No PCP on new diesel.

_Brian · 18-05-2018 11:57AM #1

Was in pricing a new Kuga yesterday in the main dealer and the sales guy wouldn’t quote me for a PCP deal on a diesel.

He said there was no idea where the value of diesels would be in three years due to hybrid and electric developments.

I was quite taken back, he said it was becoming common among dealers.

We do maybe 30-33k km a year and tow regularly so we warrant buying diesel.

Was no mention in Seat/Skoda dealers.

Dia1988 · 18-05-2018 12:50PM

WOW, that is interesting!

Did you try another Ford dealer?

colm_mcm · 18-05-2018 01:03PM

So are they doing PCP on Mondeos?

_Brian · 18-05-2018 01:09PM

He just said Diesels... No reason to beleive it was just the Kuga..

Didnt try another dealer as I pass this one all the time, next dealer is 40Km out of my way..
I might ring though for the interest..

Dia1988 · 18-05-2018 03:50PM

I suspect that's waffle from that sales guy.
Cavanaghs in Cork even have their own PCP calculator online that will quote a PCP on a Kuga.

https://cavanaghs.com/pcp-calculator/

Heres Johnny · 18-05-2018 04:20PM

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

Lantus · 18-05-2018 05:14PM

Heres Johnny wrote:

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

Surely no loan product is appropriate if there value might drop so much?

And its nothing to with a good deed. It's because they feel they can't make money from them on the current gmfv. They could reduce it to compensate which helps with people handing back keys. If a customer buys outright after 3 years or trades back up there is no loss to the dealer.

Atlantic Dawn · 18-05-2018 11:43PM

The same dealers would flog people cars requiring Ad Blue topups to people doing 5k miles a year and not even mention it to them, they are worrying now because the financial backers are going to lose their bollix on PCP and rightfully so on the criteria they used to give loans to people who shouldn't have been lent the price of a tank of fuel. Once there's no idiotic government bailout in our basket case country I couldn't give a flying F.

Zonda999 · 19-05-2018 01:27PM

Heres Johnny wrote: »

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

This isn't quite the case with PCP though, with PCP, the buyer knows what the GFMV is, and have certainty over it. They do not need to go through with the PCP if they do not like the GFMV they have been quoted prior to purchase.

Fair enough comment if applied to any other method of purchase other than PCP, if the future residual hit on diesels really will be as bad as some would have you believe.

DaveyDave · 19-05-2018 01:50PM

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity? Unless of course there's feck all equity in them at the moment.

Nonoperational · 19-05-2018 01:52PM

DaveyDave wrote: »

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity?

Yep.

Lantus · 19-05-2018 02:26PM

DaveyDave wrote:

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity? Unless of course there's feck all equity in them at the moment.

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

Doddles88 · 19-05-2018 05:03PM

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

In that case you should just hand the car back and the next day go down and buy it for 5k

CeilingFly · 19-05-2018 05:06PM

Lantus wrote: »

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

"gmfv" = GUARANTEED future minimum value. The dealer would take the loss not the customer.

micar · 19-05-2018 05:14PM

Heres Johnny wrote: »

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

Totally agree.

In recent years people were duped into buying diesel when a petrol would have been a better choice.

As a person who drives about 10km per annum, I'd ever consider a diesel.

What annoys me is that I want to replace my car but there is a serious under supply of decent petrol cars. My real only option is to purchase from UK or NI which has its own risks.

Matt406 · 20-05-2018 08:30AM

That’s interesting – I’ve been pricing diesel 7 seaters all on PCP finance over the last few weeks and no dealer has raised any concerns regarding PCP deals on diesel and GFV’s. Makes – VW/Skoda/Ford/Kia/Peugeot & Renault

If there’s doubt over the value of diesels in 3 years’ time is it not best to set a higher “GFV” now, so that if values do fall substantially the dealer/manufacturer takes more of the hit!

Lantus · 20-05-2018 08:40AM

Matt406 wrote:

If thereâ€™s doubt over the value of diesels in 3 yearsâ€™ time is it not best to set a higher â€œGFVâ€ now, so that if values do fall substantially the dealer/manufacturer takes more of the hit!

Lower gmfv! The dealer will want more of the car paid off. They won't be taking the hit for you. Look at the Nissan leaf where the gmfv is around 30% compared the more typical 45%.

In reality there would have to be a fairly big discrepancy between the real world value and gmfv for it to warrant handing the car back. Several thousand at least which doesn't seem likely.

KevinCavan · 20-05-2018 08:46AM

As another poster alluded to here, this pcp lending could be the next bubble to burst. The final balloon payments will be too much for many in a few years and their cars could be worth so little that handing back the keys might not be an option. Never before has the car industry been so unpredictable, with manufacturers likely to cease diesel car production altogether, think Volvo and Toyota.

Matt406 · 20-05-2018 10:03AM

Lantus wrote: »

Lower gmfv! The dealer will want more of the car paid off. They won't be taking the hit for you. Look at the Nissan leaf where the gmfv is around 30% compared the more typical 45%.

In reality there would have to be a fairly big discrepancy between the real world value and gmfv for it to warrant handing the car back. Several thousand at least which doesn't seem likely.

Just to clarify – if I take 2 cars, A & B
Both have a list price of approx. €37,000.
I put in 20% deposit on both, car A has a GFV set by the manufacturer/dealer of €12,000 while car B has a GFV set at €14,500. Car B with a GFV of €14,500 has lower monthly repayments and in 3 years’ time has the manufacturer/dealer having more “skin in the game” when it comes to resale values - if diesel values plummet! Car B offers me €2,500 more protection from falling diesel values!

Lantus · 20-05-2018 11:39AM

Matt406 wrote:

Just to clarify â€“ if I take 2 cars, A & B Both have a list price of approx. â‚¬37,000. I put in 20% deposit on both, car A has a GFV set by the manufacturer/dealer of â‚¬12,000 while car B has a GFV set at â‚¬14,500. Car B with a GFV of â‚¬14,500 has lower monthly repayments and in 3 yearsâ€™ time has the manufacturer/dealer having more â€œskin in the gameâ€ when it comes to resale values - if diesel values plummet! Car B offers me â‚¬2,500 more protection from falling diesel values!

Well consumers don't set gmfv values but in your example trading in a car with 14.5k of debt would provide zero deposit into the next deal if resale values are low. The consumer would require at least 10% again to start off. The 14.5k of gmfv could be 25k but the consumer still needs 10% deposit.

The dealer will take the hit alright as it needs to settle the finance. Its unlikely that the market will plummet unless the price of diesel doubles overnight. The industry will want a smooth transition and grants and subsidies will provide a buffer.

If values do fall then car a with 12.5k gmfv has a slightly better chance of some equity? Better for the consumer. Surely that is your primary concern?

RedorDead · 22-05-2018 09:43AM

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

OP - might be no harm going to manufacturer back PCP models such as VW Bank (Audi, Seat, Skoda + VW) and BMW if you're still interested in a similar model. These brands are all still backing diesel and will quote and honour a diesel on PCP.

Or maybe just look at another Renault dealer - sounds like you picked a plum.

Mooooo · 22-05-2018 10:22AM

RedorDead wrote: »

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

OP - might be no harm going to manufacturer back PCP models such as VW Bank (Audi, Seat, Skoda + VW) and BMW if you're still interested in a similar model. These brands are all still backing diesel and will quote and honour a diesel on PCP.

Or maybe just look at another Renault dealer - sounds like you picked a plum.

Kuga is Ford. If keeping the car may be as well off to use standard finance unless pcp is at or close to 0% as interest is being charged and payed for on the whole amount while the capital isn't being paid off

Lantus · 22-05-2018 11:18AM

RedorDead wrote:

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

Yes but the customer has zero equity moving into a new deal so its a double hit. The phrase guaranteed value is a little misleading. It's the bit of the car you haven't paid for. Fixed outstanding debt might be a better way to describe it? Your fixed outstanding debt won't change regardless of any change in car values.

In a rising market your fixed outstanding debt will help provide more equity as the gap between this and actual values widens.

In a falling market both dealer and consumer lose out as outlined above.

Even if the dealer took a 10k hit its of no benefit or concern to the customer. You will still need liquid cash to start a new pcp deal of at least 10%.

A lower gmfv helps protect against this fall. But it increases the monthly payments making these deals less affordable so a double edged sword.

CeilingFly · 22-05-2018 02:10PM

Just realised why the OP was refused - mileage is too high.

30-33,000 km leading to 100,000km after 3 years will be above most pcp mileage limits.

Allowing for overspill, the OP may be closer to 35k km a year and most pcp's are calculated at 15-20,000km a year with a 6c surcharge over that.

so after 3 years a further 3k would come off the GFMV.

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Lantus · 22-05-2018 06:37PM

CeilingFly wrote:

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Good point.

Some marks will quote but the best outcome would be to buy outright. So 3 years payments plus 1 to 3 years additional payments subject to financing arrangements.

If the op can save extra over the first 3 years they can cannabilise the gmfv debt from day 1.

_Brian · 22-05-2018 07:01PM

CeilingFly wrote: »

Just realised why the OP was refused - mileage is too high.

30-33,000 km leading to 100,000km after 3 years will be above most pcp mileage limits.

Allowing for overspill, the OP may be closer to 35k km a year and most pcp's are calculated at 15-20,000km a year with a 6c surcharge over that.

so after 3 years a further 3k would come off the GFMV.

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Nope.
We never got as far as the mileage conversation at all.

Blazer · 23-05-2018 12:24PM

Lantus wrote: »

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

You should really stay out of this post as it’s obvious you haven’t a clue about it

Lantus · 23-05-2018 12:46PM

Blazer wrote:

You should really stay out of this post as itâ€™s obvious you havenâ€™t a clue about it

Any specific issue you want to discuss? Or just one line snide comments?

Blazer · 23-05-2018 12:54PM

Lantus wrote: »

Any specific issue you want to discuss? Or just one line snide comments?

Well go ahead and research GMFV first and then come back to me.

here's a nice handy link for you

https://www.icalculator.info/terminology/GMFV-final-payment.html

Lantus · 23-05-2018 01:12PM

Blazer wrote:

here's a nice handy link for you

Blazer wrote:

Well go ahead and research GMFV first and then come back to me.

Thanks, it's a little badly written in parts ( a few key sentences missing) but no different to anything I've stated unless you want to make a specific point?

kdevitt · 23-05-2018 04:35PM

I’m just over two years into a PCP on a BMW and discovered last week that I already have zero equity in it. Interestingly, both dealers I spoke to are trying to push traditional HP deals now.

Keys will be handed back at the end of the agreement and I’ll pick up a used UK car i’m guessing.

No PCP on new diesel.

Comments