Used car values are hugely unpredictable.

 

Looking four years into the future is difficult at the best of times, factor in predicted used car values and it becomes almost impossible.

 

A PCP is a gamble. Some you win, some you lose.

I think we were quite lucky with SWMBO's vRS PCP. Seeing as it's petrol I suspected I would be hit hard three years down the line. 

 

As it turns out, we were offered £13.5k for the vRS with just over 21k on the clock. It owed just over £11.5k. That equity has been shoved onto the Yeti Outdoor we ordered last month. 

 

When I ordered the car, it was ordered in candy white with black optics pack, heated seats, sunset glass, cruise, colour maxidot, Amundsen sat nav, front assist and some other odds and sods. I seriously considered keeping it and just paying off the balloon but the dealer put together a good package between the vRS and the Yeti. 

 

The allure of a shiny new car with a warranty was too much. Besides, the school run necessitates the added security of 4x4. That's no joke by the way, she's struggled in the FWD vRS in the winter months. 

 

We had the same thing with the Mk2 vRS TDI, got a really good offer for it. Most of the options I stuck on it were standard kit three years down the line. 

 

The Yeti might be an issue as the Mk3 will be out long before this one is due to be chopped in. It's been well specced (IMHO) so who knows? 

If I can misquote Meatloaf here, he might have said that "Two out of Three ain't bad" but the whole point of a PCP deal is that you are supposed to have three options open to you and if arguably the most important one is closed off to you (i.e. part exchanging against another new car)  because someone at Skoda got the numbers wrong, then whose fault is that? 

 

I think it was Ford which first popularised these deals many years ago with what they called then Options 1, 2, 3 or something like that. The manufacturer wants you to buy another new car from them every 3 or so years and part exchange your old car to give their dealer network a supply of decent used cars to resell. Or at leas.t that is how it is supposed to work. Modern economics has the accountants working factories flat out to achieve certain economies of scale but what the current situation that many of us face shows is that these PCP deals are now pointless on many cars, unless you are buying a car which has a strong, proven residual value which is reasonably predictable 3 to 4 years down the line.

 

What you have is differential pricing, we as individual customers have relatively weak bargaining power and will pay a buying price fairly close to RRP most of the time, unless you get a very good deal. To keep the factories working at full efficiency Skoda (and others) sell large numbers of these cars at substantial discounts to fleets and car hire companies. The problems arise in that these cars once they have clocked up 10,000 miles or so are then being sold outwith the Skoda dealerships at very, very keen prices, which distorts the second hand market values for all these cars. This plus probably over optimistic initial RRP prices has led to this situation where even Skoda dealers do not want to touch the cars they originally sold as they reach the end of these PCP deals. In effect we as private buyers have subsidised the cheap deals that the fleet and hire companies have enjoyed.

 

I don't think it unrealistic that Skoda should offer customers who have been adversely affected by Skoda's own sales strategy some sort of recompense, to encourage them to buy another Skoda car. There are things which they could offer which would be attractive to customers, maybe free servicing, metallic paint, extra options at no additional cost. The real cost to them of doing this would be a lot less than the advertised cost but might be enough to keep customers rather than lose them altogether to another manufacturer. After three years of age most Octavia's will be serviced by independent garages, so Skoda will not have very much profit from these cars after this age, particularly if their original owners have chosen to buy their next car from a different manufacturer, in which case they have lost a customer, possibly for good.

 

It is what it is. I can't say that I am unhappy with my own Octavia, it has been comfortable and reliable, maybe not very exciting with the 1.6TD engine in town driving but more than acceptable on motorways and country roads. I'm still not sure whether to buy it outright or hand it back and get a cheap PCH deal instead, there are some pretty good deals available just now on the Yeti L & K right now, albeit in 1.4 petrol engine form, £2250 down and £139 a month for 23 months from Simpsons. If you can rent at these kind of prices, I don't see the point of taking out another PCP deal.

 

Mind you right now all of this is theoretical as I can't even drive my own car which is sitting sadly on the driveway,as I've just been given a months driving ban from the hospital after suffering a small stroke recently!

That's no joke by the way, she's struggled in the FWD vRS in the winter months. 

 

This is a whole other thread, and a total argument starter if previous discussions are anything to go by....but.... have you tried winter tyres?

 

Have you seen the Snowdome footage where the 2WD / winter tyre combo pastes the 4WD / summer tyre combo in ski slope climbing terms?

The manufacturer wants you to buy another new car from them every 3 or so years

 

Nail...head....etc.

 

We're discussing net cost like it's the defining factor, but ultimately the cheapest car for you is the one you already have in 99.9% of cases. Really it comes down to wanting a new car.

 

When my last car was sick in an apparently not fully diagnosable way the worst case scenario was a >£3k outlay, but it would probably still have been the most economic option long term. There's value, and therefore a price to be paid, for peace of mind though, and ultimately the swinger for me was that I actually wanted to replace it anyway and it was a good excuse (and something to tell the wife).

 

My father-in-law chopped in a 4-year old non-turbo Fiesta 1.4 for a new Fiesta 1.0 ecoboost. He was sold on it by the salesman telling him how much money he would save with the improvement in fuel economy. When he told me that this was the reason I laughed, because really he got it coz he wanted a new car and the salesman gave him a way to kid himself it was the sensible decision (and gave him something to tell the wife). Deep down he new he wasn't saving any money, but I bet it's a better drive than the old gutless 1.4, so he's probably over the moon with it.

This is a whole other thread, and a total argument starter if previous discussions are anything to go by....but.... have you tried winter tyres?

 

Have you seen the Snowdome footage where the 2WD / winter tyre combo pastes the 4WD / summer tyre combo in ski slope climbing terms?

 

Yep, I've done the winter tyre thing. Cruising past floundering 4x4 SUVs on summer tyres in a FWD estate car in the snow on winters triggers a massive smug face effect. 

 

A 4x4 Yeti on winter tyres should be phenomenally good in the snow. Knowing my luck we'll have three mild winters now! 

 

Snow aside, our eldest's primary school parking sometimes involves some muddy, rutted grassy garbage. FWD cars are always getting stuck there when it rains heavily. It's another good reason to have the 4x4 Yeti! 

The problem is with the customer, not Skoda, or salesmen. The customer sees a brand new car at a reasonable price, and a guaranteed minimum future value at the end of the deal, because that's how the car's sold. Then after three years (or end of term) the customer is surprised and annoyed that the guaranteed value is exactly what the salesman told them it would be. How is that mis selling? So a deal which was okay at the start is now not the deal the customer really wanted, despite it being exactly what it was and still is.

If you want to make money on a car then buying brand new and keeping it for three years isn't the way to do it (as a retail customer anyway). If that's what you want from a car deal, then buying into classic cars and holding them til the value appreciates is the way forward, or just accept that buying a car is going to cost you money.

If I can misquote Meatloaf here, he might have said that "Two out of Three ain't bad" but the whole point of a PCP deal is that you are supposed to have three options open to you

 

That wasn't my understanding of the deal?

 

In my case, I had to make 41 payments of £200 and then (a) hand it back or ( pay the balloon payment of £11k and keep the car.

 

I wasn't aware of a third option.

That third option is the one everyone thinks is the golden goose. If there's any equity, then that can be used (by the dealers) to tie you into another car from them. It isn't money as such, just the dealers perception of how much the car and your business is worth. If one dealer doesn't offer you anything over the GFMV, then another dealer might have a better idea of how much more than that it's worth. But ultimately it's not free money, it's just a dealer bargaining tool to tie you into another term of PCP or suchlike.

 

The only time the equity above GFMV is actually worth anything is if you buy the car at the end of term, and manage to sell it to someone else privately for more than you paid.

The only time the equity above GFMV is actually worth anything is if you buy the car at the end of term, and manage to sell it to someone else privately for more than you paid.

 

So, in the real world there are really only the two options that I referred to?

 

Just as I thought.