Putting off buying a new vehicle.

Submitted: Thursday, Mar 05, 2009 at 08:39
ThreadID: 66516 Views:2350 Replies:9 FollowUps:11
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I was wondering if all the "stuff" happening has caused anyone to postpone or cancel buying a new vehicle.

I'm particularly curious if it is purely a financial decision or if it is more a matter of confidence.

As an example we were due to replace 3 company vehicles in November but decided to hang on and get another year out of them. Not a money issue so much but wanted to see how badly small business was going to get screwed by banks and government first.

Personally I was going to update the Rodeo, but have now decided to wait for the VW Robust to turn up. Not really a recession decision but a postponement nevertheless.

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Reply By: Willem - Thursday, Mar 05, 2009 at 09:30

Thursday, Mar 05, 2009 at 09:30
Gone Troppo

Someone once said "Never a borrower nor a lender be"

I spent most of my life, from working in age, in debt, owing on machinery, cars and running businesses. Eventually, after some good fortune, I managed to shake off the dreaded debt curse, cut up the Credit Cards, and have been debt free for 10 years now. Its a good feeling.

If you have the money in the bank to convert to whatever you need to buy, then go for it.

If however you are asking the bank to fund your purchases then I would be very cautious. The bad times seem to be set to continue for a while. And banks can be ruthless, looking only at their bottom line and definitely not your well-being although their advertising may purport that!

Take care

Cheers


AnswerID: 352275

Follow Up By: Member - William H (WA) - Thursday, Mar 05, 2009 at 20:28

Thursday, Mar 05, 2009 at 20:28
Good afternoon Willem.

I agree with you 100% Willem, as i retired in 1990 at the age of thirty eight, and havent had the need for Bank finance, i tell everyone to pay cash for things, if they can, and not to use the banks,i dont have credit cards, only one debit card, and life is so good without those things, i own everything i have, including my tojo.

Cheers for now William h...Bunbury...WA.
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Reply By: The Landy - Thursday, Mar 05, 2009 at 09:56

Thursday, Mar 05, 2009 at 09:56
Howdy

Indicators suggest there will be no improvement in motor vehicle sales until late 2009.

A recent survey of Consumer Sentiment, which asks the specific question “whether now is a good time to buy a car” is quite telling.

The measure fell from 15% above long-run averages in 2007 to 30% below long-run averages towards the end of 2008. These are the lowest readings since 1989. Whilst it has recovered some of this ground, the index still points to a continued contraction in vehicle sales.

Indicators suggest there will be no improvement in motor vehicle sales until late 2009.

The key is the consumer; no confidence and concerns over job security will see them paying down debt and deferring major purchases until things improve. Yesterday’s National Account figures, which show the economy contracted over the past quarter, will give little optimism that the consumer is about to change the thinking.

Cheers
AnswerID: 352280

Follow Up By: Member - Matt M (ACT) - Thursday, Mar 05, 2009 at 10:08

Thursday, Mar 05, 2009 at 10:08
Landy,

So what do you think the impact on vehicle prices will be? Usually a slowing of demand leads to discounting, but of course the manufacturers are struggling with profits down, and the slide in the dollar pushing prices up. Wonder what the overall impact will be?

Maybe a good time to buy if, as Willem suggests, you don't need to drive yourself into serious debt to do it.

Matt.
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Follow Up By: The Landy - Thursday, Mar 05, 2009 at 10:30

Thursday, Mar 05, 2009 at 10:30
Hi Matt

I think that is a good question and one that came up in another thread just recently.

I think the best option for the car manufacturers will be to run down inventories and slow the manufacture of vehicles. There is clearly a large global stock of vehicles and the major companies already have plans in place to slow production and reduce inventories.

However, does this mean a reduction in prices of new vehicles? At the margin there will be discounting at the retailer level, but it isn’t the answer to the problem and it is unlikely there will be major price reductions by manufacturers.

This issue isn’t one of price, but that consumers are simply not willing to buy at present. Will a price change influence that? Again, at the margin there will be those that it will, but for the mainstream consumer it won’t. They are more focussed on paying down debt, saving, and deferring major purchases.

So discounting the price of new motor vehicles may not have a great impact in terms of influencing consumers to buy in the current environment.

Once the crisis passes, and it will in time, consumers will be in a far better shape having paid down debt and spending will eventually bounce back. But before that happens they will want to be confident about the economic outlook and job security.

Mind you, the other part of the equation is commercial buyers of motor vehicles; most companies are also paying down debt and reducing expenditure, so there will be declining support for sales from this group.

In Australia, we are only now beginning to feel the ‘real’ effect of the massive global downturn; the next 3-6 months will be very telling and a challenge to our policy markers.

Good luck….
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Reply By: Member - Old Girl (QLD) - Thursday, Mar 05, 2009 at 10:23

Thursday, Mar 05, 2009 at 10:23
We decided to rebuild our old girl instead of replacing it. With current job losses and a young family to provide for we decided to keep our money in the bank in case that rainy day comes. Would rather sleep at night than drive a new vehicle.
AnswerID: 352287

Reply By: Member - Willie , Sydney. - Thursday, Mar 05, 2009 at 10:26

Thursday, Mar 05, 2009 at 10:26
Mr / Mrs Troppo,

I put off buying a new Cruiser for at least 12 months. The demise of the stock market, has curtailed any big purchases for me.

Willie.
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Reply By: Member - DAZA (QLD) - Thursday, Mar 05, 2009 at 11:05

Thursday, Mar 05, 2009 at 11:05
Hi All

I am one of those customers from hell when it comes to purchasing big ticket items, I treat the seller or business with respect but I do my home work first before I start getting quotes from suppliers ect,as far as buying motor vehicles is concerned I think it is a good time to haggle and obtain the best deal while this so called recession is taking place, play one dealership against the other, if one waits for thing to improve, dealers will start to increase their prices to make up for losses they have incurred, I picked up this trick from a motor vehicle rep several years back, when getting quotes allways ask for their business card, and write down the tradein valuation and best
deal price of the new vehicle, for the trade in add on an extra couple of thousand, and for the new vehicle subtract a couple of thousand, plus extras ect, leave the card in the consol or on the dash, when you go to the next dealership, and they are inspecting the vehicle,and you are busy with the other rep ect, the valuer will sneak a peek at the business card, and it's amazing how they will match or better the price and tradein valuation,some times the red book valuation goes out the window, and also cash is king at the moment.

Cheers
Daza
AnswerID: 352301

Reply By: Bob of KAOS - Thursday, Mar 05, 2009 at 11:16

Thursday, Mar 05, 2009 at 11:16
GT

You said "As an example we were due to replace 3 company vehicles in November but decided to hang on and get another year out of them. Not a money issue so much but wanted to see how badly small business was going to get screwed by banks and government first."

I am guessing people all over the world are making similar choices which will have serious consequences for the vehicle manufacturers, car dealers, the people who the dealers trade with etc etc

The only beneficiary is the environment, and that's not a bad thing.

Its interesting to see how fear of a recession can actually make a recession happen.
AnswerID: 352302

Follow Up By: Member - Ed. C. (QLD) - Thursday, Mar 05, 2009 at 15:11

Thursday, Mar 05, 2009 at 15:11
"It's interesting to see how fear of a recession can actually make a recession happen."

You've hit the nail squarely on the head with that observation, methinks.......


Confucius say.....
"He who lie underneath automobile with tool in hand,
....Not necessarily mechanic!!"

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Follow Up By: GoneTroppo Member (FNQ) - Thursday, Mar 05, 2009 at 15:56

Thursday, Mar 05, 2009 at 15:56
Obversely, if everyone ignores it and does exactly what they would have otherwise, is there no recession.
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Reply By: Member - Warfer (VIC) - Thursday, Mar 05, 2009 at 14:08

Thursday, Mar 05, 2009 at 14:08
Try not watching the NEWS @ Six and A Current Affair for 5 days about all the bloody doom and gloom an i will tell you you'll feel heaps better....Still waiting for the WORLD to Implode from the Y2K Bug..


Just get on with it (Life) you'll survive..

Cheers
AnswerID: 352327

Follow Up By: Member - William H (WA) - Thursday, Mar 05, 2009 at 20:36

Thursday, Mar 05, 2009 at 20:36
Yes i agree with you, and also if you take off your wrist watch, for a few days, and then see how you feel, by just not working to a time, and doing things when yoiu need to, is a lot better and your stress levels will come down.

Cheers for now...William H...Bunbury...WA
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Reply By: Axel [ the real one ] - Thursday, Mar 05, 2009 at 14:34

Thursday, Mar 05, 2009 at 14:34
GoneTroppo , question to throw back to you , Is there ever a good time to buy a new vehicle ? Correct answer would have to be NO , depreciation from the moment it leaves the yard , buy one week and model discounted the next , runnout sales , new model with more "fruit" cheaper than what you paid 6 mths before ,, ,,,, having said that however , nothing is as nice as the smell and feeling of your own brand spanking new car ,, even though that "smell" is actually toxic ,,[ plastics /oils / ect]
AnswerID: 352331

Reply By: Chris & Sue (Briz Vegas) - Thursday, Mar 05, 2009 at 15:09

Thursday, Mar 05, 2009 at 15:09
Dear G Troppo,

We've not actually postponed purchasing a new vehicle, but we've certainly reduced our expenditure. We retired last year and in the best Grey Nomad tradition, proposed to buy a Land Cruiser and an off-road van for touring.

As the super fund started to look a bit leaner than we had planned, we still went for the Cruiser (albeit a late '05 100 series rather than a newer 200), but decided on a camper/trailer rather than lash out on a van with all the bells and whistles. Probably spent a bit over $50k instead of $150k.

When the economy (and the market) decides what it's doing and our super gets back to where it should be (HAH!), we may look at doing what we originally planned.

Cheers,
Chris
AnswerID: 352334

Follow Up By: GoneTroppo Member (FNQ) - Thursday, Mar 05, 2009 at 16:06

Thursday, Mar 05, 2009 at 16:06
Interesting comment Chris.
There was some clown on ABC the other day saying that on average super funds had lost 18% over the last 12 months and if you are 60 or over you will NEVER make up the loss.
I really had to laugh people will say anything controversial to get in the media.

The reality is that it's a paper loss only unless you sell. The markets will inevitably rebound. History shows that it will be higher than the previous high.

Plus no one needs every dollar of their super on the first day of their retirement.

So there may be some pause in the accumulation but in five years the difference may not be that big.

Hope your 100 and CT serves you well. You may like the flexibility and not want a Caravan with the lot!


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Follow Up By: The Landy - Thursday, Mar 05, 2009 at 16:46

Thursday, Mar 05, 2009 at 16:46
Hi GT

“The reality is that it's a paper loss only unless you sell. The markets will inevitably rebound. History shows that it will be higher than the previous high.”

Time does fix most things (even a bad haircut), but the reality is whether it is a paper loss or actual loss is academic as your wealth has declined at this point and you are relying on better circumstances and time to fix it.

Who knows when that might occur and if you are 60+ years of age, even 5 years waiting for the recovery is a long time if you are reliant on it to make ends meet and do the things you have worked all your life for…….

As an aside, I think the superannuation industry has had a free kick with our money that pours into the superannuation coffers each week under compulsory superannuation; I don’t think superannuation should be compulsory, but left to individuals to determine how best to manage their own savings for the future.

Many have paid into superannuation for half their lives and more; paid management fees and when needed the most find that there is only half of what they expected left in the tin……

Cheers, Landy
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Follow Up By: GoneTroppo Member (FNQ) - Thursday, Mar 05, 2009 at 17:49

Thursday, Mar 05, 2009 at 17:49
Agreed Landy (although I was told the difference between a good haircut and a bad one was only 2 weeks)

The point I was making was that without a doubt this is a setback at age 60, a pause in the growth of the nest egg. But it's not total disaster as some commentators are making out.

Any super fund should have a balanced portfolio to minimise risk.
Investing money is a risky business.
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Follow Up By: The Landy - Thursday, Mar 05, 2009 at 19:14

Thursday, Mar 05, 2009 at 19:14
Hi GT

Yes....too true about investing money, but I'll need to change barbers, ends up being three weeks for me! hahaha.

Cheers
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FollowupID: 620577

Follow Up By: Chris & Sue (Briz Vegas) - Thursday, Mar 05, 2009 at 23:53

Thursday, Mar 05, 2009 at 23:53
Hi GT,

A couple of points:-

"The markets will inevitably rebound. History shows that it will be higher than the previous high."

Concur. History certainly does show that and I'm ardently hoping that it does it again.

"The reality is that it's a paper loss only unless you sell. "

Yes and No to that one. The problem is that the stock market goes down, interest rates go down and dividends also tend to follow. Those who rely on interest and dividends find themselves with a lower income. In extreme cases, some people are forced to start liquidating assets and that becomes a bit of a death spiral, ending up with a visit to Centrelink and zero prospects of getting back to where they were. All we can hope for is to survive until there's an upturn.

"There was some clown on ABC the other day saying that on average super funds had lost 18% over the last 12 months and if you are 60 or over you will NEVER make up the loss."

Well, I for one hope he's wrong! I'm over 60 and I'll be trying VERY hard to get my super back to where it was when I decided to quit work.

SWMBO and I worked long and hard to enjoy our retirement and I'll be blowed if I'll allow some US banker to shaft it. :-))

Cheers,
Chris
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FollowupID: 620651

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