GBP depreciation vs future VW Cali Price

[VW Cali]

There is no dealer profit margin from new vehicles. Its commercial sales, all about numbers hence discounts.
I repeat, no profit from the sale.
And for resale value, who cares, unless you want to sell it, if you do, don't buy it.

Very intriguing - and definitive - comments.

I shall eschew comment on the resale part of your post. That is more in the nature of wise - or unwise - advice that is non factual.

I am more intrigued by your statement that there is no dealer profit margin at all on the VW California because they are commercial vans. Now that is very definitive but you have not provided the explanation.

Are you saying that dealers get a set amount for each unit of van sold? If so, is it VW that pockets the difference? Say exact same van was sold by 2 different dealers at 53,000 and 56,000 respectively. Who pockets the 3,000 difference? VW? In this case to increase turnover would not all VW dealers want to lower the price to the minimum to increase their chances of a sale?

I suspect you have an understanding - or motivation- that I do not have. Your comment also explains why many dealers would be keen to sell any van rather than a Cali. But it also sits ill with other explanations etc.

If you would explain it, I shall learn something and be much the wiser.

PS: On the resale bit of your comment, I have never bought a car or house where I did not think of resale value even if planning on keeping it. I suppose many are similar to me in this regard. So unless a dismissive or facetious remark there are reasons why some may thinj of resale values.

 

[Geezso]

Very intriguing - and definitive - comments.

I shall eschew comment on the resale part of your post. That is more in the nature of wise - or unwise - advice that is non factual.

I am more intrigued by your statement that there is no dealer profit margin at all on the VW California because they are commercial vans. Now that is very definitive but you have not provided the explanation.

Are you saying that dealers get a set amount for each unit of van sold? If so, is it VW that pockets the difference? Say exact same van was sold by 2 different dealers at 53,000 and 56,000 respectively. Who pockets the 3,000 difference? VW? In this case to increase turnover would not all VW dealers want to lower the price to the minimum to increase their chances of a sale?

I suspect you have an understanding - or motivation- that I do not have. Your comment also explains why many dealers would be keen to sell any van rather than a Cali. But it also sits ill with other explanations etc.

If you would explain it, I shall learn something and be much the wiser.

PS: On the resale bit of your comment, I have never bought a car or house where I did not think of resale value even if planning on keeping it. I suppose many are similar to me in this regard. So unless a dismissive or facetious remark there are reasons why some may thinj of resale values.

I'm only going on what I have been advised on more than one occasion. Its not a commercial vehicle to be clear, however sold through a commercial vehicle dealership. My comment was potentially rash, however I know when I enquired about a California at first I was met with some disinterest, this supported the comments made to me previous, which I echo.
The one thing I would be confident of is resale. These are the only manufacturer built and backed with warranty campers. They are cult classics and a search on 3/4 year old ones for £40k should give you some insight.
Typically unless you buy a limited run high value vehicle (that typically is sold as a loss leader) resale value drops like a stone. See the Vauxhall insignia. However I would never buy a vehicle as a financial investment. A project or for.sentimental reasons is different but all vehicles value will drop. I once read in what car I'm sure (not camper or van unfortunately) that after the initial drive off forecourt (when you lose the vat from.the value) a car can drop between 3% and 5% in value each month for the first 3-5 years.
In turn its all about supply.and demand, a Cali is what everyone who buys a conversion is aiming for, it may not suit their lifestyle or budget and that's why they go for.a.conversion. Ultimately the real thing is much more attractive and you should be confident, that although very difficult to say, it will have one of the strongest resale/ residual values in the market. Like anything however, we typically cant predict the future

 

[VW Cali]

I'm only going on what I have been advised on more than one occasion. Its not a commercial vehicle to be clear, however sold through a commercial vehicle dealership. My comment was potentially rash, however I know when I enquired about a California at first I was met with some disinterest, this supported the comments made to me previous, which I echo.
The one thing I would be confident of is resale. These are the only manufacturer built and backed with warranty campers. They are cult classics and a search on 3/4 year old ones for £40k should give you some insight.
Typically unless you buy a limited run high value vehicle (that typically is sold as a loss leader) resale value drops like a stone. See the Vauxhall insignia. However I would never buy a vehicle as a financial investment. A project or for.sentimental reasons is different but all vehicles value will drop. I once read in what car I'm sure (not camper or van unfortunately) that after the initial drive off forecourt (when you lose the vat from.the value) a car can drop between 3% and 5% in value each month for the first 3-5 years.
In turn its all about supply.and demand, a Cali is what everyone who buys a conversion is aiming for, it may not suit their lifestyle or budget and that's why they go for.a.conversion. Ultimately the real thing is much more attractive and you should be confident, that although very difficult to say, it will have one of the strongest resale/ residual values in the market. Like anything however, we typically cant predict the future

Thanks Geezso,

That clarifies it, and appreciate you taking the time out to write this.

On balance, I think I shall probably stay with my own impressions about profit margins because of what dealer told me, my understanding of low volume high margin products in general, plus logical inconsistencies that arise if we are to assume the contrary.

I have owned cars that are similar or higher value to Calis when new - some in multiples of Cali base price. Some depreciated fast, others slowly l, some plateaud and then started gaining value again. Recently for example, I realised that a Mercedes SLS Black used is appreciating fast....


The Cali does have a very strong residual value here in the UK. I suspect it will be so unless a worthwhile competitor enters the market.

 

[VW Cali]

Rentech - who? Certainly not me.
I'm not an economist either (though I do have an O-level in it!)

Renaissance Technologies set up by James Simons originated out of SUNY Stony Brooke. Yes, Simons himself of Chern-Simons and the Veblen Prize.

Hence my comment on your user name!

 

[Stoneybroke]

Renaissance Technologies set up by James Simons originated out of SUNY Stony Brooke. Yes, Simons himself of Chern-Simons and the Veblen Prize.

Hence my comment on your user name!

No, just an old nickname, and often an accurate reflection of my bank balance!

 

[DavidofHook]

Renaissance Technologies set up by James Simons originated out of SUNY Stony Brooke. Yes, Simons himself of Chern-Simons and the Veblen Prize.

Hence my comment on your user name!

Aha! Not then the Veblen of conspicuous consumption.

 

[The Blue Van]

What companies do is usually more revealing than what they say.

I believe Calis in the UK are sold with a chunky margin which VW will squeeze if they have to.

Reasoning: In Denmark all new vehicles, including Calis, are subject to enormous purchase taxes (these in turn feed through into second hand values). For an ordinary car, for example, it's a marginal rate of, get this, 180% above about £8K; for a motorhome/camper it's less, at about 80% if I remember correctly. All of that on top of the rate with VAT at 25%; yes, a tax double jeapordy! But the after tax is added, the list prices are, or at least were, only something like 20-30% higher than in UK. In other words, VW accept a much tighter margin than in UK in order to sell anything in DK.

This suggests that altthough a lower GBP looks likely for the forseeable future (if foreseeable has any meaning in this post-referendum environment; don't get me started...), prices are as always based on covering your costs (average or marginalcosts depending on your strategy) in the medium-long term and selling for a rate people are prepared to pay; maximising the difference between them. So the state of the UK economy, especially as it affects the Cali-buying public, and the attractiveness or not of alternatives to the Cali is what will drive price.

 

[VW Cali]

What companies do is usually more revealing than what they say.

I believe Calis in the UK are sold with a chunky margin which VW will squeeze if they have to.

Reasoning: In Denmark all new vehicles, including Calis, are subject to enormous purchase taxes (these in turn feed through into second hand values). For an ordinary car, for example, it's a marginal rate of, get this, 180% above about £8K; for a motorhome/camper it's less, at about 80% if I remember correctly. All of that on top of the rate with VAT at 25%; yes, a tax double jeapordy! But the after tax is added, the list prices are, or at least were, only something like 20-30% higher than in UK. In other words, VW accept a much tighter margin than in UK in order to sell anything in DK.

This suggests that altthough a lower GBP looks likely for the forseeable future (if foreseeable has any meaning in this post-referendum environment; don't get me started...), prices are as always based on covering your costs (average or marginalcosts depending on your strategy) in the medium-long term and selling for a rate people are prepared to pay; maximising the difference between them. So the state of the UK economy, especially as it affects the Cali-buying public, and the attractiveness or not of alternatives to the Cali is what will drive price.

Spot on.

The real value that came of this thread is how we are psychologically predisposed to justifying what we'd like to believe.

The most definitive statements here had intrigued me to the point where I thought the posters had some specific unusual inside knowledge. But no - it was quite the contrary.

Btw your point also holds across generally all kinds of products. A BMW X5 retails around 50-55k GBP in the UK. But even when cable was over 2.0 back in 2007, in the US the same BMW was about 55-60k USD.

The UK consumer is also the least price sensitive on the planet. They will pay anything and a number will leap to justify the price paid. Complaints about product or services by firms are seen as bad form and whingeing.

Interestingly, this does not extend to sports, where we make it a national past time to moan, complain and whinge at every opportunity. However, in last 10 or so years things have changed for much better.

 

[VW Cali]

Could it be that the Cali is 'complicated' compared with a Transporter? "All those batteries, all that roof going up, then you have the straps if the roof fails, those tables and the chairs in the back, that means that i have got to LEARN all about that stuff. Much easier to leave those vehicles to some one else and concentrate on the simple stuff like the vans"?
Or am I just being cynical?

David,

Just as an off the cuff remark, on Thursday, the dealer I am buying from said:

"Most dealers take no interest in the California because there is so much to learn about them!"

So basically confirmation from the horses's mouth itself. You were spot on.

Also, while he did not say it directly, I think we can lay to rest the wishful notion of Californias being low profit margin. That came across clearly as well.

 

[BerndRos]

The Cali is NOT complicated at all. However a pain if things like the roof go wrong when your wanting to .....GO.

Compared to Yachts and the systems on them and the implications of things go wrong the Cali is easy peasy....

 

[DavidofHook]

The Cali is NOT complicated at all. However a pain if things like the roof go wrong when your wanting to .....GO.

Compared to Yachts and the systems on them and the implications of things go wrong the Cali is easy peasy....

It is evidently if you are a dealer used to selling Transporters. For him it is complicated.
Any way you can't compare a Cali with a Yacht, it's like comparing a horse with a .................motor bike.

 

[BerndRos]

It is evidently if you are a dealer used to selling Transporters. For him it is complicated.
Any way you can't compare a Cali with a Yacht, it's like comparing a horse with a .................motor bike.

Yes, agreed. Seriously though when I took 15 months to go off in the Cali through 22 odd countries to include bumming through Tunisia just after the Revolution, I thought very little of it. But every time I take to the water, despite over 3 decades of sailing, I have ultimate respect for the situation I am in.

 

[Amarillo]

The Cali is NOT complicated at all.

Compared with a combine harvester, you are right. But when compared with a Ford Transit, you are wrong.

 

[DavidofHook]

Yes, agreed. Seriously though when I took 15 months to go off in the Cali through 22 odd countries to include bumming through Tunisia just after the Revolution, I thought very little of it. But every time I take to the water, despite over 3 decades of sailing, I have ultimate respect for the situation I am in.

Yes, understood and agreed! I suppose it is more to do with the environment you are in, both hazardous in their way but, with the sea you have far less control.
I keep well away from the sea in small boats but we have backpacked and done Cali trips and you then can steer yourself away from problem situations.
I followed your Cali trip by the way, very adventurous, sounded great.

 

[VW Cali]

Less than 3 months after I posted above, it seems many car makers will increase prices, albeit not proportionate to percentage decline in sterling yet.

No doubt, their previous forward/option/compound option hedges ended up in the money. This has obviously helped keep prices in check. Reduced purchasing power (PPP) of the British consumer is also a factor manufacturers must keep in mind when setting newer prices.

I am more intrigued by other corporates other tgan car manufacturers. Because I know that car manufacturers in Germany tended not to go for contracts with embedded barrier options the outsize movement in FX will not have adversely affected them. Those doing target forwards will have found their targets quickly achieved and hedges unwound too early. Here one would see greater increase in prices.

The usual corporate CFO greed and stinginess combined on FX hedges, may end up meaning greater GBP percentage increases sooner for products other than automobiles.

Let's watch and see. I know many of you think it's all rubbish or too early. Apologies. Some of you may be interested which is why I am putting this up.

 

[briwy]

Personally I'm more concerned about the effect on values that the current phase of diesel bashing by the authorities will have long term than the exchange rate which have always gone up and down and no doubt will continue to do so.
More and more cities are going to be charging levies to enter and possibly sometime this will be extended to the general road network as well. If that happens there will be a lot of people offloading diesel vehicles of all descriptions at knock down prices.

 

[Digger]

Live for today as tomorrow may never come. Enjoy it and savour the memories.

 

[VW Cali]

Personally I'm more concerned about the effect on values that the current phase of diesel bashing by the authorities will have long term than the exchange rate which have always gone up and down and no doubt will continue to do so.
More and more cities are going to be charging levies to enter and possibly sometime this will be extended to the general road network as well. If that happens there will be a lot of people offloading diesel vehicles of all descriptions at knock down prices.

Agreed.

That is obviously a concern.

Not sure I agree fully with your exchange rates always go up and down generalisation. Cable traded as high as 2.1000+ just before credit crunch of 2007, has traded down to 1.2000 now, and post Brexit parity with USD not only on cards but 90 cents to 1 pound in my view.

These are sizable moves, and not trivial You could of course discount my last prediction (not sure if it was this forum or another where I said that 3 to 6months after vote 1.1500 was a target much to general antagonism in response).

Anyway, my view and prediction on matter.