EV Depreciation 2023

alias no.9

https://www.boards.ie/discussion/comment/121908588#Comment_121908588

There are two sides to the high GFMV, say it's 50% like you suggest, sure that puts the cost to change up for the next time but in the catastrophic instance of the actual depreciation hitting 55 or even 60% through a combination of of new EV price drops and a general return to the trend of 50% depreciation over 3 years, the customers losses are limited and it becomes VWs problem.

No doubt, it'll be a difficult choice what to do next but the total cost of ownership for the problem car will be capped.

Kylie Fan

https://www.boards.ie/discussion/comment/121908611#Comment_121908611

in that case the GMFV was lower than market value , if the GMFV was higher than the market value then the Car MFG loses out as they pick up the difference when you return the car. So the car MFG has no real incentive to have a higher than Market price GMFV, that’s why lower depreciation cars can have a lower monthly payment than another equivalently priced new car with the same deposit/APR.

Tesla could lower their Monthly pcp cost and sell more cars if they thought they could raise the GMFV to 40-50%, the only logical reason for that it they are concerned that the market value might be less in 3/4 yrs and they get caught. It may be just a different approach by some brands as the poster above highlighted that some brands already do this as presumably they have more data on residuals compared to some other brands

Cyrus

https://www.boards.ie/discussion/comment/121909448#Comment_121909448

its the same with ICE cars i had PCP with audi on diesel a5s in the past and the GMFV was set at 35% of the RRP, its not an EV thing.

McCrack

Pcp is a mugs game, keeps the squeezed middle squeezed while they get to drive around in a shiny new bland thing thinking they are the dogs bollocks

RainInSummer

But how will I ever bring my home made pesto to all of my Educate Together yummy mummy friends without a shiny new bland thing?

Maybe that's where I'm going wrong. I should be driving a dull old bland thing.

Gumbo

https://www.boards.ie/discussion/comment/121909730#Comment_121909730

User lives up to their user name ❌

ULEZ23

https://www.boards.ie/discussion/comment/121909949#Comment_121909949

They do have a point though, there are a few people playing the pcp game smart but most are hooked on it and have very very little equity in their car

Buddy Bubs

PCP is fine but don't confuse monthly payments with what the car is actually costing you each month, your deposit may very well be being eaten up every month too which could add a few hundred to your monthly costs

Once you know and accept this, you'll be ok

Gumbo

https://www.boards.ie/discussion/comment/121910069#Comment_121910069

Probably. I never used it so can’t confirm.

OEP

If you get 0% on PCP it can allow you to invest/put in savings account/overpay mortgage the extra cash not used over buying it with cash outright. Not always a mugs game

McCrack

Of course is a mugs game, bland new cars that drop in value like a stone in 3 years. Folks that can't afford to buy them but can "afford the repayments".

Your financing a heavily depreciating asset at the expense of putting your money into investments / mortgage, things that actually appreciate in value.

It's bonkers

ELM327

https://www.boards.ie/discussion/comment/121911803#Comment_121911803

If you can't afford to buy a house but can, in your words, afford the repayments, should you not buy a house?

Gumbo

https://www.boards.ie/discussion/comment/121911803#Comment_121911803

Cough “mortgage” cough 😂

djan

https://www.boards.ie/discussion/comment/121911573#Comment_121911573

0% PCP deals are just a marketing gimmick with numbers being moved around to make up for loss of interest. You don't really save anything over the 3 years if you add everything up.

OEP

https://www.boards.ie/discussion/comment/121911803#Comment_121911803

What you're discussing there is buying brand new vs 2nd hand, which is fair enough but if someone wants to buy brand new getting 0% finance PCP/HP frees up cash for the investments you mention vs buying outright with cash

OEP

https://www.boards.ie/discussion/comment/121911831#Comment_121911831

Not always. If they need to shift stock it's often used.

Edit: They can also use it to lock people into the PCP cycle but if you go in with your eyes open that doesn't have to be an issue.

gym_imposter

https://www.boards.ie/discussion/comment/121911831#Comment_121911831

Maybe but while it was once the case that paying cash ensured a cheaper purchase, that is no longer the case as car companies and banks are completely hand in glove

josip

https://www.boards.ie/discussion/comment/121910069#Comment_121910069

Are there any figures available for how people finance new non-business cars and what percentage of them are financed ? And of those that are financed, what's the breakdown of PCP/HP/Personal loans?

djan

https://www.boards.ie/discussion/comment/121911848#Comment_121911848

Similair concept of my argument. Offering 0% finance is the same as doing a discount on the car purchase price. This is done more often to speed up sales rather than changing price as it's bad optics marketing wise to increase the headline purchase prices. Changing of financing rates is more tolerated by buyers than changing prices.

My point is PCP just masks the real cost of buying the car and pushes the can down the road. It's just a way to get people into cars that they cannot really afford to buy and in essence, end up in a cycle of renting cars.

Cyrus

https://www.boards.ie/discussion/comment/121912030#Comment_121912030

Is renting a depreciating asset a bad thing ?

OEP

https://www.boards.ie/discussion/comment/121912030#Comment_121912030

I agree that it's a way of getting people into the cycle, but you don't have to get into the cycle. You generally don't have the option of a discounted price or PCP (except MG are doing it now), so taking 0% PCP is how you avail of the "discount". I don't get how you're a mug if you avail of that, given you want to buy a new car. Eg Tesla had the Model Y at 0% for deliveries before 31st of March, if you want the same Model Y now you have to pay 6.9% or likely wait for the discount to reappear towards the end of the quarter. Whether it's smart to buy a new car is a different argument.

It doesn't mask the real cost of you're fully aware of what you're doing.

BrianD3

PCP generally is a mug's game because of the psychology that underlies it. It exploits human weakness and encourages consumption and unnecessary purchases of new, shiny things. If people were spending a lump sum, they'd be far more circumspect. I always hear arguments like "I'd rather spend the bank's money than my own" and "better to keep my savings" - yet how many people who buy a new car costing 50k on PCP also have at least 50k in savings? Not many I'd say.

The issue here is debt, consumerism and spending too much money on a depreciating transportation appliance. In the case of EVs, appliances which are much more expensive and much less usable than a new Dacia Sandero or Jogger. Appliance purchases which, due to range limitations, mean there is far less headroom for a change in personal circumstances than with a cheaper ICE car. Someone's life changes and now their EV is unsuitable and they are forced back into the market and can't afford to buy a replacement car without selling their now unsuitable one. Each to their own I suppose but I couldn't live like that.

Cyrus

https://www.boards.ie/discussion/comment/121912182#Comment_121912182

i couldn't live driving a dacia sandero either. Oh and I have used pcp and have well in excess of the cars cost in liquid assets!

ULEZ23

https://www.boards.ie/discussion/comment/121912066#Comment_121912066

It’s deeper than asking that simplistic question.

if people understand that’s what they are doing fair enough but I don’t think some/most do as it’s presented in a way to mask that pcp after a few rounds is just expensive renting.

The original point made that triggered this discussion is that pcp allows people buy cars that historically they weren’t able to afford and I believe that’s correct. Pre pcp, people generally bought within their means and built up equity (at a greater pace than depreciation) in their car because that’s what savings and motor loans forced them to do.

Compared to those who went before us some people simply won’t be able to retire or will do so at a later age because upon retirement they will find it hard to adjust their outgoings because everything is becoming rent and subscription based (obviously ignoring the whole defined benefits pension topic). Savings for some people is foreign because the art of saving for something like a new car is unknown to them.

OEP

https://www.boards.ie/discussion/comment/121912182#Comment_121912182

A lot of people have the car's value in cash. If you're buying a new car and you've the option of 0% over 3 years or 50k up front, which would you choose? Given you've 50k disposable cash to spend.

Cyrus

https://www.boards.ie/discussion/comment/121912272#Comment_121912272

PCP is renting, anyone getting into it should be aware of that. Id argue its cheap renting if you are doing it right rather than expensive renting though. If you want new cars you should be renting them imo. If you can afford the monthly you can afford the car, what do you mean cars they cant afford?

Dades

https://www.boards.ie/discussion/comment/121884079#Comment_121884079

We bought a 212 e2008 recently with about 23,000 kms for just under 22k. You could definitely do better than the 16k offered, but maybe the market is going through the yips at this exact moment.

FWIW its been a game-changer and my missis will never go "back".

timmyntc

https://www.boards.ie/discussion/comment/121912299#Comment_121912299

PCP is renting I agree, but many are under the illusion it is buying. It encourages people to rent a car they cannot afford to buy (which is fine), but under the impression you are actually buying it.

Most people on PCP stay on PCP long term, change often and have little equity in their cars. Which is fine, cars are heavily depreciating assets, but there are better deals out there

Cyrus

https://www.boards.ie/discussion/comment/121912381#Comment_121912381

what better deals? do you mean buying a used car instead?

Gumbo

https://www.boards.ie/discussion/comment/121912182#Comment_121912182

No amount of money in the world would have me in a Sandero unfortunately. Each to their own as you say, and there’s at least 704 people in Ireland that like you, like the Sandero.