Depreciation heavier than I expected on my Mark 3 Fabia estate.

[hetty1]

 Hello,

 

              I got a part exchange price on my March 2021 Fabia estate tsi from the same main dealer I bought my car at in the middle of 2022. This came in at quite a bit less than I was expecting, between 10% and 15% less. I didnt take it any further but then I started thinking that depreciation was, maybe, really going to eat into the cars value.

 

               The facts are these. I bought it in July 2022 for 17495 pound at the top end of the scale. It had done 12000 miles. The price I was given in p/x last week was 14000 pounds with 14000 miles on the clock.  As you would expect(?) I got several more p/x quotes from the web and the majority were actually less, one or two were actually a thousand pounds less,. The only one that beat the 14000 pounds was from Motorway and that said 14800 pounds. This got me thinking and my take is that the low( in my opinion) quote from the main dealer is because of the new Fabia range, the Mark four, introduced only in the last year or so.  My car  was 20500 pounds  with the metallic paint when new  so it has lost 35% from new  in under two years, and a bit over 20% since July 2022, I had planned on keeping it until March 2024  when the warranty has finished but now I am not so sure. I can see myself being offered just 10000 pounds in p/x if I do that which would mean a depreciation of between 40% and 50% on what I paid and i will have to give that very serious thought.

 

                Do people agree with me that the introduction of a new model has been the main factor that has  caused these figures?  I have bought runout models from other makes in the past and i didnt experience these kinds of p/X percentages loss. I appreciate  the worldwide shortage of chips will have played a part as well  of course.

 

              Please let me have your views, they will all be read,

[Ootohere]

 

 

The first registered keepers are piling on, the cars manufacturer warranty has just over a year to go. 

 

I think the introduction of the Mk4 has nothing to do with those that want to get a vehicle and then sell for more than £2,000 than they pay for it. 

[AGFalco]

57 minutes ago, hetty1 said:

depreciation

 

Deprecation is worse when the car is newer.

 

The price on second hand cars bought over the last 1-2 years are / were high because of high demand at the time.

Just look at the lack of choice of new smaller cars you can buy new now, compared to 3 years ago.

 

If you want low deprecation on a car then what I try to do is:-

Buy the car new with any extras you need for a little as possible.

Keep the car long term.

Look after the car with the plan to keep it long term.

 

Two examples:-

 

Bought a new Peugeot 307 in 2003 for £10K. About 25% under list price.

Sold in 2016 for just over £1K at 130K miles with everything still working.

So a 90% deprecation over 13 years =  7% per year.

Car is still in use today.

 

Bought a new Fiat Panda in 2009 for £7K. Scrappage deal bargain.😁

Still have the car and everything still works at over 130K miles.

If scrapped for £0 it will have deprecated 100% in 14 years = just over 7% per year.

 

Thanks. AG Falco

 

 

[nta16]

Please note - I am not a mechanic or expert in anything.

 

Vehicle prices were high, particularly s/hand (pre-owned / pre-loved) because of the pandemic, chip storage, lack of new cars and the aftermath effects of those.  There's a war, energy prices, cost of living, interest rate rises (from record lows).

 

A trade-in value is just one side of a deal in buying a replacement car, increase trade-in offer will mean decrease in money off replacement vehicle and vice-versa the dealer is only interested in the profit and perhaps changing or moving on stock to have less lower profit and more higher profit stock.  An ordinary buyer is lucky to get over-valued trade-in and at the same time under-valued replacement vehicle (cake and eat it, twice).

 

Who knows for 2024, perhaps the bubble bursting on EV will mean petrol cars have more value because of this.

 

Unless you're in the trade or at very top-end vehicles swapping every few years is possibly an expensive or very expensive way of purchasing overall.

 

ETA: you need to add monetary inflation, lost interest/investments, running costs of vehicles plus other stuff I can't think of now to AG Falco's figures.  Best bet is not to have a car.  🙂

 

Edited 16 January, 2023 by nta16
ETA: Please note - I am not a mechanic or expert in anything.

[BasilHume]

There was probably around £2.5-3k "spread" factored into the price you bought at, and are now being offered trade-in values at.  

 

That is to say, the car's trade value when you paid a retail price of £17.5k in July was probably about £14.5-15k.  So, in the trade, your car hasn't depreciated much at all.

 

What you have done, however, is paid a one-off and upfront fee for a dealer to find, prepare and warrant your current car.   If you buy another car from a trader, then you will be paying this again.  One analogy would be house moving costs such as stamp duty, estate agent & removal fees etc.  

 

Trade prices generally rose throughout 2020 to late 2022, meaning that a 3-year old car cost more in 2022 than a 3-year old car did in 2021 etc.  This trend hid some of the above costs for a while, but the consensus is that this has now peaked.  It's unclear whether ongoing supply factors such as model consolidations, long waits etc will be outweighed by a fall in demand as borrowing and living costs increase.

 

So, I disagree that there has been any substantial underlying depreciation in this example.  Costs of purchase are normal, and have been borne - that's all.  

[hetty1]

 I agree with some of what has been said.  I am not as sure though that trade prices peaked in late 2022, Members of my own family work in the motor trade, two with main dealers( not Skoda) and one with an independent, all in sales. They all tell  me that the prices on used cars are still rising albeit a little bit less. I do follow Basin Humes argument about the trade price now being broadly the same as it was in July 2022. It has been a long time since I myself was in sales in the motor trade and nothing stays the same forever as we all know. At that time the introduction of a new model always meant lower trade in values on the superseded models and I still believe that is the case today.

 

   AG Falcos arguments are very pertinent. Buying new and keeping for a long time will indeed give low depreciation as he  suggest. However, the matter of servicing and repairs comes into the equation. I am not gifted with practical skills so servicing has to be done by someone else. Whether this is done by a main dealer or an independent this obviously costs more than doing the work yourself and has to be factored in. AG Falco and others on Briskoda do their own servicing and repairs and their costs are less but mine are an integral  part of how long I keep a car for. Those costs have definitely increased and I believe they will increase year by year. As the car gets older the servicing and repair costs will increase and it becomes a balance  of how much to spend to keep the car safe and roadworthy as opposed to having to accept that the car is worth less to the trade the older it gets.

 

      I am grateful for the posts. I believe that there is no right answer to this. Some people including me will swear that changing every so many years is the only way to go while others swear by keeping a car for a long time is the only way to go.

 

      What will be interesting/.informative  is whether the p.x goes down at the same rate as it has been going.  There used to be  certain percentages in the trade; so much depreciation the minute you took delivery then so much in the first year and so on. My car has lost 40% of its new price in just under  2 years.  The consensus used to be that it would drop by another 10% by its third birthday then by lower figures year by year. These are very volatile times and the motor trade is caught up in the volatility whether it likes it or not and I believe this will continue for quite some time yet .

 

 

 

       

[Ootohere]

Even family might tell the same rubbish if a salesperson about values, trade ins, asking prices, values.

 

They paid to much to get in stock and are stuck with them. 

Offered too much in trade ins to get a sale.

The money is made over and above on finance, service package, paint treatment, even on older cars. 

 

Lots of stock bought using credit and the interest rates are up, and where new cars are available there are manufacturers /importers reducing prices to shift cars.

 

Supposedly a shortage yet car super markets and dealership / traders car lots are overflowing.

 

Don't cry for me Argentina.

Good sales people make money and can sell anything.   Some are full of BS.

 

 

Edited 17 January, 2023 by toot

[AGFalco]

10 hours ago, hetty1 said:

I believe that there is no right answer to this

Correct.

 

I approximate a car will depreciate by 50% every three years.

eg:- Bought new for £24K

At three years old it will be worth about £12K

At six years old it will be worth £6K

At nine years old it will be worth £3K.

At twelve years old it will be worth £1.5K

 

 

10 hours ago, hetty1 said:

prices on used cars are still rising

The Skoda Citigo I bought in Nov 2021 as an example. This was found via Autotrader and bought from a dealer. 

 

There is one on Autotrader ( yesterday ) that is the same as mine. eg 2018 1 Owner FMDSH at 42K miles.

It is for sale at £500 more than I paid back in Nov 2021 but mine only had 32K miles then, and has got 42K miles now.

There were many examples for more money but these tended to have less mileage.

 

I think small cars are holding their prices better than large/expensive cars as many people think of downsizing in the present climate.

 

Thanks. AG Falco

[hetty1]

 I am glad that my post has produced such an exchange of views, I am sure that George intended no offence with his comments on salespeople being full of BS etc and I   can honestly say I   have not taken any. My own  time in car sales was a long time ago and my family can look after themselves.  Some car sales people can indeed still be very pushy and persuasive to the point of driving someone to buy a car just to get rid  of the salesperson, Some still fit the stereotype but  repeat sales do not often  happen when the salesperson has acted like that and repeat business in sales, as in every other business sphere,  is essential.   Indeed, I would suggest it is more important now than  ever.

 

      I digress,    back to depreciation. Even before the current cost of living crisis there were a few cars that cost more used than new. Morgan  Rolls Royce and Bentley come to mind.  The essential difference is that was just a few marques whereas now it is commonplace. I would agree  that depreciation on a 3 year old vehicle is approx 50%  but, again, there are big differences between different marques. I may well be looking at a p/x of 10000 pounds  when my car becomes 3 years old and I will have decisions to make at that time but that will be my problem My previous Fabia was p/xd for only 700 pounds less than what I paid for it some 30 months previously   and a good chunk of that that was because the car had not had a cambelt change. One reason I posted was because I had seen comparatively few posts on the subject  since joining Briskoda in 2016 and I thought (and still think) it was an important subject worthy of being aired.  I realise this is a truism but different  cars can have have very  different rates of depreciation and  the subject must be, at least, as important as  fuel economy etc?

 

        This next isnt going to happen in my opinion but i would welcome adverts for new  cars carrying detailed information on depreciation alongside information on performance, mileage etc. Yes, that information is in motoring magazines and online but that needs searching the internet and reading the motoring press and not every buyer does that. . They may well not take notice if my suggestion ever comes in but some might, I wonder what the SMMT would think about that proposal?

 

             

                       

 

    

 

 

[310golfr]

1 hour ago, hetty1 said:

 I am glad that my post has produced such an exchange of views, I am sure that George intended no offence with his comments on salespeople being full of BS etc and I   can honestly say I   have not taken any. My own  time in car sales was a long time ago and my family can look after themselves.  Some car sales people can indeed still be very pushy and persuasive to the point of driving someone to buy a car just to get rid  of the salesperson, Some still fit the stereotype but  repeat sales do not often  happen when the salesperson has acted like that and repeat business in sales, as in every other business sphere,  is essential.   Indeed, I would suggest it is more important now than  ever.

 

      I digress,    back to depreciation. Even before the current cost of living crisis there were a few cars that cost more used than new. Morgan  Rolls Royce and Bentley come to mind.  The essential difference is that was just a few marques whereas now it is commonplace. I would agree  that depreciation on a 3 year old vehicle is approx 50%  but, again, there are big differences between different marques. I may well be looking at a p/x of 10000 pounds  when my car becomes 3 years old and I will have decisions to make at that time but that will be my problem My previous Fabia was p/xd for only 700 pounds less than what I paid for it some 30 months previously   and a good chunk of that that was because the car had not had a cambelt change. One reason I posted was because I had seen comparatively few posts on the subject  since joining Briskoda in 2016 and I thought (and still think) it was an important subject worthy of being aired.  I realise this is a truism but different  cars can have have very  different rates of depreciation and  the subject must be, at least, as important as  fuel economy etc?

 

        This next isnt going to happen in my opinion but i would welcome adverts for new  cars carrying detailed information on depreciation alongside information on performance, mileage etc. Yes, that information is in motoring magazines and online but that needs searching the internet and reading the motoring press and not every buyer does that. . They may well not take notice if my suggestion ever comes in but some might, I wonder what the SMMT would think about that proposal?

 

             

                       

I think you are right to highlight depreciation, in normal times, depreciation is always the biggest cost of motoring, yet lots of people get hung up on mpg etc

  however nowadays i believe more people lease/pcb cars rather than buy,[ i dont know the exact figures though ]   and for leasers, depreciation is not there problem 

yes the cost  can be factored into the  lease cost but you know what you will be paying for xxx amount years, also before covid, there always seemed to be deals available.

personally i prefer to buy rather than lease,  but i always buy from a broker at the cheapest price and dont mind travelling,  but i am old skool and dont like not owning the car.

    As for depreciation figures being included in manufacturers sales brochures along side mpg and  performance, 

that will only happen if manufacturers get forced into doing it, they are in the business of selling and  turkeys dont vote for xmas,  

 

 

 

[Ootohere]

@hetty1

What was the depreciation or difference from buying your 2013 Fabia to selling or trading that in?

 

If you look back to the pages at the start of this section you might find where What Car makes a All new third generation Fabia Car of the year, before a single one has been delivered to a customer.

Then you see it is a particular engine.  Then they discuss depreciation and it is greater than the Polo and servicing / running costs are more than the Polo with the same engines.

That would be VW Servicing less of a rip off than Skoda then...

This was their guesswork.   How the companies charge to lease cars looking at future values.  How Motability price cars as they know the buying price and estimated future value.

 

What Car had the Fabia later as a Used car to buy.  They never bothered mentioning the 1.4 TDI having issues.

 

http://autocar.co.uk/car-news/new-cars/skoda-fabia-2015-what-car-car-year   Pre Christmas Skoda had a big advertising campaign. What Car Car of the Year.

The customers were yet to get cars, but journalists had driven left hand ones in a sunny place overseas.

http://autocar.co.uk/car-review/skoda/fabia-2014-2021

 

http://autoexpress.co.uk/skoda/fabia/89672/skoda-fabia-vs-vw-polo-vauxhall-corsa

 

 

Getting depreciation in a brochure would be interesting.  a Mk1 Fabia is quite amazing for how much a good one can still be sold for, as is any Suzuki Jimny from 1999 on that is still on the road. 

When the new Jimny came out you could sell it for more than you had paid for it as the supply was limited and there were people that speculated and ordered knowing this would be the case.

 

We will get to 10 years old with the Mk3 Fabia and we will see how well they have held their value, or what you pay to get the first cars in the UK.

 

 

 

 

 

Edited 18 January, 2023 by toot

[AGFalco]

20 hours ago, hetty1 said:

My previous Fabia was p/xd for only 700 pounds less than what I paid for it some 30 months previously

Second hand car back in July 2022 had high prices.

 

20 hours ago, hetty1 said:

depreciation

Is the biggest cost in motoring. ( normally )

 

Bought a Peugeot in 2005 for £200, traded it in in 2009 and got £3200 for it. 😀

 

 

 

If I were you I would:-

 

Keep the Fabia, ( until about 5 years old )

Get the extended Skoda warranty to cover the car for years 4 & 5. ( to stop you worrying )

Depreciation per year will will then be less per year than trying to sell it now after only 6 months.

 

 

My Fabia III is 6.5 years old and has done 69K miles.

All still working, nothing has broken.

It has had just the regular servicing done and some tyres.

It has passed 4 MOT's with no advisories.

Brakes are now past half worn, so might need changing at 100K miles.

 

Still like the car.

 

Thanks. AG Falco