How did PCP work out in the end?

carsfan2 · 09-12-2019 09:46PM

I agree they have a good product that works well for them and those that sell it but also the customer. Repeat business and replacement of cars is what pcp is about and if people want to be in new cars and pay monthly it’s win win.
It appears bmw especially have mispriced their product and it isn’t working out as no equity at end.
You say you sell pcp, do the manufacturers make it more lucrative for sales people if the car purchase is done using pcp?

L-M · 09-12-2019 10:04PM

No, to be honest theres far less out of a PCP because of the APRs. Ie 0percent APR there’s often very little or no commission.

Bring back the days of 12 percent APR!

Also, I think we end up doing tighter deals to keep a customer and sell a new car. Ie. If you’re in a PCP and you’re paying 450 a month, and we quote a new PCP and it’s 480 a month, the customer can often just say “Match my old payments and I’ll deal” and suddenly we’ve given an extra grand on the trade, just to get a deal.

So it has its benefits in that the customer is somewhat captive, and it’s downsides where the customers trade in value can be very much based on their PCP payments.

sk8board · 09-12-2019 10:23PM

I was in bmw on Thursday for a service and from the usual Dec chit-chat if it would be a busy January it was clear there are a lot of negative equity pcp’s out there.

L-M · 09-12-2019 10:35PM

sk8board wrote: »

I was in bmw on Thursday for a service and from the usual Dec chit-chat if it would be a busy January it was clear there are a lot of negative equity pcp’s out there.

I wouldn’t call it negative equity, just no equity.

If you’re negative you just hand it back, lol.

mickdw · 09-12-2019 10:36PM

They need to get real on gfv and on trade offers even if it needs support from the bmw Ireland.
It's not like the arse falls out of bmw pricing when you.look at used asking prices at main dealers so clearly.the dealers are trying to cream off silly profits.
Local mercedes dealer was telling me (not in a sales situation)
That he had done a good few trade in deals from 5 series owners going to e class where he managed to cover the outstanding finance with hisq trade in offer while bmw were 5k or more short. These were cars with a few km over agreed.

L-M · 09-12-2019 10:48PM

I find that hard to believe when I priced a 171 520d recently and he owed 27600 on it at the end of the PCP. Car is worth 30k next year, at a push.

You’d want 10k equity to get into any E class for any decent PCP, plus they’re almost 6 percent APR.

mickdw · 09-12-2019 10:48PM

L-M wrote: »

I wouldn’t call it negative equity, just no equity.

If you’re negative you just hand it back, lol.

Not if you are over mileage on a bmw! Very much negative equity.

L-M · 09-12-2019 10:53PM

mickdw wrote: »

Not if you are over mileage on a bmw! Very much negative equity.

Hire purchase agreement half rule! Just hand it back and walk away

mickdw · 09-12-2019 11:06PM

L-M wrote: »

Hire purchase agreement half rule! Just hand it back and walk away

Good point. I have heard of people having trouble with that. I know it's legit and should not effect credit in any way but it has happened that it does.
Is there anything at all re mileage or fair usage that can effect a half rule handback?

carsfan2 · 09-12-2019 11:12PM

mickdw wrote: »

They need to get real on gfv and on trade offers even if it needs support from the bmw Ireland.
It's not like the arse falls out of bmw pricing when you.look at used asking prices at main dealers so clearly.the dealers are trying to cream off silly profits.
Local mercedes dealer was telling me (not in a sales situation)
That he had done a good few trade in deals from 5 series owners going to e class where he managed to cover the outstanding finance with hisq trade in offer while bmw were 5k or more short. These were cars with a few km over agreed.

So Mercedes dealer could offer more for a BMW than a BMW dealer could?
Seems odd but in 2017 my father traded his e class for a 5 series. At the time BMW Ireland were giving dealers 4K extra to offer a conquest purchaser i.e. someone with a non BMW car got the extra trade in allowance. I thought at the time it was nuts and went against loyal customers.

mickdw · 09-12-2019 11:16PM

L-M wrote: »

I find that hard to believe when I priced a 171 520d recently and he owed 27600 on it at the end of the PCP. Car is worth 30k next year, at a push.

You’d want 10k equity to get into any E class for any decent PCP, plus they’re almost 6 percent APR.

I didn't say they got into an e class cheaper. Mercedes allowed them to start clean whereas bmw dealer had them 5k or so in the hole before they thought of getting the new car. It's bad business having people returning with their pride and joy only to be told it won't even cover itself.
The mercedes Pcp is more expensive yet more realistic although if you knew you were going well over mileage, your half rule idea on a bmw with the highest gfv (for lowest monthly) deal you could find might be an idea.

bilbot79 · 09-12-2019 11:20PM

How much worse is a PCP deal financially compared to buying outright?

mickdw · 09-12-2019 11:21PM

carsfan2 wrote: »

So Mercedes dealer could offer more for a BMW than a BMW dealer could?
Seems odd but in 2017 my father traded his class for a 5 series. At the time BMW Ireland were giving dealers 4K extra to offer a conquest purchaser i.e. someone with a non BMW car got the extra trade in allowance. I thought at the time it was nuts and went against loyal customers.

Yep, Merc were beating bmw on the trade in.
We know how bmw tend to piss take but it's possible mercedes were doing a sales push too in grabbing bmw buyers where possible. Mercedes chap didn't mention that though.

mickdw · 09-12-2019 11:22PM

bilbot79 wrote: »

How much worse is a PCP deal financially compared to buying outright?

It can be better, depends on the deal.

bazz26 · 09-12-2019 11:22PM

BMW were mainly interested in bringing new customers to the brand by offering what appeared to be low attractive monthly PCP repayments. They then screwed over existing customers and returning customers through low ball trade-in values and little or no PCP equity. They will tell that weaker sterling and cheaper imports were responsible but these factors don't seem to influence the sticker prices of their used cars on their forecourts. They want their cake and eat it at the same time.

bilbot79 · 09-12-2019 11:58PM

mickdw wrote: »

It can be better, depends on the deal.

How so? Would you have example figures to demonstrate?

L-M · 10-12-2019 12:34AM

bilbot79 wrote: »

How so? Would you have example figures to demonstrate?

For example, on a couple of Volkswagen models you can avail of 0 percent APR and get a €1,500 deposit contribution.

So if you paid cash it would actually cost you more than if you PCPd. Plus the benefit of getting free money.

carsfan2 · 10-12-2019 12:32PM

L-M wrote: »

For example, on a couple of Volkswagen models you can avail of 0 percent APR and get a €1,500 deposit contribution.

So if you paid cash it would actually cost you more than if you PCPd. Plus the benefit of getting free money.

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

L-M · 10-12-2019 02:26PM

carsfan2 wrote: »

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

No they’re usually extra so you can negotiate as normal.

They’re paid by the brand

DaveyDave · 10-12-2019 02:35PM

carsfan2 wrote: »

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

I don't believe 0% makes any difference to the dealer, just means the bank isn't making money off those payments. Dealer is paid the same for the car. I believe the dealer gets commission for making PCP sales but not entirely sure.

Very few models are 0%, the majority will have interest. If 1/3 of Golfs are 0% Highlines, this is likely made up by the 2/3 Comfortline/Trendline models at 3.9%. Then you've got 1.9% on the GTI and R, they're €45-45k cars so will bring in decent equity.

Then you've for 5.9% on all VW second hand cars, PCP isn't as favourable on second hand cars but still better than a bank loan.

Those Scania, Lamborghini and Bugatti don't pay for themselves either.

mickdw · 10-12-2019 03:30PM

DaveyDave wrote: »

I don't believe 0% makes any difference to the dealer, just means the bank isn't making money off those payments. Dealer is paid the same for the car. I believe the dealer gets commission for making PCP sales but not entirely sure.

Very few models are 0%, the majority will have interest. If 1/3 of Golfs are 0% Highlines, this is likely made up by the 2/3 Comfortline/Trendline models at 3.9%. Then you've got 1.9% on the GTI and R, they're €45-45k cars so will bring in decent equity.

Then you've for 5.9% on all VW second hand cars, PCP isn't as favourable on second hand cars but still better than a bank loan.

Those Scania, Lamborghini and Bugatti don't pay for themselves either.

You would want to do the figures on a 5.9 percent Pcp to see what the equivalent interest rate would be on a straight hp deal cause Pcp can get expensive due to paying interest on the large offset amount not being settled until end of term.
Personally I'd take a low or zero percent Pcp everyt i me even if cash was sitting in bank.
I would not take a 5.9 percent Pcp on a used car though.

L-M · 10-12-2019 05:47PM

DaveyDave wrote: »

I don't believe 0% makes any difference to the dealer, just means the bank isn't making money off those payments. Dealer is paid the same for the car. I believe the dealer gets commission for making PCP sales but not entirely sure.

Very few models are 0%, the majority will have interest. If 1/3 of Golfs are 0% Highlines, this is likely made up by the 2/3 Comfortline/Trendline models at 3.9%. Then you've got 1.9% on the GTI and R, they're €45-45k cars so will bring in decent equity.

Then you've for 5.9% on all VW second hand cars, PCP isn't as favourable on second hand cars but still better than a bank loan.

Those Scania, Lamborghini and Bugatti don't pay for themselves either.

The Trendline Golf would never be sold on PCP and more than likely never a Comfortline either. I know they advertise PCP on them, but between the lower APR and higher future value, the payments on a Highline could be the same, sometimes slightly lower than a Trendline on PCP.

It’s always the Highline spec.

sk8board · 10-12-2019 11:06PM

L-M wrote: »

The Trendline Golf would never be sold on PCP and more than likely never a Comfortline either. I know they advertise PCP on them, but between the lower APR and higher future value, the payments on a Highline could be the same, sometimes slightly lower than a Trendline on PCP.

It’s always the Highline spec.

Pretty much yep - we just changed on Friday out of a golf highline into a golf r-line, both on 0%.
The higher spec cars with predefined specs and tech packs can be discounted off list, but if you spec a car yourself, each option ticked is paid in full on top of your monthly pcp , however it doesn’t get added to the GFV, so you’re just paying for that option in full over the 3 years and getting zero for it on the other end.

L-M · 10-12-2019 11:29PM

Ah you wouldn’t get 0 for it.

For example if you had a sunroof, you’d likely get half it or more back. Which would turn into equity at the other end

carsfan2 · 11-12-2019 10:00AM

L-M wrote: »

Ah you wouldn’t get 0 for it.

For example if you had a sunroof, you’d likely get half it or more back. Which would turn into equity at the other end

Maybe on a VW. I’ve seen some figures for Bmw’s and majority of options add zero to the value. Only m sport plus pack and a couple more add any value at the back end.

L-M · 11-12-2019 10:55AM

carsfan2 wrote: »

Maybe on a VW. I’ve seen some figures for Bmw’s and majority of options add zero to the value. Only m sport plus pack and a couple more add any value at the back end.

That’s because the majority of options on BMW are ridiculous and should be standard anyway.

TheBigEvil · 11-12-2019 11:50AM

bazz26 wrote: »

BMW were mainly interested in bringing new customers to the brand by offering what appeared to be low attractive monthly PCP repayments. They then screwed over existing customers and returning customers through low ball trade-in values and little or no PCP equity. They will tell that weaker sterling and cheaper imports were responsible but these factors don't seem to influence the sticker prices of their used cars on their forecourts. They want their cake and eat it at the same time.

Yea, this exactly. Happened to me a couple of years ago. Got a new 3 series on PCP and when PCP deal was up, I went in to trade in they screwed me and only offered me the GMFV. I was with them for nearly two hours, with their head of finance, arguing that there had to be at least a few K of equity in it. Car was perfect condition, mileage was as agreed in the PCP agreement. They were having non of it. The same 2nd hand car was selling on their lot for 8k more than my GMFV. They wouldn't even give me 1k equity.

So I said screw it and I went to VW, they gave me 5k equity on the BMW, and I got a fully loaded, new, Passat on their PCP, 0% finance.

I'd never touch BMW again. They want it every way.

mickdw · 11-12-2019 09:48PM

TheBigEvil wrote: »

Yea, this exactly. Happened to me a couple of years ago. Got a new 3 series on PCP and when PCP deal was up, I went in to trade in they screwed me and only offered me the GMFV. I was with them for nearly two hours, with their head of finance, arguing that there had to be at least a few K of equity in it. Car was perfect condition, mileage was as agreed in the PCP agreement. They were having non of it. The same 2nd hand car was selling on their lot for 8k more than my GMFV. They wouldn't even give me 1k equity.

So I said screw it and I went to VW, they gave me 5k equity on the BMW, and I got a fully loaded, new, Passat on their PCP, 0% finance.

I'd never touch BMW again. They want it every way.

Ya they are destroying the bmw business due to being too greedy on individual deals.
It's a very similar tale to what I'd said above re mercedes giving better trade in on 5 series than bmw.
They are screwing people, plain and simple. Playing on some people's belief that they need to trade in to bmw.

sk8board · 11-12-2019 10:13PM

L-M wrote: »

Ah you wouldn’t get 0 for it.

For example if you had a sunroof, you’d likely get half it or more back. Which would turn into equity at the other end

The 2 options we priced on Thursday at vw were different alloys and the pano sunroof. It was about €75-100 extra pm for them and no change to the min value, which is pretty high. He said the generic offer on a well looked after golf was €2k above gmv irrespective of extras and we could expect to get none of the money spent on extras back

edit: important to add that this happens because all the pcp golfs are higher spec Highline and rLine’s, so the few remaining missing extras won’t make much diff to the resale value

L-M · 11-12-2019 10:36PM

sk8board wrote: »

The 2 options we priced on Thursday at vw were different alloys and the pano sunroof. It was about €75-100 extra pm for them and no change to the min value, which is pretty high. He said the generic offer on a well looked after golf was €2k above gmv irrespective of extras and we could expect to get none of the money spent on extras back

edit: important to add that this happens because all the pcp golfs are higher spec Highline and rLine’s, so the few remaining missing extras won’t make much diff to the resale value

Pan roof would definitely add a few bob to your equity next time around, that’s for sure. Because very few other Golfs will have one.

Not sure what you mean about 2k above GMFV. Some 171 Golfs are coming back at 10k GMFV and being allowed 17-18k on trade in.

Sounds like you’re in Dublin and be robbed if you’re being offered 14k

How did PCP work out in the end?

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