The perfect storm It’s coming

Mctaff

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His writing style conveys that to me…. Never judge a book by its cover and all that I know but that twitter feed just made me cringe!! 🤮
 
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Jonhklee

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Style aside….. something is bound to cave in soon. All these PCPs with outstanding balloons, and no one is able to pay and no new cars to roll over to?
 

Mctaff

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The market is definitely down… I’m not sure there’s a surge of defaults yet… in the uk at least, although it may be coming

In the uk there are extensions happening because of the supply chain issues for new cars
 

1stczechemira

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Car dealers in the EU today (off record) say that the only reason the crisis has not fully manifested itself is the lack of cars due to a damaged production chain. If cars were produced in the same numbers as before, every dealer would have full warehouses and there would be a price war, supported by high interest rates that limit the number of buyers.
 

Dommo

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Style aside….. something is bound to cave in soon. All these PCPs with outstanding balloons, and no one is able to pay and no new cars to roll over to?
Surely the whole point of a PCP is to offer protection to the consumer. As long as you've paid at least half of the agreed loan back then you can just hand the car back at any time.
 

Mctaff

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Surely the whole point of a PCP is to offer protection to the consumer. As long as you've paid at least half of the agreed loan back then you can just hand the car back at any time.

Exactly, the lender is taking the risk for a premium in rate

Not sure about handing back though
 

Emiro

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This twitter guy lost me when wrote that cars depreciate and made it sound abnormal..... "people are "underwater".... the debt is more than what the car is worth".... such an idiotic statement, like comparing it to real state. Regular cars, in fact likely 99.999% of all cars have always behaved like that, are depreciating assets.
 
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Jonhklee

Jonhklee

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New car prices are ridiculous though compared to average earnings. Everyone is bought into the monthly payment PcP scheme, buying cars with inflated
MRSP than they can “actually” afford. The cycle will always have to end sometime….
 

ADC

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Screenshot 2022-12-17 at 16.27.44.png
 

Mctaff

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I disagree… the pcp model is self perpetuating

Of course if the economy tanks, interest rates carry on rising, wages stagnate etc that’s a different thing and all purchases will reduce, cars included. Which of course is the intended effect of interest rate rises.
 
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Jonhklee

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Car dealers in the EU today (off record) say that the only reason the crisis has not fully manifested itself is the lack of cars due to a damaged production chain. If cars were produced in the same numbers as before, every dealer would have full warehouses and there would be a price war, supported by high interest rates that limit the number of buyers.
What if the supply / production chain issue exist to ensure prices remains inflated and thus saving auto makers from “owning” the risks of returned PCPs? It’s a long shot but it’s a possibility….
 

ADC

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Making out that "no one else knows" things like this makes you sound like a conspiracy nut... people have no money, car repossessions will go up next year. wow. in other news, water is wet, and there is a high likelihood of the sun rising in the East tomorrow.
 

Mctaff

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Only a subset of auto makers have captive (owned) finance providers. It’s normally specialists that are independent…
 

Mctaff

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Making out that "no one else knows" things like this makes you sound like a conspiracy nut... people have no money, car repossessions will go up next year. wow. in other news, water is wet, and there is a high likelihood of the sun rising in the East tomorrow.

As per my initial comment!!

Mainly stating the bleeding obvious…
 
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