Impact of COVID-19 on motor industry?

johndaman66 · 28-04-2020 3:00pm

jmreire wrote: »

Hindsight being the great thing that it is. and with covid-19 foreseen, then no one would have entered into any financial agreement...for anything. But unfortunately, that's not what happened. People live their lives according to their circumstances ( and that includes financial matter's as well) So may have been buying / leasing car's ( and other thing's as well ) for a long time without problem. Then out of the blue..big change in the financial circumstances, and suddenly car/ house, take your pic expenditure becomes unaffordable. Not too many can afford to pull €40-50'000 out of their pockets for a upfront car purchase. And if that is what it would take to buy a new car/other, then precious little cars/other would be sold,and thats a fact !!!

With due respect I think you are missing the point he is making though. Other poster was not suggesting as far as I can see that someone who bought a car on PCP/ hire purchase should have €40 - €50k to buy a car outright. Rather that if they are in trouble making their repayments and don't have that cash buffer set aside to continue their repayments at what is lets be fair about it not too long into this crisis in the scheme of things, then there is something amiss.

Yes you can be unlucky and the longer a financial crisis goes on the greater a likelihood of someone running into financial difficulty. However, if someone who bought a €40 - €50k motor is in trouble at this early stage then to be quitr honest on I would not have much sympathy for them on the face of it. People need to take greater stock of their finances and not borrow outlandishly or strech themselves because they do not see any other option but to have a €40 - €50k motor, the Jones down the road have one or they simply can etc etc. The line from the previous financial crisis that I could not hack even slightly was - we all lost the run of ourselves, we all overindulged etc. - NO - while a lot did, not all did so.

28-04-2020 3:05pm

johndaman66 wrote: »

........... The line from the previous financial crisis that I could not hack even slightly was - we all lost the run of ourselves, we all overindulged etc. - NO - while a lot did, not all did so.

Indeed.

I also struggled with the "having to go to Oz" thing and then when they came back "Ireland is a kip, Oz is great" ........ but they'd still sh1te on about how they HAD to go, but it was bliss over there

jmreire · 28-04-2020 4:57pm

johndaman66 wrote: »

With due respect I think you are missing the point he is making though. Other poster was not suggesting as far as I can see that someone who bought a car on PCP/ hire purchase should have €40 - €50k to buy a car outright. Rather that if they are in trouble making their repayments and don't have that cash buffer set aside to continue their repayments at what is lets be fair about it not too long into this crisis in the scheme of things, then there is something amiss.

Yes you can be unlucky and the longer a financial crisis goes on the greater a likelihood of someone running into financial difficulty. However, if someone who bought a €40 - €50k motor is in trouble at this early stage then to be quitr honest on I would not have much sympathy for them on the face of it. People need to take greater stock of their finances and not borrow outlandishly or strech themselves because they do not see any other option but to have a €40 - €50k motor, the Jones down the road have one or they simply can etc etc. The line from the previous financial crisis that I could not hack even slightly was - we all lost the run of ourselves, we all overindulged etc. - NO - while a lot did, not all did so.

Just how many people out there are going PCP/HP/ other loan etc, because they actually need a car for work etc?? what % of buyers would fall into this bracket, do you think? They borrow ( and remember that now is not the 2007 borrow all you like madness) what they can afford / or what the bank /PCP will give them. And this is based on their personal finances at the time. Then their whole financial world is turned upside down...if they had that kind of money to start with, why borrow at all? People borrow for the essential's that they need, and not just willy nilly ( at least the vast majority of them )

McCrack · 28-04-2020 6:01pm

jmreire wrote: »

Just how many people out there are going PCP/HP/ other loan etc, because they actually need a car for work etc?? what % of buyers would fall into this bracket, do you think? They borrow ( and remember that now is not the 2007 borrow all you like madness) what they can afford / or what the bank /PCP will give them. And this is based on their personal finances at the time. Then their whole financial world is turned upside down...if they had that kind of money to start with, why borrow at all? People borrow for the essential's that they need, and not just willy nilly ( at least the vast majority of them )

Finance/pcp for a brand new depreciating asset worth 30/40 plus k is not an essential need by any stretch, in fact its completely daft.

jmreire · 28-04-2020 7:15pm

McCrack wrote: »

Finance/pcp for a brand new depreciating asset worth 30/40 plus k is not an essential need by any stretch, in fact its completely daft.

Just as I make the point that the majority of people buy a car out of need, and according to their fiances, there is too a Nr of people whose aim in life is to drive the latest model in the brand that they fancy, and thats their choice. And if they can afford it, why not??? Good Luck to them. But they are in the minority.

McCrack · 28-04-2020 9:24pm

jmreire wrote: »

Just as I make the point that the majority of people buy a car out of need, and according to their fiances, there is too a Nr of people whose aim in life is to drive the latest model in the brand that they fancy, and thats their choice. And if they can afford it, why not??? Good Luck to them. But they are in the minority.

Having the ability to afford something and the ability to access credit are not the same things.

And no the latter are not in the minority, in fact the majority of brand new car purchases are financed through some kind of credit.

mickdw · 28-04-2020 9:38pm

McCrack wrote: »

Finance/pcp for a brand new depreciating asset worth 30/40 plus k is not an essential need by any stretch, in fact its completely daft.

Not essential but not completely daft if you can afford it.
A 30k car is probably costing 5k per year in depreciation. Thats reasonable enough to drive a new safe comfortable warrantied car that will need nothing spent on it.
A 3 or 4 year old will likely be costing half that figure annually in depreciation plus will need some extra maintenance.
So the new car is costing less than 2500 more per year than a well used one.
Hardly complete lunacy.

jmreire · 28-04-2020 9:39pm

McCrack wrote: »

Having the ability to afford something and the ability to access credit are not the same things.

And no the latter are not in the minority, in fact the majority of brand new car purchases are financed through some kind of credit.

Yes , thats well understood, the difference between basically having cash, and having access to credit. But and what happens to these vehicles acquired with credit, when the financial well dry's up? And according to financial wizards, we are in for a recession which will make the collapse of 2008 seem mild in comparison. So for those of "Independent Financial Mean's", no change. But for those who used credit, and are now under changed financial means ?? What do you think?
And so back to the original purpose of this thread....how will Covid -19 affect the motor industry here..my guess is that if the recession is going to be as bad as forecast, then there will be a flood of 2nd hand cars released on to the market, and at vastly reduced price's.

mickdw · 28-04-2020 9:51pm

If sales stop in a huge recession, I dont see that resulting in a flood of cars coming cheap onto the market. Some hand backs for sure but dealers should be able to clear them quickly and then have a strong used car market after that.
In the last recession, the drop in new sales very quickly meant that good used cars were in demand and prices became very strong. 09 cars were very thin on the ground if I remember right.
So my theory is very poor new sales figures for the next year or 2 with a good used car trade taking over somewhat.

Leonard Hofstadter · 28-04-2020 10:01pm

mickdw wrote: »

If sales stop in a huge recession, I dont see that resulting in a flood of cars coming cheap onto the market. Some hand backs for sure but dealers should be able to clear them quickly and then have a strong used car market after that.
In the last recession, the drop in new sales very quickly meant that good used cars were in demand and prices became very strong. 09 cars were very thin on the ground if I remember right.
So my theory is very poor new sales figures for the next year or 2 with a good used car trade taking over somewhat.

Not only that, but the UK won't be an option from the end of the year unless they come to some sort of an agreement on trade (which seems unlikely).

Could end up working out quite nicely for the SIMI in the medium term, because used cars will become dearer (with no cheap UK imports as competition), therefore trade-in values will go up. If nobody buys new cars will some of the car fleet will still need replacing, so that will also increase the value of the used car fleet, which in turn will make some brave it and say sure they might as well get a new car when the cost differential is relatively minor.

The only thing that would really stop new car sales is people not wanting to be seen to be rubbing it in the faces of their neighbours in a massive recession by buying a new car, but if used car values go up a lot, then some of those will just say feck it I'm buying a new car because it won't be that much more.

Toyotafanboi · 28-04-2020 10:03pm

jmreire wrote: »

And so back to the original purpose of this thread....how will Covid -19 affect the motor industry here..my guess is that if the recession is going to be as bad as forecast, then there will be a flood of 2nd hand cars released on to the market, and at vastly reduced price's.

I dont think think that'll happen in fairness. I dont even know if the recession prediction is an accurate forecast. Sure how can we predict that?

Where would the flood of second hand cars come from?

I cant remember the ins and outs of it but remember seeing stats somewhere before that virtually every car repossession leads to a loss for the banks so repossession is a total last resort and almost just a matter of principle in extreme cases. They'd rather have you in the car paying reduced monthly payments than have you hand it back or be forced to take it back.

That and most people on PCP's on middling cars arent paying very much anyway, so shouldn't struggle to keep up unless they are long term unemployed.

H.E. Pennypacker · 28-04-2020 10:06pm

Its worth remembering that in 2008 quite a few big dealers failed not just because they had invested in glass palaces and the market tanked but because they had other property investments with everything intertwined. In many cases, the property investment failure brought everything down for them. That's not to say that we won't see dealers go under and/or there won't be job losses but it won't be for the same reason and probably not to the same scale.

28-04-2020 10:20pm

Leonard Hofstadter wrote: »

........
The only thing that would really stop new car sales is people not wanting to be seen to be rubbing it in the faces of their neighbours in a massive recession by buying a new car, but if used car values go up a lot, then some of those will just say feck it I'm buying a new car because it won't be that much more.

The massive recession is another thing that would stop new car sales

johndaman66 · 28-04-2020 10:32pm

jmreire wrote: »

Just how many people out there are going PCP/HP/ other loan etc, because they actually need a car for work etc?? what % of buyers would fall into this bracket, do you think? They borrow ( and remember that now is not the 2007 borrow all you like madness) what they can afford / or what the bank /PCP will give them. And this is based on their personal finances at the time. Then their whole financial world is turned upside down...if they had that kind of money to start with, why borrow at all? People borrow for the essential's that they need, and not just willy nilly ( at least the vast majority of them )

To give as direct an answer to that question I would say that many out there need a car for work, most especially if you live outside the Pale. No doubt they will need to go PCP/ HP/ Other loan to finance a €40k plus car. But do they need and can they actually genuinely afford a €40k plus car is the question and the whole crux of it. In my eyes if someone has to hand back the keys to whoever they have to this early in the crisis then they simply cannot afford that car.

To me a €40k plus car that is subject to heavy depreciation is a nice to have and absolutely fair play to anyone who can comfortably afford it - be it outright or on finance. However, I just don't see any sense of achievement in having that car if in the early days of a crisis they have no buffer set aside for it and cannot afford to keep up their repayments. I'd actually hate to live like that and in my book it is just basic financial prudence. That's just me and no doubt I would be considered by many to be old fashioned or a bit of a square to hold that point of view.

Water2626262 · 28-04-2020 10:33pm

Cutting VRT is a stupid idea. How will people who just bought a new Renault feel? Dealer pre reg / demo stock has a further 3k loss per unit. Returning PCP customers screwed on trade ins. All so that the Irish distributor hits the target for France.

Leonard Hofstadter · 28-04-2020 10:39pm

Augeo wrote: »

The massive recession is another thing that would stop new car sales

Obviously, but despite the (very understandable) doom and gloom out there, many people will still be in the same jobs, and on the same salaries, so could afford to buy. Indeed, for many of us in that very lucky scenario, we're saving a fortune right now with there being literally nothing to spend our money on outside of groceries or maybe the odd take-away or online clothes shop.

My point here is that there will still be plenty of people who can afford to splash the cash on a new car, but simply won't because of the optics, or else will go for a smaller/cheaper model instead (for the same reason). Higher trade in values will encourage some of this cohort to buy new instead of used.

sc86 · 28-04-2020 10:43pm

this is nothing like 2008 situation , things are paused , there was no huge bang like then.
A dip yes , mayby a few dacia dusters going handy , but come on lets stop the dramatics

Top Dog · 28-04-2020 11:38pm

sc86 wrote: »

this is nothing like 2008 situation , things are paused , there was no huge bang like then.
A dip yes , mayby a few dacia dusters going handy , but come on lets stop the dramatics

Ah! So thats what it is. And there was me thinking the likes of the Hospitality & Tourism industries are on their knees with not even the faintest clue as to when they might begin to recover. Hundreds of thousands at home at the moment, a number of whom may not have a job to go back to once the government subsidy runs out.

Yeah, no place for alarm or dramatics :rolleyes:

jmreire · 28-04-2020 11:47pm

sc86 wrote: »

this is nothing like 2008 situation , things are paused , there was no huge bang like then.
A dip yes , mayby a few dacia dusters going handy , but come on lets stop the dramatics

I hope that you are right, sc86. Believe me, I have absolutely no wish to live through a 2008 " Soft Landing" financial crash again... but have a look see at what the ESRI have to say about that, and even our finance minister says that he has little doubt that Covid-19 will cause the worst recession since the great depression. None the less, I fervently hope that you will prove right.

sc86 · 29-04-2020 9:16am

The huge difference is that we are going to throw money at this to try fix it , austerity was the tactic for the 2008 shambles and that clearly didnt work.

Have a listen to a david mcwilliams podcast , or if you want come to your own ideas.

29-04-2020 9:17am

sc86 wrote: »

this is nothing like 2008 situation , things are paused , there was no huge bang like then.
A dip yes , mayby a few dacia dusters going handy , but come on lets stop the dramatics

As others have said, we hope you are correct but that seems highly unlikely.
It's looking like offices etc that can adopt social distancing won't be allowed reopen until September so anyone working in those facilities who can't work from home aren't working until September, that's 6 months off work.

Along with hospitality, tourism and any amount of other sectors that have been hit that we don't really talk about.

Once you go beyond a week or so it's beyond a pause, it's a temporary shut-down of unknown length at best, a terminal shut-down at worst.

29-04-2020 9:17am

sc86 wrote: »

The huge difference is that we are going to throw money at this to try fix it , austerity was the tactic for the 2008 shambles and that clearly didnt work.

Indeed, but will folk throw money at a new car when they are after months of social welfare payments?

sc86 · 29-04-2020 9:20am

Augeo wrote: »

Indeed, but will folk throw money at a new car when they are after months of social welfare payments?

The motor trade is about more than new car sales figures

29-04-2020 9:25am

sc86 wrote: »

The motor trade is about more than new car sales figures

No doubt, folk will still get their cars serviced and buy tyres etc.
But new car sales will be impacted, have no doubt for the rest of 2020 and likely into 2021.

Folks mileage in 2020 will plummet in at loads of cases too, the demand for servicing will decrease one would imagine. I'm doing 250kms/week instead of 750kms/week and I'm still working on sites. Every month of this lockdown is 2000kms less on my car. I'm fairly sure I'm not alone with that significantly reduced mileage.

WFH is also going to be far more prevalent for the rest of 2020, and likely beyond. Again, loads of folk using their cars much less.

sc86 · 29-04-2020 9:30am

Augeo wrote: »

No doubt, folk will still get their cars serviced and buy tyres etc.
But new car sales will be impacted, have no doubt for the rest of 2020 and likely into 2021.

Yes they will for sure , new car sales were already on the slide before this.
Theres a huge amount of second hand cars about for dealers to trade in and cars will still need to be fixed.
Places will need to adapt

sc86 · 29-04-2020 9:38am

Top Dog wrote: »

Ah! So thats what it is. And there was me thinking the likes of the Hospitality & Tourism industries are on their knees with not even the faintest clue as to when they might begin to recover. Hundreds of thousands at home at the moment, a number of whom may not have a job to go back to once the government subsidy runs out.

Yeah, no place for alarm or dramatics :rolleyes:

2008 is nothing like whats going on today.

For example in the motor trade , alot of garages were not going bust because people stopped buying new cars in the main part , it was because alot had bought land / houses etc with loans from banks , use the garage as the colateral .
The when land they bought to develope for millions to build houses on suddenly was worth nothing , and nobody was building houses anymore , the garages went with the land to the banks / nama

So the disaster thats unfolding today is nothing like 2008 for many reasons , the above being a example

29-04-2020 9:43am

sc86 wrote: »

.........

For example in the motor trade , alot of garages ..... going bust......... because alot had bought land / houses etc with loans from banks , use the garage as the colateral .
The when land they bought to develope for millions to build houses on suddenly was worth nothing , and nobody was building houses anymore , the garages went with the land to the banks / nama ............

For everyone of those there's more that went bust as they'd a nice new showroom on a new site and it was all borrowed.

And some of them pocketed (quite rightly too) the proceeds of the sale of their previous garage that was bought by developers.

Others, went bust without being ok from a personal finance perspective.

joujoujou · 29-04-2020 3:01pm

Surprisingly, my usual brake discs supplier from Derry has reopened. Didn't really expect it to happen so quickly. Happy days!

carsfan2 · 29-04-2020 3:02pm

https://www.irishtimes.com/business/economy/motor-vehicles-generate-6-2bn-in-taxes-for-state-says-report-1.4239993

This article shows the importance of the sector to the country.
I wonder will garages be allowed open again next week. Maybe for servicing but I can't see why a showroom could not be open if strict limit on numbers.
That said it is not an essential journey to check out a car.

jmreire · 29-04-2020 3:05pm

sc86 wrote: »

The huge difference is that we are going to throw money at this to try fix it , austerity was the tactic for the 2008 shambles and that clearly didnt work.

Have a listen to a david mcwilliams podcast , or if you want come to your own ideas.

So we are going to throw money a it,,,,wonder why we did not do that in 2008?? And where is this money going to come from? I presume that it will have to be repaid?? And at what cost?
Currently, what I am quoting is coming from the ESRI, and our Minister of Finance, who has a whole department of professionals working for him.And financially, is in charge, his opinion will do for me. But if you prefer David Williams, go right ahead, and good luck to you, As I have already said earlier, I sincerely hope that we will not have recession, but based on what I see and hear, I don't think that it can be avoided.

Impact of COVID-19 on motor industry?

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