Enormous depreciation?

[siteguru]

True, never get something for nothing. It is only the monthly payment that people look at, since that dictates "what they can afford".

I edited to add about the monthlies as you were replying.

 

[tsedge]

We bought our MG4 on a PCP precisely to fix the depreciation risk. I was nervous that EV prices might collapse with Tesla's behaviour and the pace of change of the technology. It wasn't the cheapest way to buy it at all, but since we'll probably change cars in the next 2 years anyway, the flexibility suited us.

Our MGFV after 40,000 miles and 4 years is something like £16,500, which is 52% of the purchase price - this kept the monthly payments low (at the time, rates and MGFVs have changed a lot since).

 

[siteguru]

I bought ERO outright ("cash") as I'm not planning on replacing him for quite some time.

 

[tsedge]

I bought ERO outright ("cash") as I'm not planning on replacing him for quite some time.

That's the right choice if you will keep the car for years and years. Only thing better is 0% finance and keeping the return on your capital.

 

[salty]

In the end you do what is best for you, nobody else's business. But PCP isn't some sort of magic deal. Buy outright or pcp or hp you are going to lose money, simple's. Probably about the same loss whichever deal you go for. Just get your new motor and enjoy it.

 

[Rolfe]

I bought ERO outright ("cash") as I'm not planning on replacing him for quite some time.

Me Caliban, too. Also, I wanted flexibility. So I bought a car that was under what I could have afforded if I'd pushed the boat out, but one which I also really liked. So if I go on really liking him (seems probable) then he's mine to keep. If he's a turkey, well there is a warranty, and there's a limit to how much I'm going to lose if I'm forced to look elsewhere.

On the other hand, there could be the situation where new models - maybe the X-Power, maybe things to come that are mere rumours at the moment - are so attractive I want to trade up. Again, there's a limit to how much I'm going to lose on the deal as I didn't spend that much on the car to begin with. And no matter what wonders appear, he'll always be a great second car for a family that needs a runabout as well as the as-yet-unborn paragon.

 

[rogerl]

I had the No. 1 car on that list before I got my MG4. Thankfully the new price was nowhere near what they quoted in the video, and i did git a bit more than wat was quoted as well from Carwow.

Basically it looked like the resale value on the electric variants has come down to match the equivalent ICE resale value. I think that models that don't have an ICE equivalent are faring a bit better.

 

[rogerl]

That same vid was linked in post #7

Take the results with a pinch of salt, as they're based on trade values not consumer prices.

My Mokka-e was bought by one of the car supermarkets via a Carwow auction. I followed it for a bit on Autotrader and I think they eventually sold it after a couple of months for about £50 more than they paid me for it

 

[Dan C]

We bought our MG4 on a PCP precisely to fix the depreciation risk. I was nervous that EV prices might collapse with Tesla's behaviour and the pace of change of the technology. It wasn't the cheapest way to buy it at all, but since we'll probably change cars in the next 2 years anyway, the flexibility suited us.

Our MGFV after 40,000 miles and 4 years is something like £16,500, which is 52% of the purchase price - this kept the monthly payments low (at the time, rates and MGFVs have changed a lot since).

You should be okay then as MG4’s have already hit that £16.500 trade in value after only a year / a few months. Hopefully the car still suits you if your keeping it for the full 4 years

 

[NickHeynes]

Because people don't keep the car.

PCP is a way to have a new car every 3-4 years. Usually the value exceeds the MGFV a bit and that's rolled straight into a new deal. PCP is much more flexible than a leasing arrangement which suits a lot of people's lifestyles.

People are not using PCP deals to buy the car outright unless the residual value significantly exceeds the MGFV and they decide to keep it.

PCP does protect against depreciation in the sense that the maximum depreciation is baked into the deal - if you avoid putting down a large deposit that you could lose.

If always buying outright, PCP makes little sense in terms of total cost but is very attractive in terms of monthly payment when people cannot afford to buy outright at the start.

It is one of the most effective finance schemes ever invented and over 80% of private buyers use it.

I couldn't agree more.

In most cases people want to change their car every 3- 4 yrs in order to keep up to date with safety/technological/styling advances. A PCP makes this easier and more affordable. It also keeps stock moving and populates the used market with decent well-maintained cars.

Historically, most customers who bought on HP had a 5 yr agreement and settled their HP agreement after 3 yrs and bought a new car (effectively creating their own PCP but without the safety net of a MGFV).

Personally I wouldn't use my own money to invest in a depreciating asset unless I was going to keep it "forever".

I also don't like the idea of using my own savings (borrowing from myself) to buy a car and then having to (in effect) pay myself back so that I can buy another one in three years. I wouldn't be able to save quickly enough.

Having said all that, the reason that there are many different ways to get into a car is that it's horses for courses. And I would never criticise anyone for making the choice that they have.

Last time I had a car on a lease because it made financial sense to me. This time I went down the PCP route because the lease costs on the MG4 were quite high. Now they're coming down I might lease again next time. I can benefit from the affinity scheme so if it makes financial sense to buy on a PCP again I'll do that. Or if a rich aunt leaves me squillions I might buy a supercar for cash!

 

[MG4cherry]

There has been a lot of bad publicity about electric cars and this has also caused rapid depreciation.

There has been a House of Lords Enquiry into this

Electric cars: Lords urge action on 'misinformation' in press

The Lords Climate Change Committee called on the government to push back against mistruths on range and cost.

www.bbc.co.uk

The government must do more to counter "misinformation" on electric vehicles published in parts of the UK press, a Lords enquiry has said.
Despite the UK passing the milestone on Monday of 1m electric cars registered, growth of the sector has flatlined.
The Lords Climate Change Committee urged the government to build consumer confidence and push back against what it called mistruths on range and cost.
The government did not comment on this but said £2bn was committed to EVs.

• One million electric cars sold in the UK since 2002

I read a Newspaper report about a man who will never buy an electric vehicle again. Turns out the load area of his pick-up leaked water!

Have faith and don't worry the values will rise again.

 

[smartn]

Have faith and don't worry the values will rise again.

Although I've taken a massive hit I'd rather used EV prices stay low. Anything I buy now would be used and the savings would more than make up for the loss. It also means EV's are available to more people which can only be a good thing.

 

[Rolfe]

It's funny the different ways of thinking about it. I don't feel as if I've taken a massive hit. I bought a car that was within what I could afford at the time, and was exactly what I wanted. Ten months on and it's still exactly the car I bought. Still exactly what I want. Where's the loss?

 

[smartn]

I guess because I may be changing mine sooner than originally intended. I've been happy with the car on the whole but not exactly pleased with the software and the dealer/MG UK experience. The drop in used values have opened up a range of cars I just couldn't have justified only 12 months ago where the MG was an obvious choice.

The sensible thing is to hold onto the MG as the depreciation hit will level out but where cars are concerned I tend not to be sensible!

 

[Rolfe]

You only live once! Get the car you want, and damn the consequences.

When I was an impecunious student I often said that as far as I could see nobody could actually afford a car, but people just bought them anyway! I had enough money to buy a car quite a while before I felt I had enough money to RUN a car. (This was in the 1980s where interest rates were high and savings tended to grow like Topsy, but at the same time I was paying a mortgage out of my salary so didn't have a lot to spare for petrol, tyres, servicing and so on.)

Money isn't much fun if you just leave it in the bank. So long as you can still afford the rent, get the car you want!

 

[Archev]

My wife and I were left a bit of cash years ago. Spoke to my accountant and asked what he’d do. One of his accountant golf buddies in a similar position had thrown caution to the wind and put it all into Premium Bonds.
We thought about it and did the same. Our next few cars were bought cash and we paid ourselves back monthly by buying bonds. Had some grand “bonus“ surprises over the years.

 

[salty]

You only live once! Get the car you want, and damn the consequences.

Money isn't much fun if you just leave it in the bank. So long as you can still afford the rent, get the car you want!

Abso-bloody-lutely. Agree!

 

[KH11]

I don't understand why people think a PCP is a good deal ?
At the end of it you still have to pay the rest of the full price, the GFV final payment, to keep the car and suffer the depreciation or you hand the car back and the depreciation suffered is the payments you've made but you don't have a car.
The only advantage over buying outright to start with is if it's a 0% finance deal where you can keep your cash in the bank earning interest up until the final GFV payment.

The back end of your statement is where the pcp is a good deal as you say you can keep your big payment in the bank gaining interest until it’s time to pay off the balance.

 

[Rolfe]

My wife and I were left a bit of cash years ago. Spoke to my accountant and asked what he’d do. One of his accountant golf buddies in a similar position had thrown caution to the wind and put it all into Premium Bonds.
We thought about it and did the same. Our next few cars were bought cash and we paid ourselves back monthly by buying bonds. Had some grand “bonus“ surprises over the years.

The time I did that I only got the expected "return on investment" in prizes. But it was only a short-term parking of money from the house I sold until I bought another house about six months later. Maybe in the longer term it would have worked. (I kept a few, just in case I ever got really, really lucky, but I can't remember getting anything since I surrendered the big bucks.)

 

[SteveBirchall]

I bought my MG4 in September (new, pre-registered “23”)
It has only done 3,000 miles and I only collected it 5 months ago.
The depreciation is a bit of a shock, but I can kinda understand that.

I am in negative equity and so need to get a fair price for it. It is a 51KWH SE SR.
It has an interesting reg number “MG 13 AMP.
Would I be able to get close to £19k for it do you think?
This is not a for sale advert because I can’t yet sell it until I have got the £5k difference in what I owe for it.

Thanks
Steve B