax than a 520d does now(in saying that the 520d will be only €150 to tax if registered after July, though any 6 cylinder 5 series will cost almost €1300 to tax at the moment bar the 523i which is around €900 IIRC).

I agree with the principle of what you're saying, I think the lower road tax will be a definite selling point. I'm nearly of the opinion that the road tax rate will make as big of a effect on second hand values as the change in retail prices!

BUT, I'm not convinced that this logic will work in the luxury sector - the Q7's gonna go up E5,000ish (the X5 will go up a more reasonable E3,200ish) but I don't think it'll affect sales much. When you get to a certain level in the market, a lot of people are more interested in driving something that not many other people can afford.

A higher price will mean more exclusivity (as long as it still represents relative value compared to the competition). A couple of hundred quid a year for the driver of a E60-90K BMW/Audi/Mercedes is a drop in the ocean compared to the depreciation and running costs of these cars.

I wouldn't think that road tax rates'll come into it until the 3rd or 4th owner, when road tax per annum takes a bigger proportion of the running costs as depreciation levels off.