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 Topic: What would you do? New car needed.
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20/5/2018 at 7:44am
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As a company car driver since 1985, all this buying car's stuff is a little bewildering to me, PCP just seems like another way of lining someone else's pocket at your expense.
Call me old fashioned, but when the times comes for me to buy a car, I will be of down to the bank to get one of those cheap loans 3% etc.
Got my sights on a 2 year old Tesla Model 3 that will have come of lease and will have around 70k miles on the clock, I am guessing the cost will be around £10k.
They say the Tesla is good for a million miles, and with a mostly aluminium body, rust in later years should not be to much of an issue.
The problem with fossil cars is that they have so many moving parts, so breakdown as they get older.
Fuel cost of running an EV is a fraction of that compared to a fossil car.
Of course the elephant in the room with an electric car is the battery, but hopefully by the time I come to buy a car, battery technology will have further evolved to be no longer an issue, in fact in some respects that is the case now.
Tesla battery comes with 8 year warranty to still be 80% efficient, anything beyond 8 years regards battery capacity will be a bonus.
Post last edited on 20/05/2018 08:26:00
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21/5/2018 at 12:30pm
Location: Lancashire
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Got my sights on a 2 year old Tesla Model 3 that will have come of lease and will have around 70k miles on the clock, I am guessing the cost will be around £10k.
They say the Tesla is good for a million miles, and with a mostly aluminium body, rust in later years should not be to much of an issue.
The problem with fossil cars is that they have so many moving parts, so breakdown as they get older.
Fuel cost of running an EV is a fraction of that compared to a fossil car.
Of course the elephant in the room with an electric car is the battery, but hopefully by the time I come to buy a car, battery technology will have further evolved to be no longer an issue, in fact in some respects that is the case now.
Tesla battery comes with 8 year warranty to still be 80% efficient, anything beyond 8 years regards battery capacity will be a bonus.
Francias you’ve got no chance of buying a 2 yrs. old tesla for 10k, think about it realistically it will probably be around 40k new, if it was a lease car on contract hire its lease rate would be over £1250 per month to sustain that kind of depreciation. As you say the motors are good for the mileage and the battery is warrantied for 8 years.
If they were 10k you’d never get your hands on one as every taxi in the land would be a tesla, I’d budget for 25k for a 3 year one
Bessie
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22/5/2018 at 11:31pm
Location: Cheshire
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So why do car manufactures push PCP, finance etc.
If we take a fictional manufacturer, Rusty Motors. Rusty has spent many millions designing a car and a plant to assemble it and has hundreds of workers and commitments with suppliers to buy a fixed quantity of units. The supplier, say for seats is similarly organised with equipment and staff to meet the fixed units and so it goes on for all key components.
The way Rusty make the most money is to sell as many cars as they can make per day and that’s where it gets a little more complex as the cost of all the design and equipment is exactly the same regardless of if they make 1 car or 100 cars per day. (assuming they designed the maximum rate as 100 per day). And they have commitments for volume with suppliers.
If Rusty can make 100 cars per day then lets say each car cost £10000 to make and it sells for £12000 + dealer commison + taxes, Rusty makes £200,000 per day profit.
However if Rusty only has orders for 80 cars and makes just those, the costs of design, equipment, labour and promises to suppliers priced at 100 units per day, then the cost of each car is now £12500 and as the selling price is fixed at £12000 Rusty is now making losses.
It’s essential therefore to sell all of the cars that can be produced. In this situation the manufacturer will make 100 cars with orders for only 80. So they sell 80 cars at £2000 profit making £160,000 and sell the remaining 20 cars at cost. This is a much better position as even through profit wasn’t made on 20 cars, £10,000 of costs were absorbed by each so Rusty is still in a healthy overall profit at 80% of peak.
The 20 extra cars are sold by pre-register, special lease deals, special company car deals or subsidised by finance.
The one thing a car company wants you to do is to keep buying new cars to keep the factory's spinning and keep making the money. A car factory break even is typically 80-85% of peak capacity.
Hire purchase, PCP, lease, whatever the options it’s all to keep the production lines full as that is the only way the manufacturer can recover their investment and make the most profit.
As I said earlier, the most expensive thing to do is buy a new car every few years which is what PCP actively encourages.
The second most expensive thing you can do is buy a newish car every few years as dealers make a healthy profit on these, typically a 15-20% markup on what you’d get in part ex. This is less than the new car losses, but quickly adds up if you change frequently.
Buying privately is a lottery as you have no protection with increasingly complex cars.
In my view the best way to minimise cost it to buy either new or second hand and then hold for as long as possible. A decade or more is ideal.
I paid £8k for a 3 year old diesel VW at a car supermarket a long time ago. 11 years and 150k miles later I sold it on Ebay for nearly £1k. That’s cheap motoring! Buy, maintain and keep for as long as practical.
For some PCP or leasing makes sense. A collegue at work is a single mum of two, she bought a 5 year old VW, lots of expensive EGR, DPF, injector issues, spent a lot and sold and a significant loss overall. Bought a 5 year old BMW, 12 months in and timing chain issues another big bill. She now has a base model Sportage on PCP and couldn’t be happier knowing exactly what her car will cost for the next few years and she has a decent warranty with guaranteed mobility.
Not all used cars are a money pit, but with increasing complexity more of them are.
Do you feel lucky?
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