Had my Q2 edition one for 2 years now on a pcp. I know how a pcp works in that as you get closer to the end the value of the car gets closer to what it’s worth. Now I sold a BMW M135i after 18 month into a pcp and only came out £700 short and it needed 4 new tyres so factoring in that probably more like £200-£300 short but my Q2 is coming in at stupid money. Paid £32,000 2 years ago and as it was a new model there weren’t many discounts but it should of been £35,000. 2 years in I’m getting valuations of £17,000 to just under £19,000. I owe £25,000 on it still meaning at best a shortfall of £6,000. I can’t see the depreciation slowing down that much that it will balance out in another 2 years and really wanted to get rid of it at 2.5-3 years. Thinking I might end up VT’ing the car after I’ve paid 50% as I do t think it will be worth even the GFV.
Q2 Shocking valuation
- Thread starter James Plant
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You can only VT when 50% of the financed amount is paid e.g. not 50% of the RRP.
TX.
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TX.
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The last 2 years haven’t been great for used values. New car sales are tanking, dealerships need to make some money somewhere to keep those fancy showrooms going, and nearly new cars are where they try to make margin. You bought a nearly new model with low discounts, which are now much higher.. you bought a first edition with all of the bells and whistles, we all know how valuable options are on the secondhand market.
I have just sold my 2 year old SQ5. £19k depreciation in two years. If you don’t like the numbers keep for 4 years as the next two will be so much cheaper for you!
Surprised you got out of the bmw so easily - many on the BMW forums are in massive negative equity at 2 years, even when they get a big upfront discount...
Yup - the perils of buying a car new (don't do it). So you paid £32,000 - in that was 20% vat which you will have lost the moment your drove off the forecourt so at that moment the car was actually worth £26,666 maybe even less if you had any extra cost options - instantly most are zero value as they aren't listed in the trade price guides. Dealers only pay VAT on the profit element of the car when it's second hand btw..
So you have made two years worth of payments - and only paid off £1666 - deeply depressing isn't it? PCPs are a way of getting a punter into a car, move a unit on, and have the customer postpone the bad news for a year or two. How do you avoid the swinging depreciation then? You buy used, 6-12 months old after the initial brutal depreciation has happened - stick a private plate on it and no one is any the wiser. You fund it yourself using a bank loan for the whole amount - no balloon payment with the ability to sell the car at a point of your choosing or have an asset with some kind of value at the end of the loan period.
I shouldn't write the above really - I need people to keep buying new cars and getting punished.
Always worse when a new model has replaced. That is why such big discounts are offered to entice to outgoing models, along with the parts bin being emptied into them.
I guess the **** has fallen out the market with brexit. So with the M135i I got a great discount off the rrp of 7 grand so paid 28k for it new and sold for 21k 18 months later and as I say a £700 shot fall which is neither here nor there for a pcp. The Bmw I had before that was 2.5 years old and they cleared the finance plus I got the 7k off the new one but the Q2 just seems worthless after 2 years. I’ll just sit on it until the pcp is up and at worst VT it at the end of it’s not worth the GFV. The thing with buying new is you can spec a car on places like drive the deal or coast2coast cars and a new A3 Sline 1.4 with little options comes out at around 22k, you look at nearly new and they are asking almost as much. Plus you factor in 10.9% apr on used for a pcp and 6.8% on new monthly it’s not really any more. My wife wanted the Q2 and I’ve got to be honest it’s not really my cup of tea, an S3 is more my style!
There was a time when unscrupulous dealer business managers would set the PCP balloon final payment higher than it ought to be to bring the monthly payment down without affecting the dealer profit margin - I believe VW finance have killed this practice now. My wife had something similar done to her when she PCP'd a Mini a few years back (BMW Finance) - when she had paid 50% of the financed amount she took the VT option - was about £6k of negative equity at the time. Do be careful if you do consider the VT option - they pro-rata the agreed mileage into monthly buckets, if you are over mileage or the car isn't mint - i.e. ready for auction they don't hesitate to claw money back.
BMW - BMW are playing a dangerous game over throwing enormous incentives at new car purchases or making cars that sit in inventory to be sold with say 100 miles on the clock at massive discounts. Was looking at Sytner's web site recently - lot's of M5 vehicles with list prices well north of £100k, delivery miles and being offered with around £25k of discount. Good news for the buyer? No, really bad news because it means the residual values are going to be terrible. Every automotive manufacturer that has chased unit volume sales by excessive discounting has gone to the wall - GM did it to Saab and the strategy eventually killed not just Saab but the entire business - the brand remnants were sold to PSA. There are many others too.
BMW - BMW are playing a dangerous game over throwing enormous incentives at new car purchases or making cars that sit in inventory to be sold with say 100 miles on the clock at massive discounts. Was looking at Sytner's web site recently - lot's of M5 vehicles with list prices well north of £100k, delivery miles and being offered with around £25k of discount. Good news for the buyer? No, really bad news because it means the residual values are going to be terrible. Every automotive manufacturer that has chased unit volume sales by excessive discounting has gone to the wall - GM did it to Saab and the strategy eventually killed not just Saab but the entire business - the brand remnants were sold to PSA. There are many others too.
M5 at £25k discount bad news? I think not, as long as you keep it longer term
And even better if you take the discount (assume based on PCP) and then settle within 1st few weeks. Again assuming have the cash which many don’t.M5 at £25k discount bad news? I think not, as long as you keep it longer termAnd even better if you take the discount (assume based on PCP) and then settle within 1st few weeks. Again assuming have the cash which many don’t.
Mr Cosmic blue knows all about buying cars and everyone who buys on PCP is doing it wrong....
So I bought my M5 new (and my SQ5 before it...) - I'm not bothered if it loses a few quid, its my interest and I am prepared to fund it. However, I do try and keep the costs down where appropriate...
so my M5 is on a PCP..... to keep costs down.... as they gave me more than £25k incentive, a chunk of which was for taking finance. The interest rate is 3.9% APR. I couldnt get a loan at that rate (not at more than £25k...) and my investments (that I would have had to cash in to avoid finance) earn on average a chunk more than 3.9% apr....
So I have the car of my dreams (it is absolutely amazing!) and I finance as cheaply as possible. When / if bonus pays out in Dec I may pay some of the finance down, or I may invest if I am comfortable that return will be above 3.9%. Its unlikely I will pay down below GFV though as then I get a line in the sand about the amount I will lose (about £8k a year if it is only worth GFV)....
The VAT thing is a red herring, a car is worth what it is worth on the secondhand market - which is inflated by the VAT in the new car price.... My son in law (who works for a large dealer group) can run £60k cars for £200 a month for 3 months and then hand back because of the VAT in the new car price.... (tax rules for dealers on providing cars to staff (in his name as owner) kick in)
There is no right or wrong way. Yes, PCP can be expensive for some people but if that is what they want, that is their choice. Same with new cars - my £5k 3 year old Fiesta with 70k on the clock will always be a better financial buy, but it doesnt quite give the driving enjoyment my more expensive one gives.... Buying second hand can be very expensive if you run into issues, need tyres, brake discs, an extended warranty or major problems with no warranty.... Walking is definitely cheaper, we should all do that....
Edit to add - you can in excess of 20% discount on many Audi / VW / Seat models - including A6 - so VAG in danger of killing that too then....
Have you tried comparing your Q2 with those selling on auto trader? Unfortunately it is rare to have any equity on a PCP, but then those finance deals aren't aimed at those type of buyers.
Best thing, as has been stated in the previous thread, is to negotiate discount in at purchase that at least offsets some depreciation. The q2's, especially special editions ones, are overpriced and you will never get returns on the options it came with...
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It is a free country and we make our individual choices - which is cool. I'm not anti PCP (I've had many over the years), but do feel that punters are sold the agreements without really understanding the financial implications - especially if they want to change early or have paid a minimal deposit.
Within the UK car-finance industry today there are big worries that the lenders are sitting on a time-bomb of negative equity. Used car prices have bombed, the once healthy residual values of diesel cars have taken a beating and there is economic uncertainty, possibly even a recession looming. The lenders know that there is a real possibility of punters doing VTs to escape the negative equity trap in even greater numbers which impacts their profitability - maybe even viability as businesses.
In truth many people can't really afford the running costs/depreciation of a vehicle and get lured into buying a shiny new vehicle the point where a previously unattainable dream becomes a tangible reality. 24+ months down the road they discover that brutal depreciation has occurred, the original deposit has evaporated, they have made a bunch of payments and they are trapped with a vehicle they no longer feel the same way about and seek to change only to discover they are sitting on negative equity....and yep that monthly payment still has to be made. It's sick-to-the-stomach feeling when its happening to you.
The 20% VAT thing is real - if you buy a new car and immediately try and trade it the dealer will subtract the VAT because tax isn't something they need to 'buy' in a used car. All vehicles have a market value - the forecourt sticker price and that will reflect the price of that car when it was new including the VAT element for sure - the difference between the buy-in and sale price is the profit margin for the dealer and where the VAT is calculated for a used car.
The bottom line for all of us is that most cars are cr*p 'investments' however we derive pleasure from driving our purchases and that has to be paid for one way or another.
I do reflect that we are probably in the twilight era of owning a motor vehicle as personal transport - cars have existed in practical terms for mass transport for say 100 years, another 35 and they will be consigned to history to be replaced by some kind of automated electric piece of boredom. Let's enjoy it while we still can.
Within the UK car-finance industry today there are big worries that the lenders are sitting on a time-bomb of negative equity. Used car prices have bombed, the once healthy residual values of diesel cars have taken a beating and there is economic uncertainty, possibly even a recession looming. The lenders know that there is a real possibility of punters doing VTs to escape the negative equity trap in even greater numbers which impacts their profitability - maybe even viability as businesses.
In truth many people can't really afford the running costs/depreciation of a vehicle and get lured into buying a shiny new vehicle the point where a previously unattainable dream becomes a tangible reality. 24+ months down the road they discover that brutal depreciation has occurred, the original deposit has evaporated, they have made a bunch of payments and they are trapped with a vehicle they no longer feel the same way about and seek to change only to discover they are sitting on negative equity....and yep that monthly payment still has to be made. It's sick-to-the-stomach feeling when its happening to you.
The 20% VAT thing is real - if you buy a new car and immediately try and trade it the dealer will subtract the VAT because tax isn't something they need to 'buy' in a used car. All vehicles have a market value - the forecourt sticker price and that will reflect the price of that car when it was new including the VAT element for sure - the difference between the buy-in and sale price is the profit margin for the dealer and where the VAT is calculated for a used car.
The bottom line for all of us is that most cars are cr*p 'investments' however we derive pleasure from driving our purchases and that has to be paid for one way or another.
I do reflect that we are probably in the twilight era of owning a motor vehicle as personal transport - cars have existed in practical terms for mass transport for say 100 years, another 35 and they will be consigned to history to be replaced by some kind of automated electric piece of boredom. Let's enjoy it while we still can.
I think a lot of people are sold a lot of financial products without really understanding what they are doing. I am not sure you can ever truly protect someone from themselves completely, but I agree people don't understand that PCP is an overall expensive way of buying a car, but the interest is called out on the numbers you sign and the GFV so you should be able to see what its costing you. If you take a bank loan and buy "cash" there is no need to tell you how much you will lose over the time you own it....
As I said, my son in law works for a large dealer group so I know what they are planning for the changes to economic position and impact on volumes. Its not a great time to be in the industry and their overall margins are declining. New cars are not a source of much profit, two to three year old cars (those coming back from PCP...) are where they make the most money.... after after sales of course, which is where the real money is (my brother has been a service manager in the industry all his life so I already knew that!).
If you bought a Porsche GT3 from a dealer and tried to sell it back a week later, you would not lose the VAT element (1/6th of the purchase price) on that car. Its all about supply and demand. Yes, for most cars a new one is nicer and available so a dealer wont want to give you more than 5/6th, but its not always the case....
Agree on the last bit, I reckon my latest car is likely to be my last high powered petrol car and next is likely to be EV or hybrid. I'll enjoy it whilst I can!
People saying about dropping the 20% vat off when you drive away plus it would add another owner so straight away you’ve lost a few grand, I get that and it’s part of having a new car. Now I’ve been looking at SQ2’s and used ones with upto 3000 miles are going for around the same price I can get a new one for on drive the deal! One was £10 cheaper than I could get new.
Wow, no, that doesn't bode well, clearly not shifting these "new" models...people aren't fooled
Not everyone knows about sites like dtd. Even car wow only offer a couple of grand off most models when you can get more than double that in some cases so I’d say 80% of punters think they have a great deal getting 2-3 grand discount.
But the trade is so cap prices will be determined based on the best new discount available...
New S4 avant just over 40k, new SQ5 just under 45k.
My 2year old, 22k mile SQ5 (with a few extras) is on a dealer forecourt at £41.5k currently... that looks a bit optimistic!
Nope that's not the case! You don't lose 20% straight away, it's relative on used prices. If you lost 20% on day one everyone would just buy a car that's a month or two old.
I bought a brand new S3 a few years back for £28,000 if it lost 20% VAT straight away = £22,400 after day 1.
I sold it at just under 3 year old for £21,500 if the 20% VAT loss was correct and it was only worth £22,400 as soon as I drove it away that would mean it only lost £900 in the 31 months after I drove away in it....that would be a cracking used buy if it was only losing £900/31= £29 per month
Nope that's not the case! You don't lose 20% straight away, it's relative on used prices. If you lost 20% on day one everyone would just buy a car that's a month or two old.
I bought a brand new S3 a few years back for £28,000 if it lost 20% VAT straight away = £22,400 after day 1.
I sold it at just under 3 year old for £21,500 if the 20% VAT loss was correct and it was only worth £22,400 as soon as I drove it away that would mean it only lost £900 in the 31 months after I drove away in it....that would be a cracking used buy if it was only losing £900/31= £29 per month
People buy new cars for lots of reasons - never had one before/want that new car feeling but most likely that the dealers pole up with an attractive PCP, head wins over heart and another unit is registered. Whenever one is changing vehicles with a part-exchange involved the actual residual value of the part-ex is blurred by the total available profit margin which can include + finance commission and manufacturer incentives. The dealer needs the punter to feel good about the deal. As has been noted previously the general market desirability of a vehicle also has a bearing on the future value - though these days with a glut of supply for all but the rarest of cars those are few and far between.
From personal experience buying cars that are 9-12 months old with very low mileage is the place to be (typically around 25% less than list including all the options). I've literally lost count of the number of new cars I've owned - probably north of 25 and can say with absolute conviction that they are only new for a day! And...very importantly I need you lot to keep buying new cars, loading them with spec and then getting bored somewhere around the 9 month point...would you mind ordering in Blue please? Thanks!
Interestingly though cosmic, a dealer makes his biggest profit margin on a car between 9 and 30 months old according to someone in the trade... so the dealers would love us. To keep buying new and trading them in for you to buy too as they make most money when you buy (or we sell)...
I will buy new or slightly secondhand depending on what it will be used for, what I am looking for, the type of car and how much that type of car has moved on recently. I drive a 4 year old Mini for station and short journeys - know it’s history, it’s got a few marks but it’s going to get a few more. There is no way I would have bought a 9 month old M5, you just don’t know how it’s been treated and a car like that can be damaged by inappropriate treatment at a young age....
I will buy new or slightly secondhand depending on what it will be used for, what I am looking for, the type of car and how much that type of car has moved on recently. I drive a 4 year old Mini for station and short journeys - know it’s history, it’s got a few marks but it’s going to get a few more. There is no way I would have bought a 9 month old M5, you just don’t know how it’s been treated and a car like that can be damaged by inappropriate treatment at a young age....
I know what you are saying to an extent and it's true, but cars new or old are a waste of money full stop. I bought my A5 coupe 100% new with 21.4% off the list price, for the first 12 months there wasn't a used one with my spec for the price I paid new, so I got a good deal. The price has bombed on them now, so next year when my pcp is up I'll be giving them the keys and walking away, as the car will be worth less than what I owe on it, if I had bought it outright I'd be taking that hit not them.
Everyone has their own thoughts and opinions on the best way to own a car, it's what suits the individual and what deals are around at the time. For me I want a car that's always in warranty and one that I never have to MOT, I'm happy to blow up to £400pm on a car and not expect equity at the end, if I do get equity fine, if not also fine! My mates wife spends £320 per month on cigarettes....choices choices!
You are correct of course almost all cars are a terrible waste of money. And up to 2016 I was the same as you - wanted a car that was always in Warranty and never liable for an MOT... so a fixed cost model. I walk for an hour or two most nights to offset being sat on my rear all day (IT role) and reflected that maybe cars are actually not as cr*p as my motor industry memory from 31 years ago thought. I live in a fairly affluent area and yet many people have cars of 10 years plus old - still look fine and clearly work OK - had I missed a trick? Here on this forum there are lots of older Audi vehicle owners and yet serious issues are rare. So I resolved to test the theory and buy a used car with low mileage - wack a personal plate on it, get it detailed so it ends up looking better than brand new and try low-financial loss car ownership.
The used car market has taken a terrible hammering, especially for diesel cars and with the dealers throwing big discounts via brokers the residual values are getting hit too - though perhaps Audi are less guilty in this regard.
Let's just have a play with the numbers for a moment - let's say your A5 was £40k when it was new - many PCPs are 48 months. So maybe a deposit of £5k and then £400 x 48months - say £24,200 paid over the duration. Even if the A5 had lost 60% of it's purchase price and it was owned outright you'd still have an asset that had substantial value as deposit for the next vehicle. With a PCP - sure you can walk away at the end - but that's the painful bit you have nothing to show for it. PCPs are really clever trick to lure a punter to buy a new vehicle - the monthly payments look low because the amount financed is the difference between the sale price and the projected future value of the car perhaps 4 years later (the balloon payment).
With a clear head anyone seeking to purchase a vehicle needs to weigh up the whole life cost of a PCP vs funding by another method - ignore all the BS about APR rates - the decision is simple...do you want an asset with some sort of value or simple pay out a big chunk of money over the contract term and have nothing to show for it?
I see exactly what you are saying and it does make 100% sense, I've even posted on here recently about buying something and keeping it for 5 years to have something to sell at the end, I do all the numbers on how much I'd have to put away each month and for how long to get my lump sum back, minus any small repairs, mot's, breakdown cover etc over that time and on some cars I'd be up £6,000 at the end which makes perfect sense to do and I should do it! But then I think "What if something big goes, that £6k is gone!" and then come on here and see posts like a couple of the guys on the S3 forums recently did, think one guy was just out of warranty and got a bill for £12,000 after his engine went bang
it's not only the money side, it's also the hassle of getting it done and being without a car.Yes I could probably even make do with an older car for about £5,000 and keep it for years and not worry about where I park etc. but I have always liked nice cars from the age of 17, I'm now in my 40's
and I've worked hard to get into the position to be able to buy nice cars. It's just me and the wife, we both work, mortgage is paid off, no debts or kids, so when I do put my sensible head on and think 'I'll downsize & buy and keep long term' the little devil in the back of my mind shouts "Nooo get something new, someone else will soon spend your hard earned when you're not here"...I agree and then I look at new cars again lol I only ever put £1k down on a pcp, my A5 was £1k and then 36x £388. Yes a lot of money, but I know people who spend £100 per week gambling!
I've worked in a car factory for well over 20 years, so see what goes on and how they are put together and it's shocking to see some of the main parts and how flimsy they are...maybe that subconsciously puts me off long term ownership
My final thoughts (for me): Buy an appreciating asset and lease a depreciating one....but again it's what works for the individual
Well said @S2B, and like you, I just don't want to MOT, have a car out of warranty etc etc. As "if" a fancy auto box goes, that is £12k+ as you say. And engine, who knows. That is how they grab punters like you and I. I don't smoke, don't drink huge amounts, kids are grown up, and cars are my thing, finding them, doing the deal, detailing, driving all of that.
I would just not want to own, especially a performance car like a RS or M or AMG out of warranty.
All personal choices on what we spend our money on, or how much we leave to the kids (those of us that have them!)
I would just not want to own, especially a performance car like a RS or M or AMG out of warranty.
All personal choices on what we spend our money on, or how much we leave to the kids (those of us that have them!)
Exactly, no point in us being the richest couple in the graveyard
WARNING: RANT
The only younger family I have are my three nephews, one is 24 next birthday and a bit odd to say the least
, he buys all sorts of carp for his car (proper boy racer) and gets engaged to every girl he goes out with within weeks! The other 2 (twins) are lazy little s***s, 21 next birthday, they wasted 1 year at college doing joinery...then sacked it off as they didn't like it. Then did 2 years of a 3 year mechanics course and tried to sack that off until my sister put her foot down and told them to finish it. They have no interest in mechanics as they can't even drive and have never had a lesson! they finished the course in May/June and have done nothing since....drives me mad to be related to them tbh! The only job they have ever done was a 2 week stint over summer packing sportswear. When they were at college it was only a 3 day a week course, they said that they couldn't work any of the 4 days left as nobody would take them on!!! Yeah right, they live in Chester with all the bars, clubs, restaurants, cafes, shops, supermarkets etc....but there are no part time jobs! 
F-ing winds me up Rant over
The dogs home will soon find a use for what we leave!
Oh his car, good when 17-20 but time to grow up at 24...or am I just getting old :
Exactly, no point in us being the richest couple in the graveyard
WARNING: RANT
The only younger family I have are my three nephews, one is 24 next birthday and a bit odd to say the least
Rant over
The dogs home will soon find a use for what we leave!
Oh his car, good when 17-20 but time to grow up at 24...or am I just getting old :
View attachment 191159
haha, love the rant mate, and so so common amongst "some" of the younger generation...not all (before I get shot down
Jeez, we must be getting old, that looks AWFUL
It's good to have a rant now and againhaha, love the rant mate, and so so common amongst "some" of the younger generation...not all (before I get shot down
Jeez, we must be getting old, that looks AWFUL
I agree that not all young people are like them and I have full respect for the younger generation that do get stuck in and want to make a go of their life and I'll go out of my way to help them if I can. There's a 20 year old on here who's driving an S5 
I know what he does for a living and he's worked hard to get where he has and he's not finished yet!....but the hard work is paying off and I'm pleased for him Yeah it does look awful, what makes it even worse it that you can hear it coming from a mile away...big loud exhaust! I tried to tell him, I said "Mate people will hear that, look and think pri*k". He said "They won't they will think he's cool"
Just back after a week in Portugal. We hired car via Sixt, so was pleasantly surprised that the SUV they directed us to was Audi Q2. It was auto S-tronic. 30 TFSI (think that's the 1.0 litre) with 5,000km on the clock.
Pretty gutless engine, but very frugal. Tiny boot to be honest, and the turning circle of a Cunard liner. That said, very comfortable. Oh and the headlights were shocking. Why do Audi insist on crap halogen when I've got LED headlight technology on my 2015 Polo and Xenons on my 2012 Allroad?
Wondered what it retails for back home? Could get one new for £23k. A year old, the price drops to £17k.
Would I buy one, probably not, and that there-in is the problem. It has a very disposable feel. If it was a hybrid then it would probably hold the value better.
Pretty gutless engine, but very frugal. Tiny boot to be honest, and the turning circle of a Cunard liner. That said, very comfortable. Oh and the headlights were shocking. Why do Audi insist on crap halogen when I've got LED headlight technology on my 2015 Polo and Xenons on my 2012 Allroad?
Wondered what it retails for back home? Could get one new for £23k. A year old, the price drops to £17k.
Would I buy one, probably not, and that there-in is the problem. It has a very disposable feel. If it was a hybrid then it would probably hold the value better.
Because both the polo and the q2 don't have led headlights as standard? Certainly Audi do not insist upon it, buyers have a choice but rentals tend to be bum basic models..
