Why do cars in the UK devalue so much?
Discussion
I've spent sometime in Canada and France in the last few years.
I'm amazed at how expensive 2nd hand car values are in these countries. Or looked at the other way round, I'm now amazed at how quick cars devalue in the UK.
In Canada & France it seems to take on average 6-7 years for a car to halve in value. In the UK it is about 3-4. Sheds that would get scrapped in the UK go for 1-2k plus.
So how do you explain this difference? What are other countries like?
I'm not complaining as I normally spend 1k-4k and the value for money at that price range is remarkable.
I'm amazed at how expensive 2nd hand car values are in these countries. Or looked at the other way round, I'm now amazed at how quick cars devalue in the UK.
In Canada & France it seems to take on average 6-7 years for a car to halve in value. In the UK it is about 3-4. Sheds that would get scrapped in the UK go for 1-2k plus.
So how do you explain this difference? What are other countries like?
I'm not complaining as I normally spend 1k-4k and the value for money at that price range is remarkable.
Does the cost of running older cars not come into it a bit?
I was always under the impression that labour costs are higher in the UK, so older cars that are at risk of expensive repair bills are not terribly desirable.
We seem to be more snobbish about driving newer cars too.
In terms of bigger cars, our pretty expensive fuel and taxation rates also lead to them being virtually worthless even when they may have years of useful life left in them, especially for cars registered just after the CO2-based VED rates came in in 2001 - a big six- or eight-cylinder auto from then will be knocking on 9 years old now and cost over 400 quid a year to tax, possibly half of what it's worth!
I was always under the impression that labour costs are higher in the UK, so older cars that are at risk of expensive repair bills are not terribly desirable.
We seem to be more snobbish about driving newer cars too.
In terms of bigger cars, our pretty expensive fuel and taxation rates also lead to them being virtually worthless even when they may have years of useful life left in them, especially for cars registered just after the CO2-based VED rates came in in 2001 - a big six- or eight-cylinder auto from then will be knocking on 9 years old now and cost over 400 quid a year to tax, possibly half of what it's worth!
Edited by Citman on Tuesday 14th December 04:06
There's exceptions in the USA I'm sure... however as someone in the Motor Trade in the US I think it's down to a number of reasons. First, we don't have license plates that indicate the age of a car, we don't have stringent MoT as a general rule (Most states don't have any safety inspections, not that I agree with that) and in a huge part of the country, our cars just don't rust.
Also, we don't have national road tax, when states do have personal property taxes these go down the older a car gets, as does insurance. Insurance over here is more tied into the value, performance and repair costs of a car, not strictly the engine size. A, say, 10 year old Buick with a 3.8L V6 will likely be a cheap car to insure while a say, Integra Type R will cost a fortune because they either get wrecked or stolen. Plus Petrol is a lot cheaper. Running a, say, 5 year old Mercedes S-Class is a lot cheaper than running a brand new one, unlike in the UK.
Also, we don't have national road tax, when states do have personal property taxes these go down the older a car gets, as does insurance. Insurance over here is more tied into the value, performance and repair costs of a car, not strictly the engine size. A, say, 10 year old Buick with a 3.8L V6 will likely be a cheap car to insure while a say, Integra Type R will cost a fortune because they either get wrecked or stolen. Plus Petrol is a lot cheaper. Running a, say, 5 year old Mercedes S-Class is a lot cheaper than running a brand new one, unlike in the UK.
I have lived in France, UK, and now the US.
I can confirm that second hand cars in the UK are way cheaper than in France or the US.
When I left the UK, my 1996 Saab 9k Aero would have been worth 5k euros in France, and maybe 5-6k$ in the US. The going rate at the time in the UK was about 800-1k pounds. So I kept it and put in a barn in France!
I think part of it is cheap finance, and generally the UK having lived above its means for the last few years, but also a geographical reason: in most of the US, you need a car from age 16. There is simply no other option. Therefore any car which can get you from A to B is highly valuable to someone, in many cases it allows you to hold a job.
In the UK, in a lot of places you can get by using just buses or trains, at least until you are say 20 or 25. So a car is less vital. I could have lived without a car for the 10 years I spent in the UK (but is a life without a car worth living?)
France is a bit like the US, outside Paris, everything is car-oriented, you need a car from quite early on in life.
Even now, been looking at e39 M5s. They seem to start at 7-8k in the UK, but more like 15k$ in the US. And the exchange rate is not above 2 anymore!
Finally, there is also the fact that the US has a sales tax on used cars. Not sure how it affects things, but it probably does.
I can confirm that second hand cars in the UK are way cheaper than in France or the US.
When I left the UK, my 1996 Saab 9k Aero would have been worth 5k euros in France, and maybe 5-6k$ in the US. The going rate at the time in the UK was about 800-1k pounds. So I kept it and put in a barn in France!
I think part of it is cheap finance, and generally the UK having lived above its means for the last few years, but also a geographical reason: in most of the US, you need a car from age 16. There is simply no other option. Therefore any car which can get you from A to B is highly valuable to someone, in many cases it allows you to hold a job.
In the UK, in a lot of places you can get by using just buses or trains, at least until you are say 20 or 25. So a car is less vital. I could have lived without a car for the 10 years I spent in the UK (but is a life without a car worth living?)
France is a bit like the US, outside Paris, everything is car-oriented, you need a car from quite early on in life.
Even now, been looking at e39 M5s. They seem to start at 7-8k in the UK, but more like 15k$ in the US. And the exchange rate is not above 2 anymore!
Finally, there is also the fact that the US has a sales tax on used cars. Not sure how it affects things, but it probably does.
I know when the germans are done with older cars the majority end up in eastern europe.Ultimately the answer is just supply and demand. People here are willing to pay a greater premium for a new car. Yes, the number of fleet cars don't help, but if we weren't obsessed by the newness of our cars, almost all private cars would be bought second hand, ex-fleet.
To those of us who aren't obsessed by year of manufacture, it's generally a good thing in my experience. You can buy a perfectly good, newish car for a couple of grand.
To those of us who aren't obsessed by year of manufacture, it's generally a good thing in my experience. You can buy a perfectly good, newish car for a couple of grand.
In this country, we're (in the main), obsessed with external validation. Impressing people we don't know.
I also beleive that company car culture here has resulted in your car becoming a label of your status. "I drive a GL, but my neighbour drives a GLS", for example.
It's potty, but there you are. As has already been said; if you don't give a stuff about how strangers perceive you, tyou can get a great deal. I have a pathalogical inability to spend more than £20k on a car (and often spend half that), yet I've never had to compromise.
I also beleive that company car culture here has resulted in your car becoming a label of your status. "I drive a GL, but my neighbour drives a GLS", for example.
It's potty, but there you are. As has already been said; if you don't give a stuff about how strangers perceive you, tyou can get a great deal. I have a pathalogical inability to spend more than £20k on a car (and often spend half that), yet I've never had to compromise.
As mentioned I think it is mainly due to age related number plates and the company car culture. Thousands of brand new cars registered and handed to people who would not normally buy a new car. When these cars reach 2-3 years old they are then released to the used market whereas as private new cars buyers would likely keep their cars longer.
Captain Cadillac said:
There's exceptions in the USA I'm sure... however as someone in the Motor Trade in the US I think it's down to a number of reasons. First, we don't have license plates that indicate the age of a car, we don't have stringent MoT as a general rule (Most states don't have any safety inspections, not that I agree with that) and in a huge part of the country, our cars just don't rust.
Also, we don't have national road tax, when states do have personal property taxes these go down the older a car gets, as does insurance. Insurance over here is more tied into the value, performance and repair costs of a car, not strictly the engine size. A, say, 10 year old Buick with a 3.8L V6 will likely be a cheap car to insure while a say, Integra Type R will cost a fortune because they either get wrecked or stolen. Plus Petrol is a lot cheaper. Running a, say, 5 year old Mercedes S-Class is a lot cheaper than running a brand new one, unlike in the UK.
The age thing is one of the big ones, most people in the UK will judge a car by its number plate over everything else. To most people a 1 year old micra is "better" than a my 12 year old elise Also, we don't have national road tax, when states do have personal property taxes these go down the older a car gets, as does insurance. Insurance over here is more tied into the value, performance and repair costs of a car, not strictly the engine size. A, say, 10 year old Buick with a 3.8L V6 will likely be a cheap car to insure while a say, Integra Type R will cost a fortune because they either get wrecked or stolen. Plus Petrol is a lot cheaper. Running a, say, 5 year old Mercedes S-Class is a lot cheaper than running a brand new one, unlike in the UK.
The other thing is that cars in the UK suffer. Poor roads, wet weather, salt etc. Not so bad now, but cars used to start to fall apart around the 5 year mark (if you were lucky) certain brands used to rust after a couple of years.
98elise said:
The age thing is one of the big ones, most people in the UK will judge a car by its number plate over everything else. To most people a 1 year old micra is "better" than a my 12 year old elise
"But surely mine is faster than yours because it's newer".Funny, when I'm in the Lotus. Even funnier when I'm in the barge....
Martin Keene said:
Might it have something to do with the ridiculous prices wevare charged for new cars in this country, and they find their true value in the secondhand market.
UK Focus from £15,195
US Focus from $16,640
EU Focus from €16,750
Just a thought
I don't see why. The second hand price of a car is a function of its new price. We pay relatively more for new cars than, for instance, the Europeans. Yet their used values are much higher than ours.UK Focus from £15,195
US Focus from $16,640
EU Focus from €16,750
Just a thought
Cars don't have a 'true' secondhand value. It's market driven, and if one of the marklet influences is the price of new cars, than that would disprove what's being debated in this thread.
Why is it ridiculous that we pay more for our new cars than the cheapest of mainland Europe? The RHD market is smaller, it makes sense that they're more expensive.
You can always buy a new (LHD) car in Europe if you think they're better value.
You can always buy a new (LHD) car in Europe if you think they're better value.
Edited by kambites on Tuesday 14th December 10:28
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