GolfGTIforum.co.uk
Model specific boards => Golf mk7 => Topic started by: Mark V GTD on 19 May 2015, 10:52
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The difference is just getting crazy now.
An R DSG hatchback with winter pack and camera is going to cost over 12k in the first two years (3-year PCP, 5k miles and bought with 12% discount via a broker) and at that point I would be lucky to have a settlement sum not in negative equity.
On the other hand an R estate DSG leased (but with no options) is 5k cheaper over 2 years and I can just hand it back without fear of neg equity. This situation seems to be getting crazy now as there seems to be a stream of ludicrously priced leases available (R hatch, then Toureg and now R estate)....
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Every dealer i have visited in the past year told me that everyone will be leasing in 5 years time. It works out far cheaper and as you say you can just hand the car back at the end of the term without fear of negative equity. There are a few car at the moment that have ridiculously low lease deals.
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How do the lease companies actually make any profit?I assume they get the vehicles at a very good discount,does anybody know.
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I can only assume that the cars are promoted (and discounted substantially) by the official importer (ie VWUK).
Why on earth would anyone PCP an R hatch, risk negative equity after two years (ironically more likely due to the cheap leases) instead of leasing for 5,000 quid less - thats a saving of 208 quid a month!!
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I can only assume that the cars are promoted (and discounted substantially) by the official importer (ie VWUK).
Why on earth would anyone PCP an R hatch, risk negative equity after two years (ironically more likely due to the cheap leases) instead of leasing for 5,000 quid less - thats a saving of 208 quid a month!!
They probably make enough profit from people using PCP on other models to allow them to promote GTD's/R's at a heavily discounted price.
Once people start noticing them they will then head to a dealer and get sucked into a PCP deal without realising they could lease for far less with no risk.
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It does make me wonder where it's all going to end.
VW must have a reason they pump them into the system so cheaply, and maybe I'm being over-simplistic, but the only way they can lease cheaply is because they know the end value must be high enough on the vehicle not to make a loss. VWFS just throw these cars into closed dealer auctions at the end of lease and I'd guess the lease brokers main profit must be in their fees somewhere.
I think it was monkeyhanger (as it usually is) who noted that the GFV on R estates was very low (as the car is an unknown quantity and very much a niche model) so VW are likely pumping a few into the system cheaply to guarantee used supply further down the line (extra ££££ from used car finance) and get a few cars out on the streets to raise awareness. I'm just guessing mind.
£12k seems a ridiculous amount for a Golf hatchback over two years but I guess that's the price of modern throw away living. I'd just put up with the looks and lease an estate while the prices are silly low if I were the OP.
Bear in mind the 6 month waits on new R's and you can see why VW are limiting production of them to bolster used prices & to keep the model in high demand.
Now would be a good time to set up a business in your spare bedroom brokering leased cars.
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At this point - the cheapest R hatchback (DSG) available to buy is a new one with a broker discount - you cannot buy any used one for that little (just over 28k). So I guess that says something.... I even found one used R with a dealer for over 40k!!!
Sadly I am too early in my GTD PCP to switch yet (14 months) - but in a year or so will be tempted.....
PS - Spelling sorted!
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The difference is just getting crazy now.
An R DSG hatchback with winter pack and camera is going to cost over 12k in the first two years (3-year PCP, 5k miles and bought with 12% discount via a broker) and at that point I would be lucky to have a settlement sum not in negative equity.
On the other hand an R estate DSG leased (but with no options) is 5k cheaper over 2 years and I can just hand it back without fear of neg equity. This situation seems to be getting crazy now as there seems to be a stream of ludicrously priced leases available (R hatch, then Toureg and now R estate)....
That's what I am paying in total inc VAT for my 3 year lease for an R DSG plus £3k of options. Crazy it sure is.
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What I don't understand is that despite all of this "everyone will lease cos its cheaper than owning" thing, the other thread where someone was saying about how their GTi was the "worst model" people were saying that the second hand market had crumbled.... because of leases.
Which is weird - because a lease price is driven by the residual value of the vehicle - which is only realised when the second hand vehicle is sold.
If everyone is leasing and prices for second hand are falling, the residuals are falling too therefore, making leasing more expensive
QED?
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You're quite correct Fred.
Manufacturers do these promotions on various models from time to time and throw them to the lease company hounds to chew on.
We tend to look at the performance VW's here but if you go on a lease company website there are always specials from different manufacturers. It's obviously something that works for whatever reason the manufacturers do it for. Some companies chuck out 0% interest retail deals and some seem to go for the lease volume sales.
Whatever the reason, part of it is their finance companies trying to control the market as these lease vehicles are still owned by VW group and will generally be sold back to dealers who in turn will sell them with more finance attached in general.
I've not looked but I very much doubt you'll get great deals on R hatchbacks on a private lease right now due to the huge storm at the end of last year surrounding the whole issue and the subsequent restrictions on supply VW put on the cars which will have meant the long waiting times would create quite a few cancelled orders.
The R estate is obviously being punted out on a bit of a promotion to get metal out on the road and in public view.
The fact there aren't any 'cheap' second hand R's out there is partly the long wait times on new cars coupled with the huge press positivity and subsequent interest in the cars from GTI/D owners looking for more traction and power (aspirational sales) and those that have to buy the latest and greatest model family hatch on offer who will next year be buying Focus RS's or Civic Type R's or R400's, RS3's etc.
Once the R has been around for a couple of years, just like the GTI, something newer will no doubt have caught people's eye and there will be a lot more second hand cars about and the prices will soon even out.
The mk5, mk6 and to a point the mk7 GTI were all quite similar in the first year or so in that it was almost cheaper to buy a discounted new car than a used one as dealers cash in on those not prepared to wait. So the dealers will have nearly new cars on sale at prices way above what you'd want to pay for a new one. There are a few on the VW used website that have been sat on forecourts overpriced for ages. I suspect either these dealers aren't keen to deal or possibly just make buyers aware that they can supply a new one for less and that's where they'd be better of spending their PCP cash - subsequently the dealer hits new car sales bonus and makes more money. I used to sit and wait for impatient sales managers reducing their six month old cars when they needed shot of it to make way for the next demo or sales manager's company car.
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Magic that's what. As said, leasing totally relies on the future value.
What's a 2 year old, 16k mile, R estate going to be worth? Maybe 60% of list?
What's the likely volume discount against list? 30% perhaps?
Rough figures for easier maths...
2 year 16k mile R estate total lease cost inc all fees:
£6600
33k list price, 30% discount, dealer gets for £23100.
2 years later, car is worth £19800.
Add the £6600 you paid.
Total £26400
Profit on one car lease £3300.
All a bit theoretical plus needs some VAT sprinkling in there somewhere but it's about right.
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It IS cheaper to buy a new R. Drivethedeal can offer just over 12% off which pitches a brand new R from them cheaper than any Mk.7 R available on the VW used website!
Crazy situation - the only people buying used will be the ones who cannot bear the wait for a new one! As I said earlier there is actually one R listing at over 40k out there!
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It IS cheaper to buy a new R. Drivethedeal can offer just over 12% off which pitches a brand new R from them cheaper than any Mk.7 R available on the VW used website!
The brokers will generally be using fleet departments so will have different discounts than retail sales plus different quotas to sell. My GTI was amongst the first orders yet people buying from brokers got theirs ages before I did.
Where the waters get muddy is if you have a part exchange.
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Magic that's what. As said, leasing totally relies on the future value.
What's a 2 year old, 16k mile, R estate going to be worth? Maybe 60% of list?
What's the likely volume discount against list? 30% perhaps?
Rough figures for easier maths...
2 year 16k mile R estate total lease cost inc all fees:
£6600
33k list price, 30% discount, dealer gets for £23100.
2 years later, car is worth £19800.
Add the £6600 you paid.
Total £26400
Profit on one car lease £3300.
All a bit theoretical plus needs some VAT sprinkling in there somewhere but it's about right.
So, 5% per annum return?
Seems a bit low actually!
If you look at these guys:
http://www.buy2letcars.com/
These are not a huge thing like VWUK, a smallish operation... and then are guranteeing 11% PA return to investors after they have taken their cut too!
I suggest probably VWUK or whoever are making more like 12-13% PA - which is why they want you to lease, because they make more from that than finance.
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Was just a guess at figures to show why it makes sense. p2p car leasing, interesting concept!
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Considering VWUK buy them straight from the factory and still own the car at the end so can manipulate the resale value I'd say they were on to a very good thing.
If dealers can offer 11% plus discounts and still make money then VWUK must buy the cars in very cheaply, especially with good exchange rates and low interest.
The challenge to them is the gradual erosion of people's perception of actually owning a car. The buying public are slow to change habits but eventually they do especially if suckered in by affordability.
Then once people are suckered in the prices go up...
Not that I'm cynical or anything.
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Magic that's what. As said, leasing totally relies on the future value.
What's a 2 year old, 16k mile, R estate going to be worth? Maybe 60% of list?
What's the likely volume discount against list? 30% perhaps?
Rough figures for easier maths...
2 year 16k mile R estate total lease cost inc all fees:
£6600
33k list price, 30% discount, dealer gets for £23100.
2 years later, car is worth £19800.
Add the £6600 you paid.
Total £26400
Profit on one car lease £3300.
All a bit theoretical plus needs some VAT sprinkling in there somewhere but it's about right.
Seems about right to me, give or take a few % either way. In the quantities they are buying in, perhaps they can take advantage of the strong pound/weak Euro in a way us mere consumers cannot.
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It IS cheaper to buy a new R. Drivethedeal can offer just over 12% off which pitches a brand new R from them cheaper than any Mk.7 R available on the VW used website!
Crazy situation - the only people buying used will be the ones who cannot bear the wait for a new one! As I said earlier there is actually one R listing at over 40k out there!
Give it a while. Right now a 6 month old one is more expensive than a new one can be haggled down to, once there are more used ones about over 1 year old, it will just about be worth someone's while to buy used. I can see a 3 year old R being around the same price as a 2 year old GTD down the line - around £22k retail.
It is for the very reason you cite that I will not consider a nearly new VW when I have the patience to wait for a new one to be built. No way I will pay more for an almost new one than a new one.
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The manufacturer will want volume as higher volume will reduce manufacturing 'unit' costs.
To achieve this they agree discount levels with fleets for high volumes of the whole product line, so in this case it is not just about the R.
However they will throw in some incentives for what would otherwise be a lower volume variant (Due to its £30K+ price tag.) Yes they risk flooding the market but they only need worry about values for the first 2 years or so and this is why there was a significant shift (downwards) in GFV last year for the R.
It is apparent that within the next 12 months we will see cars coming back from lease, the nice stuff will go to franchise, the ones that are 'less than perfect' go to independent retailers.
This is win win for VW as they then resell the car, plus finance/interest charges through franchises & all associated maintenance & service revenue for the new/second owners.
This is a well thought out product life cycle which for me says that a facelift then MK8 will be sooner than expected. Possibly by late 2017 if you use the MK6 lifespan as a guide.
Then it will all start over again for the Golf & it's various guises.