27-07-17, 06:04 PM
Quote:Most buyers I imagine would be looking at a new replacement vehicle after this period rather than stumping up several grand as a final payment on their now much reduced in value vehicle. So another new car or bike on the good old PCP.
Which is where the problem kicks in. PCP works well for people with strong incomes who desire a new car every 2,3 or 4 years. But as you point out Dave this thing has grown legs and dealers are now selling new cars to folks on PCP who would not be able otherwise to ‘afford’ a new car (ie miss selling the product). Those purchasers are going to start coming back to dealers soon looking for their next new car. They will have neither a trade in nor a deposit for their next PCP and they certainly won’t be able to settle the balloon payment on their existing car.
The manufacturers, distributors and dealers are only in a win win situation for a few years.
Quote:Cash buyers currently seen as a nuisance by many dealersIt’s true and I’ll never understand that. Why would you ever want to turn away the dudes who actually have the dosh!
Quote:Simple economics dictate that this situation cannot go on indefinitely and sooner or later we will once again enter the "bust" phase of the good old "boom & bust" cycle.
Absolutely. Problem is we are going to have a bust this time without having had any boom. What’s more the Bank of England won’t be able to use one of it’s key tools for stimulating an economy in recession – that is lowering interest rates. Unless that is that you think ‘lowering’ the base rate from a quarter of one percent to an eighth of one percent actually means anything.