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Pater wants a new car

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ThunderGuts
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PostPosted: 11:28 - 16 Dec 2021    Post subject: Pater wants a new car Reply with quote

So, bit of advice please. My father is looking at getting a new car - he has recently inherited some funds so is in a fortunate position where he can buy what he wants outright if he wants to. However, I feel the fast-changing nature of the car market (e.g. EVs etc.) means buying outright isn't necessarily the best option.

He's set on getting a plug-in hybrid. Most of his journeys are local, so the electric bit would work there, but he doesn't want range limitations as he does (maybe every other month) do long hauls to distant corners of the country. These are the options as I see it;

1) Buy outright. There's sod-all discount available though and while theory a PHEV is a more future-proofed vehicle, my concern is all it takes is a new tech development to render them worthless (e.g. battery tech moving forwards, which it will at some point, extending PHEV range to 100 or more miles, rather than the paltry 40-50 miles you get at most right now).

2) PCP - steeper monthly payments, but gives him the option to retain the car. The other thing is he's convinced the car (Skoda Octavia PHEV) is likely to retain 60-70% value after 4 years due to his low annual mileage. I am a bit unconvinced, but value checkers seem to confirm this. PCP could mean he'd be able to buy the car off them for a sum less than it's actually worth. Overall though, I do think this is more expensive.

3) Contract hire - can get some fairly competitive figures, biggest benefit I think is any market changes are derisked. If the value of the car plummets, it's not his problem. He doesn't have a liability to get rid of in 4 years time - he just hands it back, even if it's worthless. However, the lease companies clearly don't want to lose out either so they'll likely set the contract hire figures to take account of that risk. Indeed, they amount to a bigger chunk of depreciation than he thinks is likely.

So, in summary, I think option 3 is the better approach as it's lowest risk in what is an unsettled car market (used values are strong right now, but that may change, plus the whole technology moving on side of things). Am I missing anything though? Would it actually be better for him to just buy it and chance the used market in 3/4/5 years time and hope he can sell it for similar to what he bought it for? Or is the used market likely to get flooded with PHEVs because they've become "old-hat" and nobody wants them anymore, with values dropping accordingly?

If anyone has a crystal ball, that'd be fab, otherwise any steer/info/comments would be good. Cheers. Thumbs Up
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UncleFester
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PostPosted: 12:28 - 16 Dec 2021    Post subject: Reply with quote

Anything modern and 'lectrickery' should be treated like white goods. I'd not want to own anything that's superceded every 12 months.

OtOH buying a Cobra or 356 rep ..... absolutely.
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JackButler
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PostPosted: 12:30 - 16 Dec 2021    Post subject: Reply with quote

At this stage I'd be checking what the delivery lead times are . . . .

There's a very good reason why 2nd hand prices have skyrocketed.
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Easy-X
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PostPosted: 12:39 - 16 Dec 2021    Post subject: Reply with quote

Yeah, second-hand from a main dealer you might get a bit cheaper than new but loads are manufacturers are offering warranties as if the car were new.
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ThunderGuts
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PostPosted: 14:05 - 16 Dec 2021    Post subject: Reply with quote

The specific model he wants isn't available generally as nearly new. He's also not that bothered about the lead time (I did tell him we're talking probably 6 months).

I think, from my perspective at least, the contract hire route is being reinforced. Thumbs Up
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Diggs
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PostPosted: 14:19 - 16 Dec 2021    Post subject: Reply with quote

Yep, delivery times are killing things at the moment. I've had a new Skoda on order for 6 months now, and every month I get a message to say the date has been pushed back again...
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JackButler
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PostPosted: 16:33 - 16 Dec 2021    Post subject: Reply with quote

Diggs wrote:
Yep, delivery times are killing things at the moment. I've had a new Skoda on order for 6 months now, and every month I get a message to say the date has been pushed back again...


On the plus side, you'll be getting a '24 car at '21 prices Smile
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Polarbear
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PostPosted: 17:10 - 16 Dec 2021    Post subject: Reply with quote

I'm of a different view because I absolutly hate not owning the car. Probably wrongly I feel like leasing is like renting a house, money down the drain.

Now I know cars value goes down, unlike houses, but at the end of the day I own my car, however valuless it is. I've bought it, paid for it. I don't have to worry about that scratch on the alloys where where wifey curbed it or that sap stain on the paintwork from where it's sat under a tree.

Just my view on it.
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ThunderGuts
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PostPosted: 17:18 - 16 Dec 2021    Post subject: Reply with quote

Polarbear wrote:
I'm of a different view because I absolutly hate not owning the car. Probably wrongly I feel like leasing is like renting a house, money down the drain.

Now I know cars value goes down, unlike houses, but at the end of the day I own my car, however valuless it is. I've bought it, paid for it. I don't have to worry about that scratch on the alloys where where wifey curbed it or that sap stain on the paintwork from where it's sat under a tree.

Just my view on it.


Valid points on the damage point of view, I think the key difference (as you've alluded to) is cars depreciate, generally houses don't (hence the old thing about renting is "paying someone else's mortgage"). At the end of a 3 year lease, financially you're not in too dissimilar a position if you PCP and paid the balloon, or bought it outright (thanks to low interest rates). With contract hire, obviously there's no option to buy that actual car, but as you've only paid the depreciation (in theory anyway), nothing stopping you going out and buying a similar used vehicle for the residual price, i.e. what you had leftover from the original stash of cash you could have used to buy the car outright.
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Diggs
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PostPosted: 17:43 - 16 Dec 2021    Post subject: Reply with quote

I've leased a few cars over the years, and always found it to be a cost-effective way of running a new motor. If this is what he decides to do, he must factor in the cost of a body-shop to get rid of small scratches before he gives it back. This will cost him £300 unless he is really unlucky with damage. Of course, if he buys a car outright he may do the same before he sells it...

However, even lease deals have shot up recently and bargains don't seem to about like they used to.
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Keithy
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PostPosted: 23:47 - 16 Dec 2021    Post subject: Reply with quote

Can’t help with buying options, sorry. I’m with PolarBear in that I don’t see the point of new. PCP/lease deals are basically designed to make money for the companies selling the product.

Prior to the corona price surge new cars lost on average 50% in the first three years. So a 30k car is costing you £5k p.a. in depreciation. That’s what a lease wants to take off you. At year 4 that car is £15k and should last another 6 years (average mileage) so that’s only £2.5k a year. More than covers your servicing. Mine’s now at 12 years, so that would take it down to £1,250 p.a.

My only thought would be if you are going to spoff a shed load on a brand new motor then, for me, it would have to be a long term keeper.
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ThunderGuts
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PostPosted: 08:18 - 17 Dec 2021    Post subject: Reply with quote

Keithy wrote:
Can’t help with buying options, sorry. I’m with PolarBear in that I don’t see the point of new. PCP/lease deals are basically designed to make money for the companies selling the product.

Prior to the corona price surge new cars lost on average 50% in the first three years. So a 30k car is costing you £5k p.a. in depreciation. That’s what a lease wants to take off you. At year 4 that car is £15k and should last another 6 years (average mileage) so that’s only £2.5k a year. More than covers your servicing. Mine’s now at 12 years, so that would take it down to £1,250 p.a.

My only thought would be if you are going to spoff a shed load on a brand new motor then, for me, it would have to be a long term keeper.


Valid enough points, but my dad is after a new-fangled plug-in hybrid; used examples tend to be "old tech" and not particularly good and the tech is quite new so questionable long-term reliability. Plus, it's a fast moving market - every year better EVs come out. For these reasons, he's ruling out a used purchase or a long-term keeper.
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UncleFester
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PostPosted: 09:09 - 17 Dec 2021    Post subject: Reply with quote

The other option is to hire a few. Each time he needs to go somewhere, hire a different one. A grand spent over 2 months to see what he likes or doesn't like might not be bad value.

The barely 40 mile range of most PHEV would put me off. To be ysefuk for local trips I'd like a true 40+ range and that bumps the price.

If it was local buy a second hand VW Up E and something mad fun petrol like a Yaris GR.
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Keithy
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PostPosted: 10:00 - 17 Dec 2021    Post subject: Reply with quote

..or an EV shed to use and hire something when you need to do long distances?
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ThunderGuts
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PostPosted: 10:16 - 17 Dec 2021    Post subject: Reply with quote

Keithy wrote:
..or an EV shed to use and hire something when you need to do long distances?


I did actually suggest this, but he wants something sizeable as he carries bulky stuff fairly regularly. To get a decent sized EV you're talking similar money; may as well get a PHEV which will cover both.
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Shaft
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PostPosted: 02:47 - 19 Dec 2021    Post subject: Re: Pater wants a new car Reply with quote

ThunderGuts wrote:

So, in summary, I think option 3 is the better approach as it's lowest risk in what is an unsettled car market (used values are strong right now, but that may change, plus the whole technology moving on side of things). Am I missing anything though? Would it actually be better for him to just buy it and chance the used market in 3/4/5 years time and hope he can sell it for similar to what he bought it for? Or is the used market likely to get flooded with PHEVs because they've become "old-hat" and nobody wants them anymore, with values dropping accordingly?

If anyone has a crystal ball, that'd be fab, otherwise any steer/info/comments would be good. Cheers. Thumbs Up


Based on more than 35 years in this business, I would go PCP and self charging hybrid, if he's set on something electric.

The problem with your third option is, all he will do is pay out for X months and end up with nothing, with a PCP he has options at the end of the contract; pay the guaranteed future value and keep it, use the difference between the actual value and the GFV as a deposit on the next one, or hand the keys back, if the market has gone properly tits up.

When PCPs first appeared in the UK, the finance companies got the GFVs badly wrong (in their defence, it also coincided with an economy crash and an unprecedented rise in insurance costs) and a lot of people got their fingers burnt, although not really the punters; now the GFVs are about as safe as they can be, assuming you keep it in good nick, your car will be worth more, 99.99% of the time.

As for hybrids, I don't really know why anyone buys a PHEV, you get the worst of both worlds, an electric motor with no useful range that you have find a charging point for, coupled to a not very economical and underpowered petrol engine, that you use most of the time.

At least with self charging, they have some sort of KERS system that means that, even on a long journey, you might get to use the electric motor some of the time.

If you really want to display your green credentials, fork out and buy a full EV with a sensible range.

Personally, I think EVs are a technological blind alley, it's a quick fix to appease the tree huggers, but it's not the real answer and everything will change in the next 5 years or so.

If I were being forced to buy a brand new car at this moment (keeping in mind there aren't really any to be bought) I would get something with a petrol engine, on a PCP, lowest deposit possible.
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ThunderGuts
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PostPosted: 17:19 - 20 Dec 2021    Post subject: Reply with quote

Thanks for the advice everyone. He's decided eventually to go on a contract hire; it was substantially cheaper than the best PCP deal so the maths did work out.

Shaft; the PHEV thing does work for someone who drives very locally frequently; he'll just plug it in when he gets home. Most of his journeys are less than 5-10 mile round trips, the sort of distance where a combustion engine will barely be warm. He's keen to be as green as possible, but wants a practical family car. I for one will be interested to see how the reality of the thing plays out, but long term reviews suggest they can be effective in such circumstances.
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Polarbear
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PostPosted: 18:27 - 20 Dec 2021    Post subject: Re: Pater wants a new car Reply with quote

Shaft wrote:


Personally, I think EVs are a technological blind alley, it's a quick fix to appease the tree huggers, but it's not the real answer and everything will change in the next 5 years or so.


Thumbs Up I do so agree.
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A100man
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PostPosted: 14:20 - 21 Dec 2021    Post subject: Re: Pater wants a new car Reply with quote

Shaft wrote:

As for hybrids, I don't really know why anyone buys a PHEV,


Because - company car tax BIK.
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Robby
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PostPosted: 17:00 - 22 Dec 2021    Post subject: Reply with quote

I've had a couple of hybrids and recently gone for a full EV. PHEV would make sense in this situation. It's just a hybrid with a bigger battery and more powerful motor. Still does all of the energy recovery/self charging stuff of a normal hybrid (or EV).

I doubt there will be much in it financially between a lease and a PCP. People who know a lot more about finance than us have worked out the numbers. At this point it isn't so much about predicting the future market as shaping it - the GFV values are used to define the market, rather than making a bet against it.

Also, while this car would become outdated sooner than a petrol car in 1995, it isn't going to be obsolete overnight. The next big thing in battery tech isn't even agreed on at the lab scale yet, so it's several years away from mass production.
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PostPosted: 11:11 - 19 Feb 2024    Post subject: Reply with quote

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