Ford Scrappage Scheme

[crapcarcollector]

Okay, so this thread, like all the others, is playing into the "people who PCP are thick/indebted" etc.

 

STOP THINKING OF CARS AS ASSETS. Yes, they were once status symbols. A century ago to half a century ago. They are now depreciating, technologically progressive liabilities that are there for a purpose unless they are things like high end AMG/Jaguar (high end, mind), etc.

 

A modern car is not a debt in the sense of "OMG you stretched yourself to own a £20K asset rather than having an old car you CAN afford". Unless they can't afford the monthly payments, they CAN afford it. Think in terms of ZipCar, car club, train passes, taxis, ubers, hiring a vehicle when you need it.

 

A PCP/lease is a way of securing a zipcar type object that no-one else gets mucky and is always there when you need it. It's a season ticket to the roads.

 

You know who is making a poor choice? The people who have £10K in savings and dump it into a 5 year old car with almost 100,000 on the clock because they'd rather be seen in a Mercedes than a Dacia, losing all their equity and flexibility in one go. In my opinion. Every, EVERY scenario is different, but FFS.

 

Most cars are not desirable status symbols anymore and the range of monthly costs can range from as little as £99/month for rare deals on tiny things to £350/month getting you a Velar on lease. Londoners pay £4K tops for rail passes for a year. Hiring a nice car for a weekend costs £80-300 - for one weekend. Plus deposit/liabilities. Membership of a citycar programme - if you live somewhere that's relevant - costs £6-15/month plus either an hourly charge or £50-74/day for a small car that is often full of crap.

 

Obviously the Autoshite way is best.

 

No, seriously, IF you can do it Bangernomics will save you shitloads, but if the argument is for financial reasons, it has to be the sub-£1K cars and you have to have some technical knowledge and some time. Not necessarily a lot, but there are good reasons for bangernomics proponents also being car enthusiasts. If the argument is not financial, then your kink is not their kink. And that's okay.

 

You have to be prepared for FTP, for no/missing aircon, for partners or friends or colleagues judging/being reluctant to go in your car. At a recent car thing the loos were 1/2 mile away or so, and the team wanted to go... "It's okay, we can use the Volvo" "NOT AS A TOILET! I'LL DRIVE YOU THERE /IN/ IT!"

 

The list price should be thought of like the reinstatement value on your home insurance. It's a technicality. Yes, some weirdos might want to buy a brand new car for cash, and some people might be fortunate enough to have £15K in savings to spend on a 30% off list, pre-reg low mileage car with extended warranty, which works out better value in depreciation than monthly lease costs and is doing sod all because of low interest rates... but again, every scenario is different.

This is the most sensible thing I’ve read on this forum this year. I have an Alfa GTV and blow tons of cash on it because it’s my hobby, I love it, and it’s my thing.

 

I also have about £800 worth of Volvo S60. I like my cars to be right, so I’ve just blown £300 having the bottom arms done, it has matching tyres and wants for nothing, but this just costs money all time.

 

Yet the bastard air on doesn’t work (and stuff not working pisses me off), costs a fortune to run and I use it purely to go to work in. 8 miles away.

 

I should just get a Panda on PCP. Worry less about daily motoring and enjoy the GTV more.

 

I’m being serious.....

 

 

 

 

Sent from my iPad using Tapatalk

[RichardK]

Honestly, I enjoy my shit old cars a lot more when I also have a cheap lease car. The only time I've regretted a lease car was when I overstretched and got a Citroën C6, and that was more because the damn thing had problems almost as much as a banger - I gave it up when I got a £500 Xantia and the ride quality and handling was better.

 

Plus to lose the commitment I dropped the C6 back and got a C3 - simple, cheap and pleasant in every way. So for me, the "lease something practical/appropriate and spend the discretionary cash on daft shit" applies more than, say, "buy the simplest banger and lease something posh".

Some forums I'm on have forbidden threads. Like "which of the gang do you fancy/have you shagged" etc.

I think Autoshite's Forbidden Thread should be "How many cars have you owned and how  much has it cost you".

 

For which my stats currently stand at 172 cars over 25 years, and not counting repairs except in a few notable cases where I remembered (they usually wrote off any 'equity' in the car), we're nudging £200,000.

[Uncle Jimmy]

So less old 2nd hand cars on the road for people to buy too so more chance of them thinking 'Fuck it, I'm not spending £5k of my own money on an 8yr old Focus' and forking out £250pm on a PCP contract, especially as their mates may have done the same.

Exactly! It's all been planned in a cynical attempt to destroy the evil known as 'Autoshite'.

[wuvvum]

So less old 2nd hand cars on the road

 

 

"Fewer."

[RichardK]

My brain just showed me the future.

 

Car manufacturers stop selling cars outright (though, I expect some sales would have to remain) except in luxury and niche markets. Everything from a Dacia to a Mercedes is ONLY offered as a lease/hire vehicle.

 

But, you can contract hire a car up to 7 to 10 years old, with full manufacturer warranty and servicing. Credit checks no more complex than a mobile phone, so almost anyone can get one with proof of address and a few payslips.

 

Your budget offering isn't a more basic car necessarily, but is a lower service level agreement and a used, refurbished car. At 5 years old the suspension and wheelbearings are replaced, the bushes sorted, and the car drops into a lower tier cost bracket. It has no downtime guarantees - it may break down and you'll have to wait for it to be repaired or pay a cost for a replacement car if you're in a rush, whereas the new tier has guaranteed courtesy cars - you break down, they whisk out a similar replacement, you swap your stuff over at the service station and they take your old one away.

 

When the car is 10 years old they don't need to compel the owner to part with it. They recycle it themselves, entirely in house.

[Stebob]

What upsets me about this thread is seeing the perfectly useable shite that was condemned as "scrap" back then.

 

The irony is that the stuff that they traded in would reasonably still be running now with a little servicing and care, yet the cars that replaced them have long since died due to more complicated electronics / emissions equipment.

 

Case in point I was at the garage yesterday and I witnessed the death of a 09 plate Megane convertible (yes I know not the most desirable but anyway), used for short journeys for most of its life and at 67k it was getting cubed, why? Because the dpf that was bollocksed and was worth more than the car and the car wouldn't run without it!

 

There isn't a car in our fleet that is under 10 years old, and we get around very nicely whenever we want, and the star of the show has to be my mondeo, it gets thrown up and down the m62 to Leeds and back every day, it's comfortable, surprisingly fast, economical, working air con for the summer, heated seats for my bum in winter and I can park it where I like without the fear of someone damaging it, but in the eyes of most people and garages it's worth the square root of naff all.

 

What I'm angling that is that shitters can legitimately do the daily grind as good as the next 118d / a3 etc.

 

Steve

[mk2_craig]

Ah crap not again. I bet there'll be a few tidy Sierras in amongst all the tatty fifteen year old Fiestas/Focuses etc

[SiC]

118d/118i must be getting into shite territory soon. Iirc they came out around 2004, so the oldest around 13yrs old. Won't be long before they're the sort of price to be scrappage scheme eligible!

[sierraman]

You could hardly compare a Volvo with a Panda though could you? It's not exactly like for like.

 

Not everyone will fall for this nonsense about scrapping your perfectly serviceable car for a new one so it's not worth getting into a hysteria about it. My old mondeo diesel, from checking on the MOT site, has just passed it's MOT so I'm relieved to see it's got another year out there on the highway murdering people with its fumes. Hopefully it's new owner will resist the temptation of being lured into a 'it's only £75 a week!' deal by the Ford Dealers.

[Stebob]

You could hardly compare a Volvo with a Panda though could you? It's not exactly like for like.

Not everyone will fall for this nonsense about scrapping your perfectly serviceable car for a new one so it's not worth getting into a hysteria about it. My old mondeo diesel, from checking on the MOT site, has just passed it's MOT so I'm relieved to see it's got another year out there on the highway murdering people with its fumes. Hopefully it's new owner will resist the temptation of being lured into a 'it's only £75 a week!' deal by the Ford Dealers.

Agreed on this, seem to remember people were trading 5 series's for Toyota corollas, it didn't have any rhyme or reason to it, nowt funnier than folk as they say!

 

To me though manafacturing new metal isn't the environmental way forward surely, like how much of the earth will we have to gouge out to meet the need of all of the new lithium batteries that we will need if we do go electric, and god knows what an impact it will have when inevitable time comes to scrap the hybrids, it boggles my mind!

 

Steve

[RichardK]

There isn't a car in our fleet

 

 

D'ya see the problem here, as we drive down double-parked, cramped urban streets? Not for people like us, of course, but for normal people?

[sierraman]

The problem they'll have with Hybrids is the sheer mileage they'll cover before they wear out. A Prius can do something like 100-120k on a set of pads, no clutch to wear out, unstressed Petrol engine, brushless motor. People say the batteries will go but the amount of people that have done 400k on the originals suggest otherwise.

[Stebob]

D'ya see the problem here, as we drive down double-parked, cramped urban streets? Not for people like us, of course, but for normal people?

It's probably hard for some people to understand, but in our case there is usually only one of em on the road at any given time.

 

The irony is that for collectively what all 3 cost us including servicing, repairs,mot,tax, insurance etc are still way way less than what some of the pcp peeps are paying every month and also ours are well specced out, I doubt a fiat 500 or focus would have cruise control for example.

 

I suppose it boils down to personal preference, I don't buy into the people who lease are stupid though, if I did considerably less mileage I might consider doing the same, doing long journeys and regular servicing are probably the only reason the mondeos still running!

 

 

Steve

[RichardK]

Most cars made since 2010 have cruise and switchable speed limiters (damn useful things in 30 limits). These days they read the roadsigns and auto-set the limiter - but don't force it on you. Yet.

[SiC]

The problem they'll have with Hybrids is the sheer mileage they'll cover before they wear out. A Prius can do something like 100-120k on a set of pads, no clutch to wear out, unstressed Petrol engine, brushless motor. People say the batteries will go but the amount of people that have done 400k on the originals suggest otherwise.

Even when the pack fails, often it's only an individual cell and opening up to swap it out usually does the trick.

[Junkman]

A package deal involving your current car is as old as the horse car trade. I can understand that people fall for it,

since firstly they haven't learned how to calculate at school, neither do they have the faintest idea how accounting works.

And whoever dealt with the parade of ocean going gomerels a sub 2k car attracts when put up for sale privately,

will inevitably dream of simply getting the dosh subtracted from the price of his next car.

 

What Ford is currently doing is called a 'Blitz' in the trade and was first documented by the US Senate in 1953,

it can be found in a document called "Automobile Marketing Practices", a 1,225 page typescript of hearings before the

Senate's subcommittee of the Interstate and Foreign Commerce Committee, published as document 73438 by the

U.S. Government Printing Office at Washington D.C., in 1956.

It puzzles me to this day that this scam hasn't been rendered illegal there and then.

 

Please, do never forget the following preliminaries:

 

1. The car industry doesn't give away any money. They take it in. The more, the better. That's the only thing that counts for them,

    so they came up with tricks you wouldn't deem possible.

 

2. The car industry is run by a bunch of sociopaths, who don't give a shit about you, your safety, or your environment.

    I cannot stress this enough. They don't care about you! Not one little bit! Nada. Zilch. Nix. Rien. Not one tiny dollop of shit.

 

The Blitz works as follows.

 

1. They reel in customers by promising them something, either a shitload of money for their old car (one flavour of this is a scrappage scheme),
    or a cashback when they buy a car, or a year's worth of insurance, or petrol, or some fucking thing.

 

2. Only one kind of customer must be kept out of the shop. The man who wants to pay cash. Cash customers can kill a blitz because the cars

    are practically sold at cost to the dealer. If someone asks 'how much?' and pulls out a wad, he will be told all cars in the respective spec are

    already sold and he will have to wait for at least three months for the next ones to arrive. In the meantime he will be shown the convertible...

 

3. The dealer has two prices in mind for each car. The first, to be charged to relatively solvent customers, will guarantee a barest minimum

    of profit. The second is more of an elastic plan than a price and guarantees that the profit on the cars sold for a price is merely chicken feed.

 

It is now necessary to follow the dealer's arithmetic in some detail.

 

Let's say the factory charges him 17269.70 for a relatively well equipped example.

He will pay his salesman a 300 quid commission for each sale on top of his salary.

He will spend - or at least charge - a 150 quid handling charge to get the car ready for sale.

He will tack on a 393.80 gross profit and offer the car to a 'solvent' customer for 18,113.50.

 

4. If a 'solvent' customer plunks down 4,540 in cash, or turns in a used car worth that much, it leaves him with an unpaid balance of 13,573.50.

    The dealer will then add an insurance for let's say 30 Months, worth 1,445.00, leaving the customer to finance a balance of 15,018.50 on

    which there would be 6% interest for 30 Months. This is not interest on a declining balance however, in reality it's more in the nature of a

    carrying charge and thus the customer would be faced with a total of 17,721.80 divided into 30 Monthly payments.

    In other words, the customer would first have to pay 4540.00 down in one shape or another, and then 17,721.80 in Monthly payments,

    or to be blunt about it, it would cost the customer a grand total of 22,261.80 to buy a car that cost the dealer exactly 17,719.70 to sell.

 

5. It must not be imagined that the dealer will make a 4,542.10 profit on each deal, however. His initial gross profit was 393.80 on each car,

    plus an 829.70 profit on the finance and insurance charges. Thus he would make only 1.223.50 on each deal, but a Blitz is for volume.

    If he merely shifts 100 cars on the Blitz (a ridiculously low figure), his profit would be 122,350.00 and he could expect his profits

    on the finance charges of his used car sales to more than wash out the costs of adverstising the Blitz.

 

    It will be seen that the dealer's profit on finance charges is more than twice the gross profit on the sale of the car itself. If his profits on parts

    and service pay for the entire overhead of his agency and if he would own a finance company, his profits would tell a much longer and more

    interesting story. Alas, this is not the case. Dealers earn only 8% net profit on sales of new and used cars, parts and service and his real

    profit is made on financing and acting as an agent for an insurance company.

    It is precisely this point that gave rise to the truly monumental phase of a Blitz - the plan for the customers who can't afford to buy.

 

It goes as follows:

 

 1. The customer shows up with a car worth 4,000 at auction, maybe a tad more if flogged off the used car lot.

     That's 540 less than needed for a downpayment on the above mentioned 18,113.50 price schedule.

     Obviously the customer doesn't have 540 in his wallet, much less in his bank account, which is overdrawn.

     But he might be good for 600 a Month. So they slip him what is called a "pack" in the trade.

 

2. A salesman offers him an exorbitant 7,000 for his old car (do you begin to realise the insignificance of a scrappage scheme now?).

    He tells him they won't be able to sell it anywhere near that (which is true) and actually make a loss on the deal which will get him

    into trouble with his boss. Once the customer is finished with commiserating him, the salesman will offer him an additional 3,000 cashback

    on top of that if he buys the car today and that he can do with that money whatever he wants, like a nice holiday abroad with the new car.

    So basically he offers the customer 10 bags for his heap worth 4k. Tempting, huh?

 

3. One fundamental trick of the Blitz is that it's nowhere advertised what a car really costs. You will only ever read about

    Monthly payments, %%%%, scrappage scheme, cashback, jada, jada.

    The actual sales price is left to the salesman, as long as he doesn't tuck under the 18113.50 which is the basic "list price"

    to 'solvent' customers.

 

4. Following an established formula set out by the dealer for people who can't afford to buy a car, the salesman now races through

    a series of transpositions. First, as mentioned, he inflates the worth of the trade in by 3,000. Next, he adds 3,000 to the original

    18,113.50 that was the basic "list price" of the Blitz" and quotes the customer the figure of 21,113.50 as the "list price".

    The mythical 3k are what the trade calls the "pack".

 

5. The seller now deducts the agreed 7k offered for the customer's old car as the downpayment on the theory that it's one third of

    of 21k and that any 36 Month term contract must carry at least 1/3 down.

 

6. This leaves an unpaid balance of 14,113.50 to which the salesman quickly adds 1,445.50 for insurance and the 3k "cash gift"

    to bring the unpaid balance to finance up to 18,558.50. Next, figuring three years at 6% on all this, he adds in 3.340.05 to bring

    the total to finance up to an imposing 21,899.00, which he expresses in the following terms: "So it's only 608.30 a Month for you".

 

7. Thus the customer would be paying out 25,899.00 in notes and investment to buy the car that cost the dealer precisely 17,719.70

    to sell, or, to put it in another way, it would cost the customer exactly 3,637.20 more to buy the same car than it would cost anyone

    able to meet the dealer's 'solvent' customer price on a 30 Month deal.

 

8. The customer now pays a 6% "interest" on a balance that never declines. He pays it on a 3k "pack" that turned out to be not a gift,

    but a loan, which was pure whimsy. He pays it on the dealer's insurance commission. And he pays VAT on the base of 21,889.00

    when his purchase was really worth 17,719.70, which might explain why this scam is still legal. He effectively pays tax on the very

    interest he pays. I might redundantly reflect that he pays significantly more tax on his purchase than a rich man who paid cash would

    pay on the same purchase. In sum, the customer who can't afford to buy a car would pay a total of 4,781.00 in charges on a 21k deal

    and since the dealer made a 20% profit on gross charges, this would mean he made a 956.20 profit on this amount, plus his

    393.80 gross profit on the sale of the car itself, or 1,350 profit on a sale to a customer who can't afford to buy a car, i.e.

    136.50 more per car than he would by selling it to anyone who meets his price for 'solvent' customers.

    Selling only 100 cars under this scam provides a total profit of 135,000.00.

[RichardK]

A package deal involving your current car is as old as the horse car trade. I can understand that people fall for it,

since firstly they haven't learned how to calculate at school, neither do they have the faintest idea how accounting works.

And whoever dealt with the parade of ocean going gomerels a sub 2k car attracts when you put it up for sale privately,

will inevitably dream of simply getting the dosh subtracted from the price

 

<SNIP - scrollback for the content!>....

8. The customer now pays a 6% "interest" on a balance that never declines. He pays it on a 3k "pack" that turned out to be not a gift,

but a loan, which was pure whimsy. He pays it on the deler's insurance commission. And he pays VAT on the base of 21,889.00

when his purchase was really worth 17,719.70, which might explain why this scam is still legal. He effectively pays tax on the very

interest he pays. I might redundantly reflect that he pays more tax on his purchase than a ruch man who paid cash would pay on

the same purchase. In sum, the customer who can't afford to buy a car would pay a total of 4,781.00 in charges on a 21k deal

and since the dealer made a 20% profit on gross charges, this would mean he made a 956.20 profit on this amount, plus his

393.80 gross profit on the sale of the car itself, or 1,350 profit on a sale to a customer who can't afford to buy a car, i.e.

136.50 more per car than he would by selling it to anyone who meets his other price.

Selling only 100 cars under this scam provides a total profit of 135,000.00.

But - and here's the thing in the UK - the cars are cheap, the finance is cheap, and the pack cars from stock are below list. List is a fabrication, of course, but it is the basis for the MGFV calculation which the initial customers don't pay, usually.

 

What's crucial to this is that the car makers aren't car makers exclusively. They're financial operations and making cars for profit is only part of it - GM has in bouse finance. So does Ford. The strength of the in-house finance bolsters profits for the group.

 

This is a fantastic illustration of why the volume is important, but compared to the rest of the world the UK has incredibly cheap cars - because we provide the churn that few other European territories match.

[Junkman]

The higher the MGFV, the bigger is the amount outstanding at any time.

For instance, if you borrow £15k with an MGFV (or balloon) of £5k, at the last repayment you still pay interest on £5k.

A conventional loan will therefore always cost less interest. The MGFV is thus just a synonym for a "pack".

If you don't believe me, compare the total paid under the Car Purchase Plan and a conventional loan (at the same APR).

 

 

But what I really wanted to explain is that any scrappage scheme or other incentive a car company offers to do a Blitz

is completely insignificant in the grand scheme of the Blitz.

[cros]

'Tis cuntish.

[sierraman]

What will happen when interest rates rise then?

[Kiltox]

What will happen when interest rates rise then?

Bad mortgage debt will hurt the banks far more than car loans

[cort16]

It's just another form of discount it's not as offensive as the government subsidising it with our money !

 

For new cars the future is all online. You ll be able to book test drives on line. They'll bring the car out and assess your px. You'll go through a shopping cart and pick the purchase options , cash, hp or pcp . A payment will be calculated, you'll agree and the car will be delivered to you.

When it needs serviced they'll come and pick it up

And deliver it back . Work required to

The car will Be communicated to the customet via live or pre recorded videos.

It means they can build big centralised out of town centres on cheap land without spending a fortune on marble tiles and coffee machines.

Just like what happened to white goods .

 

Every one knows it but the car industry is so fucking backwards they'll fight it tooth and nail .

[tooSavvy]

In Preston, this last week, all the cabs were Prius!

 

.... well all the ones I saw

 

 

TS

[sierraman]

I think people will bounce the PCP before the mortgage. There'll be fields full of Quashquais nobody can afford any more.

[RichardK]

The higher the MGFV, the bigger is the amount outstanding at any time.

For instance, if you borrow £15k with an MGFV (or balloon) of £5k, at the last repayment you still pay interest on £5k.

 

But what I really wanted to explain is that any scrappage scheme or other incentive a car company offers to do a Blitz

is completely insignificant in the grand scheme of the Blitz.

 

 

Yes, but what matters is not the overall figure - it's the monthly cost. If we abstract all of this stuff and just think "An Aygo, Sandero is £99/month, a Cactus, Tipo or Astra is £159/month, a C-class or A4 is £259/month, an XE or Evoque is £350/month" then that is literally all that matters - how the sausage is made, whether it's 0% APR (my new lease car figures work out as 0% APR, £5K discount, some VAT shenanigans and a basic 4.5p/mile adjustment over their 10K base assumptions) or whatever, isn't relevant.

 

The MGFV is not something you worry about. It's just their benchmark for their figures and disposal of the cars at the end of the lease period - some may overvalue as loss leaders. Some may undervalue to entice buyers back in. It's something that in many ways, shouldn't even be shown to people leasing, it means they get all wound up about owing (or potentially buying) an asset instead of thinking of the car as a service provider. Nissan, Ford, Vauxhall, EE, O2, Vodafone. Pay money, use device as you see fit, hand it back when a newer, better model comes along.

 

Your insurance covers the equity in the lease car, unless you're a moron, all you need to consider are the monthly bills, your pence per mile over contract rate, and the main stage you are likely to get fleeced (and it has never happened to me, so I think they're usually reasonable) is damage when handing the car back. My RX8 went back with a 1" gouge in the bonnet and they didn't charge, a couple of stonechips were considered fair.

 

Perhaps at the moment, your credit rating will show you have a £22K liability if you take on a mid spec Golf on PCP for £199/month. Given to get those deals you need to throw £5K equity at them (on paper), I don't like the sums - £5K is 2 years of car in my mind, so if you have the cash, just buy a £5K car or a £3K car and budget £2K for repairs. But 3+23/35/47 contract hire deals, your up front payment is comparable to the cost of a franchise dealer timing belt change or four decent brand tyres on many modern cars.

 

Like everything - I don't begrudge people making money, be they car manufacturers or dealers or whatever, as long as the product is good and the service honest. In this case, for non-financial/technical types, if they walk into a dealer, can afford £xxx/month on the car they want, and the dealer can provide that for them, then how the figures work to make that profitable really doesn't matter.

[RichardK]

It's just another form of discount it's not as offensive as the government subsidising it with our money !

 

For new cars the future is all online. You ll be able to book test drives on line. They'll bring the car out and assess your px. You'll go through a shopping cart and pick the purchase options , cash, hp or pcp . A payment will be calculated, you'll agree and the car will be delivered to you.

When it needs serviced they'll come and pick it up

And deliver it back . Work required to

The car will Be communicated to the customet via live or pre recorded videos.

It means they can build big centralised out of town centres on cheap land without spending a fortune on marble tiles and coffee machines.

Just like what happened to white goods .

 

Every one knows it but the car industry is so fucking backwards they'll fight it tooth and nail .

 

it's been tried. There have been court cases from dealers/states fighting Tesla over this. Daewoo sort of tried it. Saturn tried it in America pre-internet in the prepackaged, consistent service model.

[cort16]

Smart are doing it right now . It'll take a change on thinking but the franchise model will eventually die.

[Paul Dupart]

the Ford Motor Company has only one purpose and one purpose only - to make money.

 

In order to make money, they just happen to manufacture cars.

 

Same for all the manufacturers....

[Cleon-Fonte]

Isn't this all academic anyway, as surely nobody other than fleet managers buy Fords these days?

[RichardK]

I know a fair number of private buyers who opt for Ka/Fiesta/Focus (and of course the scourge of Kugas and EcoSports) - and they're mostly pretty decent cars for the money, too. I'd rather have a Focus than an A-class.