PCP - Who's handing theirs back?

Blackal · Feb 29, 2020

Selling any bike privately now - is hard work, if you are within £3k range of what is available in a dealer on PCP.

Not so many these days have £10k to splash on a bike when they can ‘afford’ £13k on a dealer PCP deal.

That has a knock-on effect on bikes below that (to a lesser degree).

PCPs have fcuked the S/H market, but those who have subscribed to the PCP circus - still expect great things when they sell. :blast

GSite · Feb 29, 2020

Yeah, the have your cake and eat it expectation rarely works out in the customers favour.
Problem in part is that when PCP was first devised the predicted Gross Future Value was aimed artificially low so that at the end of the term the vehicle was actually worth more than this GFV and there was some equity as deposit for the next PCP.
This way, folk could have a new one every 3 years typically for a very similar payment.
Years down the line, this GFV is now assumed by many to be the actual trade value which has a knock on effect on used vehicle valuation, leaving no equity or more commonly negative equity. Also, the availability of a new bike through PCP has led to massive sales increase with the resulting over supply of 3 year old minters, hence buyers market, seller beware.

Interestingly, there were significant deposit contributions as an incentive to take the PCP, which were not available to cash or HP buyers. Buyers then compare this to the the price of used vehicles with no incentives and decide that a new one is only a slight stretch more in monthly payments, further damaging used values and desirability. So it seems PCP has been a victim of it's own success.

In the past PCP has sometimes worked well for me by negotiating a big discount, then used PCP with low interest rate, invested the cash for a reasonable return at a similar or higher interest rate, then bought the vehicle at the end of the term. It has then been worth more than the GFV paid and I sold it for a profit. Happy days, but no longer as I feel the PCP bubble has burst well and truely.

I think I will break even on the Africa twin deal, due to the 0% interest, discount obtained and hence relatively small difference between the bike price and the GFV, but woukd be very reluctant to have another PCP now the market pkace has changed dramatically.

Warlord · Feb 29, 2020

I would have another PCP Deal bike, if it is as stupid as my last Africa Twin one.

I literally ran out of the house to pick up a brand new bike for £70 pcm

malcopopolo · Feb 29, 2020

Warlord said:
I would have another PCP Deal bike, if it is as stupid as my last Africa Twin one.

I literally ran out of the house to pick up a brand new bike for £70 pcm

Agree. Question is will they do it again...

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GSite · Feb 29, 2020

No, I don't think they will.
The reason the deal was so good is that the discount on the bike made the price only about £2500 more than the GFV, hence all you are paying at 0% is amount over 3 yrs, what's not to like. The new 1100 bike is a lot more expensive and folk will want all the toys, yet the GFV won't be a lot more than the old bike. Hence the difference between purchase price and GFV will be upwards of £7000 even with a healthy discount.

Warlord · Feb 29, 2020

malcopopolo said:
Agree. Question is will they do it again...

Yes they definately will. If you want to predict the future look at the past.

They did it in 2012 on the VFR1200 DCT.

£12500 Bike, selling it brand new for £8500 on PCP.

That fucked everyone over back then.

It'll happen again

Warlord · Feb 29, 2020

... the differentiator is you don't know when it will happen.

The VFR1200 time was to promote the DCT technology as it wasn't selling...

The Africa Twin time was to raise sales numbers to beat BMW GS figures...

Andi_archer · Feb 29, 2020

Yes similar with the At I purchased one used with all the extras a few years ago for 10K three weeks later they reduced the new price by around 3K and were selling new for 8.5K

Davey B · Feb 29, 2020

Warlord said:
The Africa Twin time was to raise sales numbers to beat BMW GS figures...

No it wasn't, it was only John Banks Honda who was doing it and most other Honda dealers were up in arms demanding Honda Uk sort it. Honda didn't sort it so a few other dealers decided to match it, presumably as sale was one step closer to a target ? (Mine was thru Chester Honda who were within a whisker of the same deal but were a few quid more overall....they claimed they were making £10 on the bike. I've no reason to doubt that when you look at them flogging a £12500rrp bike for £9k

malcopopolo · Feb 29, 2020

Maybe we should have a PCP best deal section.

I sa the john banks deal and hesitated.

Story of my life!!!

Guess that's why I am not a leader

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JohnnyBoxer · Feb 29, 2020

Blackal said:
Selling any bike privately now - is hard work, if you are within £3k range of what is available in a dealer on PCP.

Not so many these days have £10k to splash on a bike when they can ‘afford’ £13k on a dealer PCP deal.

That has a knock-on effect on bikes below that (to a lesser degree).

PCPs have fcuked the S/H market, but those who have subscribed to the PCP circus - still expect great things when they sell.

Stupid as you can’t have it both ways on the residual

Warlord · Feb 29, 2020

malcopopolo said:
Maybe we should have a PCP best deal section.

I sa the john banks deal and hesitated.

Story of my life!!!

Guess that's why I am not a leader

The only reason I did it (as I've already got a fully spec'ed GSA) was to buy a cheap decent 'Adventure Bike' that I could throw around without the pain (just leave it scratched) or the pain of dropping my £21k BMW (and the regular repair bills to keep it looking mint).

So with the Africa Twin I looked at the £70 pcm and thought that was really low rental. Then, I could buy it for £6500 at the end of term, a bike I've owned from new, and know exactly where it's been etc. So that £6500 really was how much I was buying the bike for (in my head

)

However as it turns out, I really liked riding my Africa Twin DCT as well and invested the same amount of money in that bloody bike. So it's equally as expensive now :blast

But, each of these bikes now are set up for either purely Road Use (Summer Poser Bike), or Off-Road (Winter Slag) Use. So it's a great choice to have, really good.

I've been thinking about what I'd like to get next, but honestly cannot think of anything that I would like outside of these two great bikes.

Even my Bandit 1250 Streetfighter (Summer Cafe Rideouts) bike might get sold this year !! - as I'm always out on the other two getting into plenty of trouble. The Bandit 1250 has only seen 280 miles in two years !!

I did briefly think about getting another sports bike/sports tourer but again.... no point, as these two bikes do it all for me. I'm getting too old for red-lining 200+ BHP nowadays...

GSite · Feb 29, 2020

It seems that to repeat the £70 per month deal over 3 yrs on the PCP, you need to have £2500 difference between the purchase price and the GFV.

The 1100 DCT is near enough £14000 with a GFV of around £6500 (4000 miles per year) which means you need to be getting it for £9000, the same price as the crazy deals in late 2017 on the older bike.

Cannot see Honda dealers discounting to the tune of £5000, surely they will have learnt the lesson when it must be clear that they will be lumbered with a glut of bikes worth less than the GFV which have been returned for that reason and they will struggle make much if any profit on.

However just my opinion, history does repeat itself in the main, but I do feel the above deal unlikely, but at similar discount level more like £120 per month and depreciation of at least £2000 more than the older bike over the term.

At least for this year anyway while the 1100 is quite new, but give it a couple of years when they need to raise the game due to other new bikes, who knows, would be a rich man if I could predict that.

However, still represents a corking deal but dare I ask the question if the 1100 is worth the extra over the older bike with the risk another debate will open up.

Warlord · Feb 29, 2020

GSite said:
It seems that to repeat the £70 per month deal over 3 yrs on the PCP, you need to have £2500 difference between the purchase price and the GFV.

The 1100 DCT is near enough £14000 with a GFV of around £6500 (4000 miles per year) which means you need to be getting it for £9000, the same price as the crazy deals in late 2017 on the older bike.

Cannot see Honda dealers discounting to the tune of £5000, surely they will have learnt the lesson when it must be clear that they will be lumbered with a glut of bikes worth less than the GFV which have been returned for that reason and they will struggle make much if any profit on.

However just my opinion, history does repeat itself in the main, but I do feel the above deal unlikely, but at similar discount level more like £120 per month and depreciation of at least £2000 more than the older bike over the term.

At least for this year anyway while the 1100 is quite new, but give it a couple of years when they need to raise the game due to other new bikes, who knows, would be a rich man if I could predict that.

However, still represents a corking deal but dare I ask the question if the 1100 is worth the extra over the older bike with the risk another debate will open up.

Yeah or a COVID-19 Global Recession.... that'll bring everyone to their knees and discounts galore. !!

peepingtom · Feb 29, 2020

GSite said:
It seems that to repeat the £70 per month deal over 3 yrs on the PCP, you need to have £2500 difference between the purchase price and the GFV.

The 1100 DCT is near enough £14000 with a GFV of around £6500 (4000 miles per year) which means you need to be getting it for £9000, the same price as the crazy deals in late 2017 on the older bike.

Cannot see Honda dealers discounting to the tune of £5000, surely they will have learnt the lesson when it must be clear that they will be lumbered with a glut of bikes worth less than the GFV which have been returned for that reason and they will struggle make much if any profit on.

However just my opinion, history does repeat itself in the main, but I do feel the above deal unlikely, but at similar discount level more like £120 per month and depreciation of at least £2000 more than the older bike over the term.

At least for this year anyway while the 1100 is quite new, but give it a couple of years when they need to raise the game due to other new bikes, who knows, would be a rich man if I could predict that.

However, still represents a corking deal but dare I ask the question if the 1100 is worth the extra over the older bike with the risk another debate will open up.

on your last point I certainly won't be buying an 1100 as it won't be £5/6/7000 or whatever better than my 2017 model plus iv no need or desire for a slightly newer model. im guessing some will though.

Davey B · Feb 29, 2020

peepingtom said:
on your last point I certainly won't be buying an 1100 as it won't be £5/6/7000 or whatever better than my 2017 model plus iv no need or desire for a slightly newer model. im guessing some will though.

I'm guessing lots will. When you look at Autotrader, 22668 bikes for sale, 12,312 of them are less than 3 years old and of these...10,685 have fewer than 5000 miles on the clock. God, rufty tufty bikers are a bunch of sunny Sunday pussys

Warlord · Feb 29, 2020

Davey B said:
I'm guessing lots will. When you look at Autotrader, 22668 bikes for sale, 12,312 of them are less than 3 years old and of these...10,685 have fewer than 5000 miles on the clock. God, rufty tufty bikers are a bunch of sunny Sunday pussys

.... or have surplus bikes they don't use

Davey B · Feb 29, 2020

Warlord said:
.... or have surplus bikes they don't use

Nah, sunny Sunday pussys........

jj65 · Feb 29, 2020

Warlord said:
Then, I could buy it for £6500 at the end of term, a bike I've owned from new, and know exactly where it's been etc.

you mean how many times its been on its side

Warlord · Feb 29, 2020

jj65 said:
you mean how many times its been on its side

Ahhh, good old days..... with the Karoo 3 bollox tyres.... (I blame the tyres...)

PCP - Who's handing theirs back?

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