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Is PCP destroying the used car market?

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lukemk5gti:
I'm not sure if the UK is offering the same PCP schemes as Ireland but in the last couple of years I've seen countless people driving around in brand new cars since any average Joe can no afford a brand new 2017 golf with an attractive trade in and low monthly payments.

I've noticed for the first time here in Ireland that a golf R dropped below the 30K mark and a mk7 GTI with really high spec for just over 20K from a main dealer. (remember we have far less cars in Ireland so typically our prices are higher due to demand).

It looks like the new PCP scheme may be the problem or at least a contributing factor to the huge drop in second hand car prices. I suppose this is good for those that can't afford the latest model but bad for those who drove their brand new car out of the showroom and after a year it's worth half as much as it was.

grey golfster:
Don't know Ireland, but would tend to agree with you.
Interesting thought...

We have been having chats at work (not motor trade!) About what will happen to our used motors in the future, once we all have moved into new lease/PCP/rental cars....?

Another reason why I will be renting my next new car, not buying outright,  especially as it's likely to be a diesel 4x4 auto, with all the tax/carbon bollox that that brings nowadays.
 Braced for a shafting!
At least on rental i can budget now, on the basis of today's knowns, and any coming tax or emissions related problems will not be mine in 2020!

This is despite me having poo-poo'd these deals in the past. On a new car that you only plan to keep short term rentals are a no brainer, cheaper than the predicted depreciation on some vehicles atm.
Will be sure to get gap insurance tho!

FJ1000:
Regardless of how you finance it, there is no avoiding the massive hit you take on depreciation on buying a new car. It's the main reason I doubt I'll ever buy a new car. All PCP is, is a way to net off the purchase price and selling price by using the car as collateral, and funding the difference (I.e. The depreciation) at current low interest rates.

As a rough rule of thumb, most cars will lose 40-60% of their value in the first 3 years. You're still paying that even if it's spread out in monthly payments.

If you're concerned about warranty, perhaps buy a 2 year old car. But otherwise, if you think used cars are cheap, why not buy one of those rather than a new car?

Also keep in mind, PCP financing is also available on used cars.


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lukemk5gti:
I do agree that they depreciate when leaving the showroom but I honestly think that used car prices have reached an all time low due to the influx of new cars through PCP.

I suppose those selling their 2 year old cars are now hit even harder...

FJ1000:

--- Quote from: lukemk5gti on January 05, 2017, 02:04:59 pm ---I do agree that they depreciate when leaving the showroom but I honestly think that used car prices have reached an all time low due to the influx of new cars through PCP.

I suppose those selling their 2 year old cars are now hit even harder...

--- End quote ---

So take advantage- buy used!


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