Will the Exotic Used Car Market Change as well?
Discussion
I am hesitant to pull the trigger on something I have been saving for, based on the currently inflated prices.
We all know the used car market is extremely high, mostly from the impact of the pandemic. However, I am curious as to how this will affect the Exotic side of the used car market?
I am thinking higher end used cars that would originally cost £70/80k upwards, like the RS6, R8, Gallardo, AMG GTS, 911, etc etc. i'm talking pride and joy cars, weekend toys, and something a bit special. Not an everyday A to B vehicle.
These cars are obviously much more affordable after five years or so, but are they likely to drop back with the rest of the used car market if and when the bubble finally bursts? I have seen prices start to soften slightly, but I think that maybe down to the extortionate fuel costs at present and the not so great economy of these vehicles.
My thoughts are they will go one of two ways?....
a - They will drop back to pre-pandemic levels and follow suit of the rest of the market: or
b- They will not drop back as much and possibly even retain their higher prices as people had more disposable income from furlough etc. The pandemic also taught us that nothing is for granted so to live for the moment and buy the nice car etc. Plus with the advent of EV's will these big power gas guzzlers become rarer and be more sought after? Or will then be shunned and taxed heavily, so value will plummet?....
Admittedly we are in uncharted waters, and a crystal ball would be great, but would love to have a better insight into the exotic side of things.
We all know the used car market is extremely high, mostly from the impact of the pandemic. However, I am curious as to how this will affect the Exotic side of the used car market?
I am thinking higher end used cars that would originally cost £70/80k upwards, like the RS6, R8, Gallardo, AMG GTS, 911, etc etc. i'm talking pride and joy cars, weekend toys, and something a bit special. Not an everyday A to B vehicle.
These cars are obviously much more affordable after five years or so, but are they likely to drop back with the rest of the used car market if and when the bubble finally bursts? I have seen prices start to soften slightly, but I think that maybe down to the extortionate fuel costs at present and the not so great economy of these vehicles.
My thoughts are they will go one of two ways?....
a - They will drop back to pre-pandemic levels and follow suit of the rest of the market: or
b- They will not drop back as much and possibly even retain their higher prices as people had more disposable income from furlough etc. The pandemic also taught us that nothing is for granted so to live for the moment and buy the nice car etc. Plus with the advent of EV's will these big power gas guzzlers become rarer and be more sought after? Or will then be shunned and taxed heavily, so value will plummet?....
Admittedly we are in uncharted waters, and a crystal ball would be great, but would love to have a better insight into the exotic side of things.
As I said on the other thread, my concern would be that an inflation rate of 9% has historically lead to interest rates of at least 9%. I understand that many cars in this class are bought with a significant chunk of finance (cf Chris Harris' FF, GT3s etc); to state the obvious, monthly repayments on a principal of £50k or £100k will be a lot higher if the rates go from 1.25% to 10 or 11%.
So I guess probably interest rates will rise a lot more, and probably that will somewhat reduce the numbers of buyers in the market for an 'exotic' car, leading to a slower-moving market and likely somewhat lower prices.
However, whether that's 'a little' or 'a lot' lower, I really don't know.
No one has a crystal ball unfortunately so advice or opinions may vary !
Imho the current prices for all used cars are obviously high but largely not helped by the lack or wait for new factory orders. When this improves it must have a knock on effect.
As it seems that all types of cars and within all price ranges have seen these rises , paradoxically when they do fall I don’t think it will be as universal though.
Specials /exotics / limited number editions could fall obviously but perhaps not pro rata although having said that some of these do seem to be ridiculously priced.
The bracket you are looking at falls into that grey area ie not run of the mill but equally not totally exotic.
I’m not interested remotely in EV’s and have no intention of parting with my V8 or V10 for some considerable time and don’t think they will be taxed out of existence either.
If anything their value could well rise.
If you can afford it then as none of us know what’s round the corner anyway , I’d be in the go for it camp !
Imho the current prices for all used cars are obviously high but largely not helped by the lack or wait for new factory orders. When this improves it must have a knock on effect.
As it seems that all types of cars and within all price ranges have seen these rises , paradoxically when they do fall I don’t think it will be as universal though.
Specials /exotics / limited number editions could fall obviously but perhaps not pro rata although having said that some of these do seem to be ridiculously priced.
The bracket you are looking at falls into that grey area ie not run of the mill but equally not totally exotic.
I’m not interested remotely in EV’s and have no intention of parting with my V8 or V10 for some considerable time and don’t think they will be taxed out of existence either.
If anything their value could well rise.
If you can afford it then as none of us know what’s round the corner anyway , I’d be in the go for it camp !
samoht said:
As I said on the other thread, my concern would be that an inflation rate of 9% has historically lead to interest rates of at least 9%. I understand that many cars in this class are bought with a significant chunk of finance (cf Chris Harris' FF, GT3s etc); to state the obvious, monthly repayments on a principal of £50k or £100k will be a lot higher if the rates go from 1.25% to 10 or 11%.
So I guess probably interest rates will rise a lot more, and probably that will somewhat reduce the numbers of buyers in the market for an 'exotic' car, leading to a slower-moving market and likely somewhat lower prices.
However, whether that's 'a little' or 'a lot' lower, I really don't know.
I'm thinking maybe this will have the effect that the superconductor issue is creating at the moment, so in essence there will be less people buying exotics new and the used market may even become more buoyant?So I guess probably interest rates will rise a lot more, and probably that will somewhat reduce the numbers of buyers in the market for an 'exotic' car, leading to a slower-moving market and likely somewhat lower prices.
However, whether that's 'a little' or 'a lot' lower, I really don't know.
However, paradoxically I guess this also depends on whether the buyer's in the second hand market also require finance.
Sadly I think that most people are relying on finance too much and live way beyond their means. A bit of man maths no and again is ok, but I wouldn't live my life this way all the time.
alscar said:
I don’t recall being helped out then and certainly had not previously experienced rates of that magnitude - appreciate they didn’t remain at that level for too long though.
Perhaps ammo is a good idea just in case - assuming you can find and afford it.
We've given it to Ukraine haven't we?Perhaps ammo is a good idea just in case - assuming you can find and afford it.
troika said:
No I’m not. However, no govt will preside over the utter carnage that would cause to a whole generation who’ve only known ZIRP.
To be fair, if the economy is now more rate-sensitive than the old days, having become accustomed to ultra-low rates, then they won't have to go up as far perhaps. However it would still have to go high enough to have an effect.MrPid said:
I'm thinking maybe this will have the effect that the superconductor issue is creating at the moment, so in essence there will be less people buying exotics new and the used market may even become more buoyant?
However, paradoxically I guess this also depends on whether the buyer's in the second hand market also require finance.
In order to push used prices up you'd need new supercar buyers to be substantially more affected by the higher interest rates than buyers in the used market, and I don't see that. Also any effect would be delayed, a shortfall in 2023 model year cars would take a few years to filter through to impact the used market.However, paradoxically I guess this also depends on whether the buyer's in the second hand market also require finance.
This is just considering interest rates, there's also generally people having less money to spend in a down economy, and being less willing to spend the money they do have on a visible extravagance.
A factor that could exaggerate a slide would be that unlike a standard PCP, with supercar finance the residual value liability is with the customer. If you buy a £100k supercar today with cash, you might hope that it'll be worth £70k in four years' time. However, if it ends up being worth £50k, that's a shame but most owners will accept it. However if you're on the hook for a £70k balloon payment to the finance provider at the end of term, and you see asking prices of cars like yours sliding down through £70k in year two, you might decide you need to sell it now before you end up deep in negative equity. So a bit like how margin calls can accelerate stock market crashes, if many supercar owners are exposed in this way, it could make any drop in prices self-reinforcing.
I'm not trying to be pessimistic here, I'm also keen on buying something like this soon, so watching keenly.
There is no way we will see the rates of the 80s.
As others have said, it's a totally different environment now.
House prices are much higher now and rates much lower. If they even go up to 5% there is going to be an awful lot of people who can no longer afford their mortgage.
17% rates of the 80s would basically bring about the apocalypse.
As others have said, it's a totally different environment now.
House prices are much higher now and rates much lower. If they even go up to 5% there is going to be an awful lot of people who can no longer afford their mortgage.
17% rates of the 80s would basically bring about the apocalypse.
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