Residual values

[cadman2k]

With Lexus being available in limited numbers and having a reputation for good residual values, I have noticed the last few month that lexus finance predicted values of most used lexus vehicles are around 50% of what they ere purchased for after 2 years of ownership with minimal mileage. As an example a 68 plate Lexus IS300h advance with a few thousand mile on it is showing being worth 16298 from an initial purchase price of 30980. This equates to around 7300 a year depreciation or £608 pound per month. This excludes any monthly payment for the car which without any cash deposit equates to 700 pound per month. Therefore total cost of ownership is 1300 per month. I am wondering what the objective is here. Surely this cannot be helping a car market that has been in decline the last number of month. 

30,980.00

Guaranteed Future Value/Optional Final Payment

£16,298.75

[Normski]

IMO there's a move to force people down the "rental" route where they pay X amount per month - regardless of the age of car. This kind of hides the "cost" of the vehicle.

Depreciation wise - there are very, very few cars that are wouldn't show a similar profile..

[Nigel-Lexus Owner]

41 minutes ago, cadman2k said:

With Lexus being available in limited numbers and having a reputation for good residual values, I have noticed the last few month that lexus finance predicted values of most used lexus vehicles are around 50% of what they ere purchased for after 2 years of ownership with minimal mileage. As an example a 68 plate Lexus IS300h advance with a few thousand mile on it is showing being worth 16298 from an initial purchase price of 30980. This equates to around 7300 a year depreciation or £608 pound per month. This excludes any monthly payment for the car which without any cash deposit equates to 700 pound per month. Therefore total cost of ownership is 1300 per month. I am wondering what the objective is here. Surely this cannot be helping a car market that has been in decline the last number of month. 

30,980.00

Guaranteed Future Value/Optional Final Payment

£16,298.75

Buying a brand new car is a great experience and expenditure. The car looses about 50% in the first 2,5 years. This works for company cars, but if you are spending your own money, you are better off getting a 2 or 3 years old which would be around £15K and with 30,000 miles for example on a car which cost £30,000 new. If you keep the car for 3 years you can still sell it for £8K-£9K depend on condition and your 3 years ownership would come to £6,000 or £7,000 in total, which is £166 or £194 a month. Compare to £1,300pcm for a brand new car!!!

 

New cars have warranties and peace of mind, but you can get an extended warranty on 2 or 3 year old car or buy Lexus( very reliable and with Lexus services you probably do not need to pay for extended warranty). What you can do is open a saving account and call it “ For repairs” put £100 every month instead of paying for extended warranty and if anything goes wrong, get it fixed. If you buy Lexus after 3 years you probably will have £3,600 in the account and can upgrade to another 2 or 3 years old car.

[ganzoom]

I've been keeping an eye on used prices last 6/12 month as at one point we were going to sell the IS this year. 

We paid £35K including the 'safety pack' option for our Premier in 2015. Looking at Autotrader am pretty confident I would be able to get close to £19K for our without much hassle, even WBAC is offering £17K. 

In terms of long term ownership prospects the IS300H really is hard to argue against. Our is £10 VED, not needed a drop of oil in between services, no need to worry about DPF/Turbos/Clutches, very little chance of been 'banned' from major city centres as clean air policies kick in. I can see used prices staying strong compared to a 4/5 year old turbo diesel from Merc/BMW/Audi. Infact the absurdly cheap running/maintenance costs of the IS is partly why we are no longer going to sell it, which I think reflects why used prices have been really firm.

The reason finance companies no longer support high GFV is because they no longer want the risk at a time the global markets are bordering on a crash. 

[Tel]

My Deals have always equated to c. 60% over5 the last 20 years

The German Marques with Options above Metallic Paint,large wheels & leather have zero value so their costs are potentially huge.

Tel

[ganzoom]

21 hours ago, cadman2k said:

With Lexus being available in limited numbers and having a reputation for good residual values, I have noticed the last few month that lexus finance predicted values of most used lexus vehicles are around 50% of what they ere purchased for after 2 years of ownership with minimal mileage. As an example a 68 plate Lexus IS300h advance with a few thousand mile on it is showing being worth 16298 from an initial purchase price of 30980.

 

The cheapest 2017 car I can see on Autotrader is £20K, so if you signed up to a 2 year PCP with a £16K GFV your almost certainly have a decent amount left at trade in to contribute to as deposit for the next car. This was how the original concept of PCP was sold to the public, but in recent years with cheap finance/need to shift cars means manufactures used stupid high GFV to bring the headline £££/month costs down - essentially this was crazy credit driven lending to make it inflate new car sales with little thought for who's actually going to pay for the credit/interest. 

Now that we are on the brink of another recession finance/manufactures are rightly moving back to the original concept of PCP, with realistic GFV and interest rates that reflect the true cost of borrowing money. 

I had a brand new Nissan Leaf (£25K list), for £200/month, zero deposit, and a crazy high GFV at 24 months in 2015. Same car now, same deal conditions, and Nissan now wants £400/month and £5K deposit. The headline price once adjusted for inflation has hardly changed, £25K versus £28K, its changes to APR% and GFV which has made monthly cost shot up. However if you buy cash with personal loan you can bypass all the finance games the manufactures like to play. 

If you actually look at used prices of IS300Hs your see residuals are rock solid for a 'premium' saloon, the other potential car we looked when buying the IS in 2015 was a new Jag XE, a similar age/spec diesel XF is worth about £5-7K less than our IS, despite both cars having virtually the same new cost in 2015, the XE actually been slight more if I remember correctly.  A 2015 BMW 320d is also not commanding as much as a 2015 IS300H.  

[Steve44]

50% retained value is pretty good overall, much better than some of the other manufacturers.  Being low volume, non-fleet really helps residuals and has hit BMW/Audi/Merc badly as they chased higher volume sales.   No one has ever claimed buying a car is good financial sense, but you need to be savvy to minimise outgoings.

Could be worse, you could have bought a MG6 - just 23% retained value 😱

[Jayw13702]

Buying a brand new car is a great experience and expenditure. The car looses about 50% in the first 2,5 years. This works for company cars, but if you are spending your own money, you are better off getting a 2 or 3 years old which would be around £15K and with 30,000 miles for example on a car which cost £30,000 new. If you keep the car for 3 years you can still sell it for £8K-£9K depend on condition and your 3 years ownership would come to £6,000 or £7,000 in total, which is £166 or £194 a month. Compare to £1,300pcm for a brand new car!!!
 
New cars have warranties and peace of mind, but you can get an extended warranty on 2 or 3 year old car or buy Lexus( very reliable and with Lexus services you probably do not need to pay for extended warranty). What you can do is open a saving account and call it “ For repairs” put £100 every month instead of paying for extended warranty and if anything goes wrong, get it fixed. If you buy Lexus after 3 years you probably will have £3,600 in the account and can upgrade to another 2 or 3 years old car.

I bought my 2014 IS300h SE in May with 59,000 on the clock and paid £13,500 for it, less than half its original retail price.
I never buy new, the loss is too much for me to absorb, I always buy good one owner cars that have been well looked after, I keep them for 2/2.5 years or when they reach 200k, whichever comes first (recently it’s been the 200k) at which point it will be worth very little sadly.
It will still have fsh and been in as good condition as I can keep it though


Sent from my Iphone using Tapatalk

[Nigel-Lexus Owner]

54 minutes ago, Jayw13702 said:

 

I bought my 2014 IS300h SE in May with 59,000 on the clock and paid £13,500 for it, less than half its original retail price.
I never buy new, the loss is too much for me to absorb, I always buy good one owner cars that have been well looked after, I keep them for 2/2.5 years or when they reach 200k, whichever comes first (recently it’s been the 200k) at which point it will be worth very little sadly.
It will still have fsh and been in as good condition as I can keep it though


Sent from my iPhone using Tapatalk

 

Hi Jason,

Good post. What do you do for living if you don't mind me asking in order to do that many miles a year? 

[Jayw13702]

Hi Jason,
Good post. What do you do for living if you don't mind me asking in order to do that many miles a year? 

Hi Nigel,

I do patient transport primarily now but also a few school runs. A lot of my work is city to city journeys.
I’m generally out in the road 5 days a week 8-10 hours a day.

It’s a nice comfy place to be and my passengers love the Lexus as well


Sent from my Iphone using Tapatalk

[ganzoom]

13 hours ago, Jayw13702 said:

 

I bought my 2014 IS300h SE in May with 59,000 on the clock and paid £13,500 for it, less than half its original retail price.

 

 

So you paid just under 50% list price for a 4 year old car with 59K on the clock?

This proves how solid the residuals are on the IS, and how unrealistic the latest Lexus finances deals are predicting 49% depreaction from list at just 2 years. Which I belive is OPs main question.

[wharfhouse]

On 1/18/2019 at 11:47 AM, cadman2k said:

With Lexus being available in limited numbers and having a reputation for good residual values, I have noticed the last few month that lexus finance predicted values of most used lexus vehicles are around 50% of what they ere purchased for after 2 years of ownership with minimal mileage. As an example a 68 plate Lexus IS300h advance with a few thousand mile on it is showing being worth 16298 from an initial purchase price of 30980. This equates to around 7300 a year depreciation or £608 pound per month. This excludes any monthly payment for the car which without any cash deposit equates to 700 pound per month. Therefore total cost of ownership is 1300 per month. I am wondering what the objective is here. Surely this cannot be helping a car market that has been in decline the last number of month. 

30,980.00

Guaranteed Future Value/Optional Final Payment

£16,298.75

Although there is a GFV it's only a safety net. When you come to sell the car it may well be worth more than the GFV and so you keep the difference or put it towards a new car. If you decide after the two years to buy the car for the GFV and keep it then you have simply paid a bit more of the car off during the two years. 

[Dealkent]

On 1/18/2019 at 1:43 PM, ganzoom said:

I've been keeping an eye on used prices last 6/12 month as at one point we were going to sell the IS this year. 

We paid £35K including the 'safety pack' option for our Premier in 2015. Looking at Autotrader am pretty confident I would be able to get close to £19K for our without much hassle, even WBAC is offering £17K. 

In terms of long term ownership prospects the IS300H really is hard to argue against. Our is £10 VED, not needed a drop of oil in between services, no need to worry about DPF/Turbos/Clutches, very little chance of been 'banned' from major city centres as clean air policies kick in. I can see used prices staying strong compared to a 4/5 year old turbo diesel from Merc/BMW/Audi. Infact the absurdly cheap running/maintenance costs of the IS is partly why we are no longer going to sell it, which I think reflects why used prices have been really firm.

The reason finance companies no longer support high GFV is because they no longer want the risk at a time the global markets are bordering on a crash. 

I think the Lexus servicing costs are too high , i am Paying more to service my IS 300 h than i was paying to service a 3 litre diesel Jaguar XF . 

[Casa1862]

On 1/24/2019 at 9:29 AM, Dealkent said:

I think the Lexus servicing costs are too high , i am Paying more to service my IS 300 h than i was paying to service a 3 litre diesel Jaguar XF . 

I agree, service intervals too short, 10k is nothing, business get 12k. My 300h cost way more than the 3 series it replaced.

[reeac]

I think that there's a flaw in the OP's argument. If you are making a monthly payment with no deposit then you haven't made any other initial investment in the car and so can't suffer any depreciation.

[rayaans]

On 1/23/2019 at 10:54 PM, ganzoom said:

 

So you paid just under 50% list price for a 4 year old car with 59K on the clock?

This proves how solid the residuals are on the IS, and how unrealistic the latest Lexus finances deals are predicting 49% depreaction from list at just 2 years. Which I belive is OPs main question.

Yes but Lexus finance deals have always been like that, no idea why. On a £60k RX they expected it to be worth £25k in 3 years time. I highly doubt it.

Also, just to add, we bought our IS300h F-Sport with premium nav and leather for £23k with 10k miles on at 2 years old. Its now nearly 6 years old and I have been offered a trade in price of £15k. 

List price was £37k so it lost £14k in 2 years and then decided to steady itself. 

On the other hand, we just bought my son a 2015 Merc C180 AMG Sport with the Premium Plus pack for £13k from a main dealer. It has 57k on the clock and cost £34k when new. Just looking at that it shows that the IS has better residuals as even the early ones with 100k miles at independent dealers are like £14-15k

[ganzoom]

On 2/5/2019 at 4:42 PM, rayaans said:

 

Also, just to add, we bought our IS300h F-Sport with premium nav and leather for £23k with 10k miles on at 2 years old. Its now nearly 6 years old and I have been offered a trade in price of £15k. 

List price was £37k so it lost £14k in 2 years and then decided to steady itself. 

Apart from Tesla and Porsche no one pays the list price for a new car.

Our IS300H premier had a list price of £42k in 2015, we paid under £34k so 20% off.

We could have got a F sport for under £30k as brand new factory order if I remember. So actual depreciation would be closer to just £7k for 2 years if you paid £23k for a 2 year old one. Which is remarkable residuals for a £30k car.

Having said that our current Tesla Model X is doing even better. If I put it on the market now for £7k less than what we paid for it 2 years ago it would be the cheapest Model X on autotrader by £2k!! So about 10% depreciation on a £70k car over 2 years, which frankly is crazy. If brexit actually happens I recon the price will even go up as import tariffs rise/pound devalues even more.

Am almost tempted to sell the Tesla based purely on the crazy residuals but there are still no EV alternatives, which I suspect is partly when used prices are so firm.

[rayaans]

1 hour ago, ganzoom said:

Apart from Tesla and Porsche no one pays the list price for a new car.

Our IS300H premier had a list price of £42k in 2015, we paid under £34k so 20% off.

We could have got a F sport for under £30k as brand new factory order if I remember. So actual depreciation would be closer to just £7k for 2 years if you paid £23k for a 2 year old one. Which is remarkable residuals for a £30k car.

Having said that our current Tesla Model X is doing even better. If I put it on the market now for £7k less than what we paid for it 2 years ago it would be the cheapest Model X on autotrader by £2k!! So about 10% depreciation on a £70k car over 2 years, which frankly is crazy. If brexit actually happens I recon the price will even go up as import tariffs rise/pound devalues even more.

Am almost tempted to sell the Tesla based purely on the crazy residuals but there are still no EV alternatives, which I suspect is partly when used prices are so firm.

Maybe but ours is a early 63 plate when discounts were only £1k off list if anything.

[i-s]

EV residuals are crazy at the moment because demand is so much higher than supply. 

We bought our Leaf 24 Tekna second hand in November 2017, from a dealer with 2 years warranty and servicing, etc for £11k. I've put 10k miles on it since then (up to 23k from 13) and it's still worth around £11k. The other Brexit driver that might influence that is if the pound does go south and makes oil more expensive for us to  buy then petrol/diesel prices will go up again - again bolstering EV residuals. 

[ganzoom]

1 hour ago, i-s said:

EV residuals are crazy at the moment because demand is so much higher than supply. 

We bought our Leaf 24 Tekna second hand in November 2017, from a dealer with 2 years warranty and servicing, etc for £11k. I've put 10k miles on it since then (up to 23k from 13) and it's still worth around £11k. The other Brexit driver that might influence that is if the pound does go south and makes oil more expensive for us to  buy then petrol/diesel prices will go up again - again bolstering EV residuals. 

I would have been happy if our X was going be worth £35k at 3 years old, but currently its looking I'll be able to shift it for £50k+ even in 2020. When Hyundai has a 10 month+ waiting list for £30k Kona when the equivalent petrol version costs about £17k it really does look good for EV residuals.

I do wish Lexus would get on with it and release a full EV. Still cannot moan as the interest in EVs certainly has helped to keep IS300H prices versus diesels. Really glad we went with IS back in 2015 rather than a diesel XF/XE.

The whole Brexit thing is an annoyance, I really don't care either way about the politics, but if it means the cars I want to buy end up been 10-15% more expensive than thats not good.

[rayaans]

On 2/7/2019 at 9:27 AM, ganzoom said:

I would have been happy if our X was going be worth £35k at 3 years old, but currently its looking I'll be able to shift it for £50k+ even in 2020. When Hyundai has a 10 month+ waiting list for £30k Kona when the equivalent petrol version costs about £17k it really does look good for EV residuals.

I do wish Lexus would get on with it and release a full EV. Still cannot moan as the interest in EVs certainly has helped to keep IS300H prices versus diesels. Really glad we went with IS back in 2015 rather than a diesel XF/XE.

The whole Brexit thing is an annoyance, I really don't care either way about the politics, but if it means the cars I want to buy end up been 10-15% more expensive than thats not good.

The UX300e has been trademarked so I suspect it'll be the first Lexus EV coming next year

[Funkyboy]

On 24 January 2019 at 9:29 AM, Dealkent said:

I think the Lexus servicing costs are too high , i am Paying more to service my IS 300 h than i was paying to service a 3 litre diesel Jaguar XF . 

Your right Lexus service costs are ridiculous when you look at what actually gets done. In most cases it's an oil change and visual checks for £269 the next service is £449 and is you've guessed it an oil change and a few more visual checks. 

 

[Dixgas]

10 minutes ago, Funkyboy said:

Your right Lexus service costs are ridiculous when you look at what actually gets done. In most cases it's an oil change and visual checks for £269 the next service is £449 and is you've guessed it an oil change and a few more visual checks. 

 

Had a 2nd service on my GS last month, it included oil, brake, coolant change and all 4 brakes stripped cleaned and greased,  

so rather more than a few visual checks but as you say still pricey at the best part of 5 hundred. 

[Mikey B]

7 hours ago, Dixgas said:

Had a 2nd service on my GS last month, it included oil, brake, coolant change and all 4 brakes stripped cleaned and greased,  

so rather more than a few visual checks but as you say still pricey at the best part of 5 hundred. 

Why did they strip the brakes and change the coolant?  Did you ask for this to be done as I cant see it on the checklist?

[mikes5]

striping brakes, cleaning/greasing also change of coolant good practice.

not to difficult DIY job.