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Voluntary PCP terminations 'at record high'

Matt Dale, G3 Remarketing

The voluntary termination of personal contract purchase (PCP) and hire purchase agreements (HP) are at an all-time high, according to G3 Remarketing.

The motoring specialist deals with and disposes of nearly 1,000 voluntary terminations each month for funders, and has seen a 35% increase in these cars going through its auction, compared with the same period in 2016.

The company says this indicates strong demand for new vehicles, caused by relatively cheap finance agreements which make premium brand cars more affordable.

G3’s director Matt Dale (pictured) said: “The PCP model has forced a shift in the UK motor industry, with 60% of new cars now being bought via this method. These figures aren’t set to fall any time soon.

“People are simply changing their cars more often than they ever have, and don’t want to be held back by finance agreements.”

Dale believes this is also having an impact on the used car market.

“There’s no disputing the fact that values of used cars are falling. Ultimately, consumers are wise to the affordability of PCP agreements, so they now also expect to pay less for a used vehicle.

“Dealers therefore need to protect their bottom line by considering other ways to maximise margins. For example; sourcing stock via auction; using experienced but reasonably priced mechanics to prepare vehicles for sale; and upselling add-ons, such as warranties and GAP insurance.”



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Comments

  • Nigel Beach - 31/03/2017 17:08

    I feel that a great number of dealers have pushed customers forward, not only to boost 1/4 1 figures but to sell the customer on the new Road Tax Rates that come into effect tomorrow (1st April 2017), as per Ford own radio advert! Think the Main Agents will be having a tough time going forward with New Car (Retail) registrations plus added pressure from Manufacturers.

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  • Rob Chisholm, Applewood Vehicle Finance Ltd - 24/04/2017 14:26

    There is some very scary examples of how PCP/PCH is sold via dealerships - I thought the bad old days of taking in a customers P/X and using the whole value as the Deposit/Initial Rental to produce an artificially low monthly payment/rental was gone. Well, sadly, according to the Mercedes-Benz Finance quotes I have on my desk from customers those days are not behind us ... and incidentally, these quotes also includes a suite of Insurance products the customer didn't ask for, nor understand or even know the actual cost of!

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