Who the hell is buying new cars?

[dahamsta]

Sales in February are up 33% on February last year (http://www.rte.ie/news/2010/0308/cars.html). The actual number of cars remains tiny, but still, up is up. I've never understood the new car mindset and - unless I win big on the lottery of course - I'll never, ever buy a new one. It's sheer idiocy and I'm sure I don't need to explain why. So, I guess I have two questions:


Are people really so gullible they'll fall for a "scrappage scheme" that still has a bog standard Opel Corsa at 11 grand (http://www.opel.ie/opel/europe/ireland/wholesale/en1/home/offers_services/current_offers/opel_corsa_ad_2009-12-02.html)? 11 grand ffs! For a Corsa!
Where the hell are these people getting the money? Do they really believe that the recession is over? Is it not gullible they are at all, are they just plain thick?

adam

[Dodge]

A guy I know gets a new car every year. The dereciation on his trade in is less than the interest on most car loans.

Some people will always have money adam. if they want to send it on cars, good luck to them

[Colbert Report]

I bought a new car last October. The way I look at it, I'm only going to buy two or three new cars in my entire life. I was 25 when I bought the car, a 2009 Honda Civic, brand new, and I hope to drive it until I'm 45. My last car was a 1986 Honda Civic. I figure that it'll be cheaper in the long run to buy a new car and maintain it properly myself than buy ten to fifteen year old cars and fix them up along the way, which is what I've been doing for the past seven years, when I started driving.

[SkStu]

everyone knows the reasons we shouldnt buy a new car but its a good feeling and something i think everyone who can do should do at least once. I bought brand new a year and a half ago. Im with CR on this one.

[Macy]

We'll be buying new when the car is eligible - no one's taking trade in's against second hand cars, or giving you peanuts (which is all you'd get with a private sale). If it was staying the car would need a good bit of work on it (timing belt etc coming due).

Loan will be from the credit union, as always. Part of the aim will be to reduce the running costs by getting an A rated car for the tax, and fuel efficiency, and a few years of low maintenance to get us over the hump. It's the "second" car, so while we might not be aiming for 20 years out of it, but we'll be looking for it to do another 10 years at least.

[pineapple stu]

no one's taking trade ins against second hand cars
Not true; the motor industry is screaming out for (good quality in particular) trade-ins. There's no cars to sell out there at the moment because people aren't trading in.

"Giving you peanuts", as you say, may be happening too, but the value of used cars dropped across the board with the VRT changes. Cars are cheaper to buy now, but that cuts both ways.

I don't understand this "It's a good feeling to buy a new car" milarky, but I suppose that's just my approach to money.

On the increase in general, I have a notion that fleet and hire companies took it easy last year with new cars, but are replacing more this year, which is helping put figures up. I know a couple of people who replace their cars every 3 or 4 years and were due to replace last year, but who skipped that and replaced this year instead. In that case, you'd imagine next year will be down again, all other things being equal. But there's still less than 10000 new cars in Dublin this year I think, which is about a third of what you used to have at this time of year, so the industry's still fecked.

[dahamsta]

Same here. You can buy "new car smell" air freshener like! :)

[Macy]

Not true; the motor industry is screaming out for (good quality in particular) trade-ins. There's no cars to sell out there at the moment because people aren't trading in.
For cars that are at, or coming up to, the scrappage age? Wouldn't be my experience, last year. Must admit I haven't tried recently as making sure we get the low motor tax rate and efficient car more of an issue now.

[pineapple stu]

Not sure about older stuff (hence qualifying by saying "good quality"), but I think my post still holds there too.

I know last year a fair few of dealers suddenly had way too much stock and were making big losses on them, so to stay liquid, they had to reduce their stock quite a bit. Now stock levels are manageable, but no-one's selling any cars, so there's no cars to sell.

[juan]

Yer man who won the Irish Apprentice must be some salesman;)

[John83]

Next to no one was buying last year. I'm sure that means that there are more people who have strong reasons to buy this year - the cars people got one more year out of need a lot of work or have failed NCTs or whatever. With such a small baseline, that makes a big difference.

[SkStu]

I don't understand this "It's a good feeling to buy a new car" milarky, but I suppose that's just my approach to money..

I understand why people are reluctant to buy new cars but i couldnt get a loan for a used car when i got here and surprisingly i got one more easily for a new car a while later. And trust me, driving the car out of the shop was a nice feeling despite the fact that it lost a quarter of its value when i did so. But Stu, i suppose you would need to have actually bought a new car in the first place to understand the "malarkey", something im guessing you havent done.

Im just glad it wasnt a Toyota i bought... :)

out of interest, does the government there have any incentives for purchasing fuel efficient/hybrid cars??

[NeilMcD]

Surely you need people buying new cars in order to ever have second hand cars. New cars have to exist for 2nd hand cars to come on the market. So while you made describe it as stupidity, that stupidity allows you to go and buy a decent car 2nd hand.

[tetsujin1979]

out of interest, does the government there have any incentives for purchasing fuel efficient/hybrid cars??
lower emission cars have lower car tax, there was talk of dropping VRT for any new hybrids bought, but I don't think it ever came in.

[pineapple stu]

Surely you need people buying new cars in order to ever have second hand cars. New cars have to exist for 2nd hand cars to come on the market. So while you made describe it as stupidity, that stupidity allows you to go and buy a decent car 2nd hand.
That's why there's so many used imports at the moment. Garages are importing cars from England to replace the 09-Ds and 08-Ds that they're not getting from trade ins. Apparently, when the speed limits changed, pre 2005 cars (still in miles) lost a couple of grand overnight. Now there's so many imports that it doesn't really matter any more whether your car's calibrated in miles or km.


And trust me, driving the car out of the shop was a nice feeling despite the fact that it lost a quarter of its value when i did so.
I think I can find better ways of spending thousands, to be honest. I have a (5-year-old) car, it goes where I want it, the end as far as I'm concerned. Don't understand the concept of cars as a social show-off good. And I work in the motor industry, and have never been tempted by all the nice new cars sitting right in front of me.

[dahamsta]

I've always been far more tempted by a 10 year old luxobarge or supersaloon - that cost 100k and now sells for 10k - than a shiny euro/jap yawn-on-wheels. Never got it. Myself and my wife actually point and laugh when '10 Micras go by. I mean, why?

NeilMcD's point is of course a truism - like, duh - but I didn't ask people to stop. I just don't get it.

[Dodge]

Some people buy second hand clothers, some buy designer clothes...

Just because you don't enjoy the idea of a new car, surely you can accept that others will

[dahamsta]

I didn't say I don't accept it (as retarded, obviously), I said I didn't get it. Right there above your own post.

(Designer clothes are retarded too. Most of them even look retarded. And the opposite of designer clothes isn't second-hand.)

[Dodge]

I was responding to pineapple, not yourself adam (I got delayed before posting it)

The point I was making is that people make different choices based on what they want. Some want new things, others want value for money and functionality. Not too much to "get" really

[dahamsta]

There's taste and there's flushing money down the toilet.

[pineapple stu]

I'm in the same boat as dahamsta, so his reply is mine too.

(And I get Dodge's point, I just don't get it, if you know what I mean...)

[Dodge]

There's taste and there's flushing money down the toilet.

But some would prefer the new car to the money in the bank

same argument can be made for food. Some people think nothing of spending €100 on a steak, while others would prefer to spend €4 on a steak from tesco "Sure it'll only keep you going the same time...."

IT all depends on what you want to achieve from your purchase. As SkStu posted above, buying a new car isn't simply buying a mode of transport for some.

(and I'll point out I've never bought a car less than 3 years old)

[dahamsta]

You're taking us around in circles, as usual. I love a steak as much as the next man, but anyone that spends €100 on one needs punching in the face. There's enjoying nice things and there's being a dick.

(This extends the original discussion to it's limit and it's not my point. Buying a new car doesn't make you a dick. It remains something I will never understand though.)

[osarusan]

Doesn't this simply boil down to the fact that different people have different tastes, and that some people are willing to spend more money than others on certain things. Hardly a new concept?

Everybody is willing to spend money on something that other people don't value anywhere near as highly, be it the newest Blackberry, a cool watch which tells the time in 40 zones and is waterproof to 50 metres, whatever.

I don't think cars are any exception to that.

[OneRedArmy]

Admittedly all of my car buying experience is from the North, but in my experience there are a number of compelling reasons to buy a new car, particularly the German brands:

1. Low depreciation. Unlike a lot of brands, most of the German brands (and a number of other ones too) have historically had very low depreciation. This has changed a bit in the last couple of years as demand has dropped, but broadly, the old "drive it off the forecourt and its worth 20% less" doesn't hold true.

2. Warranties and service inclusive deals. 3-4 year warranties and service inclusive deals are now commonplace on new cars (at least in the North). With parts and labour being extortionately expensive, deals like this further reduce the cost of a new car and give an incentive to buy new, hold to the end of the warranty period, then trade in.

[pineapple stu]

Doesn't this simply boil down to the fact that different people have different tastes, and that some people are willing to spend more money than others on certain things. Hardly a new concept?
I suppose the more frugal of us baffle that people are willing to keep themselves in lots of debt for no real tangible reason, and recent events (recession and people struggling to repay debt) has given legitimacy to that bafflement.

[endabob1]

Having had a run in with a credit card company some years back I only buy things cash (except property obviously) so my cars are now always second hand, that said I did buy a new one once and if you've got the money I 100% recomend it. The low maintenance, lack of worry about things giving up the ghost, (like the turbo in my current motor which is setting me back the equivalent to a cool 1600 euros to replace) is something that is hard to beat.

As for spending excessive amounts on food, when living in London I would infrequently blow 200+ on dinner for myself and the good lady, if it's something you enjoy and can afford it I say why not.
Personally, I dont get the latest mobile phone every 6 months thing, 15 years, 4 phones and for the last 13 years pay as you go.

[dahamsta]

Troll post by Dodge infracted and deleted.

ORA, I've never heard anyone attribute 20% to it (although I'd accept people do tend to exaggerate). I'd guess an average of 10% wouldn't go too far off that mark, given that a "budget" car will lose about €1k on delivery, and luxury cars far more. In business, vehicles are depreciated at 10% per annum at best, and this figure likely isn't far off the consumer rate. That isn't a small figure.

There are cars with 7 year and more warranties, but that doesn't make running them free by any stretch of the imagination. With the growing "electronicification" of cars, servicing - "free" servicing is rarely free, and generally lasts around a year - is getting more expensive, and will get more expensive still because of the proprietary path the manufacturers have chosen. (The equipment is overpriced, and the squeezing of 3rd party servicers will move us towards a cartel.)

endabob1, this is Ireland though, not London. I've eaten in Michelin starred restaurants in Dublin for less than the €100 steak mentioned above, for two of us. With pudding!

[centre mid]

It can save you money in the long run to buy a new car every year. With the reductions in emmisions and car tax, there can be as much as €300-€400 in the difference on a camparable 2010 car and a 1998 car. Added to that the warranty on a new car means that your will not have any service cost or repair/replacement cost. The purchase price of a new car less the trade in value v the hp on an existing car loan are probably negligible if not slighty better.

If your in a position where you can buy a new car then your will always benefit from the eagerness of garages to get new motors out the door and a FF government who give the motor indusrty breaks rather than put together a coherent public transport network. If your happy enough to go on paying in direct taxes such as the nct then good look to you also.

[Dodge]

ORA, I've never heard anyone attribute 20% to it
SkStu did in this very thread


I've eaten in Michelin starred restaurants in Dublin for less than the €100 steak mentioned above, for two of us. With pudding!

But you didn't have to go to a Michelin star restaurent. You allowed yourself the (relative to you) luxury. Just like some people allow themselves the luxury of a new car

[osarusan]

I suppose the more frugal of us baffle that people are willing to keep themselves in lots of debt for no real tangible reason, and recent events (recession and people struggling to repay debt) has given legitimacy to that bafflement.
There is an assumption there that the people buying these cars are keeping themselves in debt to do so. I don't think you can claim it to be fact given we're talking about only 11,000 cars across the country.

Consequently, there isn't really legitimacy in your bafflement from that assumption, in my opinion.

[pineapple stu]

It can save you money in the long run to buy a new car every year. With the reductions in emmisions and car tax, there can be as much as €300-€400 in the difference on a camparable 2010 car and a 1998 car. Added to that the warranty on a new car means that your will not have any service cost or repair/replacement cost. The purchase price of a new car less the trade in value v the hp on an existing car loan are probably negligible if not slighty better.
E300-E400 saving on car tax is nothing compared to the amount it can cost to upgrade each year. It depends on cars obviously, but you'd pay E5k or so to upgrade from an '09 a '10 Avensis, for example. Also, there's warranties on used vehicles as well (granted, usually one year, but still worth mentioning). And I don't think many people are choosing between a '98 and a '10 car; the choice is more likely to be between an '05 (say) and a '10.

On my previous car (an 03), for example, I spent less than E1k on servicing over the three years I had it, some of which (brake pads, windscreen wipers) wouldn't have been covered under warranty anyway, I'd imagine (warranty usually doesn't cover standard wear and tear). I think that factor is talked up more than its worth.

So yes, there may be a feel good factor (and I'm not trying to argue that point other than to note that I don't get it), but I don't think you can portray it as cost-beneficial to upgrade each year.


There is an assumption there that the people buying these cars are keeping themselves in debt to do so. I don't think you can claim it to be fact given we're talking about only 11,000 cars across the country.
11,000 cars across the country? We're on 11,000 cars in Dublin at the moment. Also, I think your post is a bit of a non-sequitur? I don't see a link between your two sentences?

I think we can safely assume that a large amount of people buying new cars are taking out car loans to do so. Certainly, that's my experience of it, and I think given the stories in recent times about how much in debt the country is (in terms of the people in it), it seems a safe assumption to me.

Edit - I don't know if a link is required for the claim that people in general are in a lot of debt, but here's one (http://www.irishtimes.com/newspaper/ireland/2009/0430/1224245682024.html), two (http://www.independent.ie/business/irish/personal-debt-is-strangling-us-1428468.html) and three (http://www.finfacts.ie/irishfinancenews/article_1017947.shtml); can't find any car loan specific figures at the moment.

[Real ale Madrid]

Just bought a new car last week.

I love mine cos its lovely and shiny and it smells new etc etc :)

Seriously tho - there's lots of reasons,

2 year warranty
Its a diesel - more efficient than the petrol motor i had - plus the tax for the year is just €104
got a raft of extra features for nothing
got a good price for car I traded in.
Had a look at the possible depreciation and its not as bad as it used to be - same model cost 5k more 3 years ago and model I bought holds its price very well.
Good friend is a mechanic and told me its a good idea to buy new at the moment. particularly Diesel.

[osarusan]

11,000 cars across the country? We're on 11,000 cars in Dublin at the moment. Also, I think your post is a bit of a non-sequitur? I don't see a link between your two sentences?

Sorry, misread original link. you're right, 11,000 in dublin alone .Still though, 11,000 cars for a city of over a million - even though we all know lots of people are in debt, you seem to be assuming that some of these people are the ones buying cars. I'm not sure of the logic of making that link.

The link between my two sentences is that the bafflement only has legitimacy if it is accepted that your assumption is correct.

[pineapple stu]

Still though, 11,000 cars for a city of over a million - even though we all know lots of people are in debt, you seem to be assuming that some of these people are the ones buying cars.
I'm not assuming; I know from working in the industry.

[osarusan]

I'm not assuming; I know from working in the industry.

If you know for a fact that people are willing to keep themselves in debt in order to buy new cars for 'no tangible reason', then fair enough.

[dahamsta]

I'd genuinely love to see numbers for news car v user car costs. I don't believe this "new cars cost less" business for a second, but unfortunately I've no way of backing it up.

[SkStu]

Some people buy second hand clothers, some buy designer clothes...

i dont know why, its just a good feeling to pull on a pair of e30 boxers...


SkStu did in this very thread

exaggerating for fear of being accused of understating, unfortunately!


I'm not assuming; I know from working in the industry.

oi, thats my line!

;) ;)

[endabob1]

My sister & BIL bought my niece a new corsa last year, in the UK mind. l Queried their sanity but they reasoned that as it came with free Insurance, Roadside maintenance & had a 5 yr warranty (normally 3 I think but the dealer bumped it) it was costing them virtually the same amount of money to finance it for 3 years (at which point it goes back or they pay a lump sum) as it would to buy her a decentish second hand car & she'd been through 3 of them. She is in her final year of uni so the need for a reliable car was paramount for getting from home to classes etc.. plus she now has 2 years while working to save the cash to pay it off at the end.

[Fr Damo]

If no one bought new cars the price of 2nd hand cars would rise meaning those that advocate new only would be hit in the pocket. It a rubbish argument IMO, personal taste, circumstances and one that has been discussed last year (to death).

Personally, I have never owned a new car.

Would I buy from new? Yes

Have I lost more in two years on my 06 Diesel vectra than somebody will lose on a 2010 plate corsa will by 2012? Yes.

What is interesting for me though is commercial vehicle sales are on the up too meaning things are improving (at least business sentiment is)

[Macy]

I don't believe this "new cars cost less" business for a second, but unfortunately I've no way of backing it up.
It depends on the car (both the "old" one and the "new" one), but if you're getting an efficient car then you'll be saving on tax and fuel. Ongoing maintenance, all going well, there probably won't be much difference. However, you're less likely to get hit with an unexpected with a new car, and if you do it'll be warranty covered. If our 10 year old can limp through to August we'd be looking at a day to day saving. On fuel alone, the costs per week will be at least halved by my calculations.

The caveat I would throw into the calculations is that it'd be changing from a family saloon to a hatchback, so the comparison probably isn't totally fair. But then I think this is what a lot of people are doing, particularly in 2 car households. People can no longer justify 2 family size cars when one of them only has just the driver in it.

[pineapple stu]

If our 10 year old can limp through to August we'd be looking at a day to day saving.
Again though, the issue not being looked at is whether a 3-year-old car would be better value than both.

[dahamsta]

Commercial sales are up for the same reason rental sales are up.

No offense intended Macy, but I was looking for figures; and general ones, not specific.

[Fr Damo]

Commercial sales are up for the same reason rental sales are up.


I dunno what you ment by rentals, but I was on about light commercial vehicles............

Update....... re your comment on Deprectaion, every company is different. We go for straight line with a risidual but there is no hard an fast formula. The Government will give tax relief to 7 years so in theiry thats 14% year on year.

In Engaland where I write from, large fleet users write them off over three and that's why you can come to auctions over here and buy a three year old transit @ next to nouwt. (Though often In poor condtion , granted)

[KevB76]

The two directors where I work have just replaced their 06 cars with new models (exact same cars as before). They are saving €400 per month on the repayments for each car, as well as saving €600 a year on tax for each car, plus they have got free servicing up to 100,000 km. They got a lot of "extras" thrown in with the new cars as well as they are the last of the older model which is being replaced this month by the manufacturer, and with the new VRT system, pre-registered and a dealer keen to make the sale, the new cars cost less than 2/3 the price of the identical 06 version.

Meanwhile back in the real world, I'm trying to stretch a few more months or years hopefully out of my 12 year old 1 litre Polo, but with 173,000 miles on the clock and an NCT due in May, things are not loking good. I wanted to hold out until a half decent 08 car (lower tax) becomes affordable, about the 3 year old mark.

[dahamsta]

I hate to be a killjoy, but how many years did they extend the lease by? Spending less per month is not the same as saving money.

[Fr Damo]

I hate to be a killjoy, but how many years did they extend the lease by? Spending less per month is not the same as saving money.

The example quoted by KevB76, companies hire or Lease cars so they know the actual cost per year (normally contracted for a set period) and this figure comes out of the P&L account. Families (households) weather they like it or not put a car into the household balance sheet. In this business example yes they are saving money becuase I am assuming they don't own the car, simply rent it and as this payment is less than before, it seems they are (and they are!) saving money on the cost of having (not owning) a vehicle.

I honestly believe that longer term, new car prices will start to fall further, seperate of sales drives or incentives, (as profit aspirations fall) therefore the amount subject to depreciation will be less, meaning therefore less depreciaation. This recession isn't / wasn't all bad!

[dahamsta]

Rent != Lease != Buy

[KevB76]

I hate to be a killjoy, but how many years did they extend the lease by? Spending less per month is not the same as saving money.

The 06 cars were on a 5 year loan, they refinanced after 4 years to get the new cars, presumably over another 5 year period. The saving really is a genuine saving as they need to replace the cars anyway, with the high mileage they do, the 06cars had clocked up a lot of miles and were at the point of beginning to need the odd extra bit of repair and maintenance. Saving €800 a month on the cars is significant to a small company like ours in the present situation, better to save it now when its most needed and keep payments going over subsequent years when things will have picked up (again they'd have to replace the cars anyway). A director arriving in to clients in a clapped out 5 or 6 year old car does not give a good impression, and breaking down on the way to some meeting is worse again!

[dahamsta]

I don't mean to sound like a bitch KevB76, but see post #48. A monthly saving and a cleaner car might be lovely for the company, but it's not the same as an actual saving. To calculate the that, you'd need to know whether the cars are rented or leased, the original APR and contract length, and the current APR and contract length.