PCP and depreciation

[WingingIt]

As I've mentioned elsewhere, I'm thinking of buying a camper conversion but started wondering about buying a California as I'd heard they retain their value really well.

But I've just seen this PCP example - https://www.volkswagen-vans.co.uk/en/buy-a-van/offers/california-offers.html

Now, unless I totally misunderstand PCP, the final payment is the finance company's guess of the worst case resale value at the end of the PCP. Because it's their worst case scenario, often vehicles do a bit better leaving you with a few thousand left as a deposit when you trade in. So, in this particular case, VW are saying that the California may have lost almost 50% of its value in 3 years with a low mileage. Even if that's conservative, let's say it actually loses 40%, that is still eye-watering depreciation. £25,000-ish lost to depreciation in 3 years would render buying a California a complete non-starter for me anyway.

 

[2into1]

A Cali will hold it's value better than any other camper (or just about any other vehicle).

Based on track records, your depreciation hit will be massively less than that, but with a PCP deal you are asking someone to guarantee that the past trends will continue. No one will do that for nothing, hence their illustration allows for things to worsen considerably vs the historical data.

VW are also pretty rubbish at buying back vehicles, so if you went that route, think about paying out the balloon payment with a loan and either keeping the van, or selling it privately for loads more.

 

[2into1]

*edit

In the past few years, new prices have gone up massively, so used prices have held up really well. Most owners here are more worried about how on earth they will pay for the next one, not how much they have lost on this one.

If cash is tight, spend your time and effort reading about what goes wrong with them, and how the market is for 2nd hand ones, and wait and bag a bargain. It's not that difficulty to buy 2nd hand, use them a year and sell for all your money back (so long as no dealers are involved at either end).

 

[BerndRos]

A Cali is for life, not just the first year of the roaring 20s

Seriously though,mine is 2010 and I specced it with just about every extra that was available, plus dealer and brandrup extras. Close on 80K miles now.

Have never considered residuals, as I intended to keep it long term. Now I don’t even think about it’s value, as after 10 years it’s ‘free’ as in wine you laid down &
bought long ago, and now drink, the cost forgotten.

 

[The Merle]

As I've mentioned elsewhere, I'm thinking of buying a camper conversion but started wondering about buying a California as I'd heard they retain their value really well.

But I've just seen this PCP example - https://www.volkswagen-vans.co.uk/en/buy-a-van/offers/california-offers.html

Now, unless I totally misunderstand PCP, the final payment is the finance company's guess of the worst case resale value at the end of the PCP. Because it's their worst case scenario, often vehicles do a bit better leaving you with a few thousand left as a deposit when you trade in. So, in this particular case, VW are saying that the California may have lost almost 50% of its value in 3 years with a low mileage. Even if that's conservative, let's say it actually loses 40%, that is still eye-watering depreciation. £25,000-ish lost to depreciation in 3 years would render buying a California a complete non-starter for me anyway.

If you opt for a ex demo or a year old one, you wouldn’t lose much at all.
I had a 5.1 14 plate I bought it when it was a year old, and had it 3yrs and put 30k miles and sold it for £500 less than what I paid for it.
You shouldn’t worry to much about what it will be worth and just enjoy. Get an older one your be fine with that.

 

[WingingIt]

Thanks 2into1, that's good background, but also slightly makes me think my fears are right. Perhaps the reason for the good historic depreciation has been the increase in prices for new ones. In another couple of years, VW will probably have the ID Buzz out, at which point there will be another VW camper (that looks more like the classic one!) competing with the California. Electric vehicles have a lot of potential for use as camper vans as well because they are essentially giant leisure batteries on wheels. Imagine being able to run the A/C all night long from the battery in hot weather like you run the diesel heater in cold weather now.

I'm suspicious that VW know the resale value of Californias will drop when there's another VW badged competitor out there, hence the playing it save on the PCP prediction.

As for buying it and keeping it forever - the only reason I could justify to myself spending the sort of money that it takes to buy a hugely expensive California (even a 2nd hand one) over a cheaper conversion (maybe a conversion of a different panel van with a less premium badge on it), would be if I believed that the financials of the entire end-to-end proposition to include residuals justified the high up-front cost. If it's just a case of do I buy a £60,000 camper that I'll keep forever or a £30,000 camper that I'll keep forever, I'm going to go for the £30,000 one.

 

[Joker 1299]

Thanks 2into1, that's good background, but also slightly makes me think my fears are right. Perhaps the reason for the good historic depreciation has been the increase in prices for new ones. In another couple of years, VW will probably have the ID Buzz out, at which point there will be another VW camper (that looks more like the classic one!) competing with the California. Electric vehicles have a lot of potential for use as camper vans as well because they are essentially giant leisure batteries on wheels. Imagine being able to run the A/C all night long from the battery in hot weather like you run the diesel heater in cold weather now.

I'm suspicious that VW know the resale value of Californias will drop when there's another VW badged competitor out there, hence the playing it save on the PCP prediction.

As for buying it and keeping it forever - the only reason I could justify to myself spending the sort of money that it takes to buy a hugely expensive California (even a 2nd hand one) over a cheaper conversion (maybe a conversion of a different panel van with a less premium badge on it), would be if I believed that the financials of the entire end-to-end proposition to include residuals justified the high up-front cost. If it's just a case of do I buy a £60,000 camper that I'll keep forever or a £30,000 camper that I'll keep forever, I'm going to go for the £30,000 one.

A £60,000 forever will be at least twice as long as a £30,000 forever.

 

[WingingIt]

A £60,000 forever will be at least twice as long as a £30,000 forever.

Perhaps in normal times, but over the next couple of decades electric cars will take over from ICE cars. Very hard to predict the lifetime of any diesel car these days. In 10 years, if electric cars go as far on a charge as a tank of diesel would take you, charge up in around 10 minutes, cost a fraction to run, and (in the camper world) allow you to run a load of high-powered electrical accessories all the time, who will buy my diesel van?

I think what it may come down to unfortunately for me, is that I believe that spending money on a non-electric vehicle in 2020 is placing a bit of a bet, with widespread electric vehicle adoption around the corner. Whether you're betting on residuals for resale, or betting on longevity to keep running it, it's a riskier bet now than it was 10 years ago. With that in mind, I think I'm going to be more inclined to bet £30,000 than £60,000.

Shame though, as I think the Cali seems awesome and I'm jealous of all of you!!

 

[Joker 1299]

Perhaps in normal times, but over the next couple of decades electric cars will take over from ICE cars. Very hard to predict the lifetime of any diesel car these days. In 10 years, if electric cars go as far on a charge as a tank of diesel would take you, charge up in around 10 minutes, cost a fraction to run, and (in the camper world) allow you to run a load of high-powered electrical accessories all the time, who will buy my diesel van?

I think what it may come down to unfortunately for me, is that I believe that spending money on a non-electric vehicle in 2020 is placing a bit of a bet, with widespread electric vehicle adoption around the corner. Whether you're betting on residuals for resale, or betting on longevity to keep running it, it's a riskier bet now than it was 10 years ago. With that in mind, I think I'm going to be more inclined to bet £30,000 than £60,000.

Shame though, as I think the Cali seems awesome and I'm jealous of all of you!!

It will take at least a couple of decades to see a sustainable electric camper. By then, I won’t care either way.

 

[WingingIt]

It will take at least a couple of decades to see a sustainable electric camper. By then, I won’t care either way.

Out of interest, why do you say that? Most people say it's due to range anxiety, but VW says the ID Buzz will go 373 miles on a charge, and that's only 2 years away.

 

[2into1]

Thanks 2into1, that's good background, but also slightly makes me think my fears are right. Perhaps the reason for the good historic depreciation has been the increase in prices for new ones. In another couple of years, VW will probably have the ID Buzz out, at which point there will be another VW camper (that looks more like the classic one!) competing with the California. Electric vehicles have a lot of potential for use as camper vans as well because they are essentially giant leisure batteries on wheels. Imagine being able to run the A/C all night long from the battery in hot weather like you run the diesel heater in cold weather now.

I'm suspicious that VW know the resale value of Californias will drop when there's another VW badged competitor out there, hence the playing it save on the PCP prediction.

As for buying it and keeping it forever - the only reason I could justify to myself spending the sort of money that it takes to buy a hugely expensive California (even a 2nd hand one) over a cheaper conversion (maybe a conversion of a different panel van with a less premium badge on it), would be if I believed that the financials of the entire end-to-end proposition to include residuals justified the high up-front cost. If it's just a case of do I buy a £60,000 camper that I'll keep forever or a £30,000 camper that I'll keep forever, I'm going to go for the £30,000 one.

You are right to consider the impact of electric vehicles on Cali residuals. For 16 years, Cali's have just had minor trim changes, the face-lift panels eyc, and more importantly, the cleaner diesel engines.
All campervans depreciate much slower than cars ONLY because they have very long lives (a 99 T4 Cali can still be high £teens). If the politics reduces that life to say 15 years, then residuals won't be as they they've been recently.

The above is only one of about 5 big reasons I swapped out of a close to £50k T6 back to a £20k T5.

I suspect all will be well with Cali residuals, as a viable elec alternative is a long way off, but if it troubles you like it did me, and there is a different route to the same camping pleasure, then take that route and sleep easier.

I now spend my days worrying how to fix the airbag, and stop exhaust fumes coming into the cabin.... All routes have problems, but I feel more in control of mine

 

[WingingIt]

You are right to consider the impact of electric vehicles on Cali residuals. For 16 years, Cali's have just had minor trim changes, the face-lift panels eyc, and more importantly, the cleaner diesel engines.
All campervans depreciate much slower than cars ONLY because they have very long lives (a 99 T4 Cali can still be high £teens). If the politics reduces that life to say 15 years, then residuals won't be as they they've been recently.

The above is only one of about 5 big reasons I swapped out of a close to £50k T6 back to a £20k T5.

I suspect all will be well with Cali residuals, as a viable elec alternative is a long way off, but if it troubles you like it did me, and there is a different route to the same camping pleasure, then take that route and sleep easier.

I now spend my days worrying how to fix the airbag, and stop exhaust fumes coming into the cabin.... All routes have problems, but I feel more in control of mine

Haha! Thanks 2into1, you make good points. I shall continue mulling it all over...

 

[Joker 1299]

Out of interest, why do you say that? Most people say it's due to range anxiety, but VW says the ID Buzz will go 373 miles on a charge, and that's only 2 years away.

But will it go 373 miles and then camp off grid for three days? No. With an ICE you charge the leisure batteries while driving. How will that work with an EV?

 

[GrannyJen]

I just don't get the fear over residuals.

I've just tried so hard to buy an electric car. We have a 2012 120 BMW. Tax is £30 per year, beautifully specced and a beautiful car but only does city mileage. However, God forbid, if Alfie, my Cali and our main car, should suffer an off-road experience of any length of time, then the Beemer is pushed into international mileage, at least further North than Watford gap.

How on earth do I buy an electric car?

The range is crap. The residuals are crap. The tax, if I specced it to the Beemer, would be in the over 40k highway robbery level. Meanwhile the cali continues to depreciate at the rate of a geriatric snail and the 8 year old Beemer is now so cost-effective that in the effect of a total diesel ban I can afford to park it well outside of any town and hire a luxury limo into town whenever I want.

How on Earth are electric vehicles in my lifetime ever going to impact on California residuals? There has to be another alternative. Possibly hydrogen, but electric? No. Never.

 

[WingingIt]

But will it go 373 miles and then camp off grid for three days? No. With an ICE you charge the leisure batteries while driving. How will that work with an EV?

You make a fair point But bear in mind you said it'll take two decades to be viable... I currently drive an e-Golf that will do about 140 miles between charges. VW say they're going to make a vehicle that is much heavier and will go to 373 miles just two years from now.That's some rate of progress, and doesn't make me think we'll be waiting two decades for the EVs to take over.

 

[GrannyJen]

You make a fair point But bear in mind you said it'll take two decades to be viable... I currently drive an e-Golf that will do about 140 miles between charges. VW say they're going to make a vehicle that is much heavier and will go to 373 miles just two years from now.That's some rate of progress, and doesn't make me think we'll be waiting two decades for the EVs to take over.

big difference with an E Golf and a camper you might just want to drive into the back and beyond. How many charging stations are going to appear in Iceland back country, Morocco, Nordkapp, the E gap of Italy, even pennine black spots?

It will take massive battery weight to provide for a E-power plant to take a 3 ton vehicle into where you currently bite your fingernails between diesel supply, let alone charge stations, and how much of that extra weight will translate into extra license requirements?

 

[WingingIt]

I just don't get the fear over residuals.

I've just tried so hard to buy an electric car. We have a 2012 120 BMW. Tax is £30 per year, beautifully specced and a beautiful car but only does city mileage. However, God forbid, if Alfie, my Cali and our main car, should suffer an off-road experience of any length of time, then the Beemer is pushed into international mileage, at least further North than Watford gap.

How on earth do I buy an electric car?

The range is crap. The residuals are crap. The tax, if I specced it to the Beemer, would be in the over 40k highway robbery level. Meanwhile the cali continues to depreciate at the rate of a geriatric snail and the 8 year old Beemer is now so cost-effective that in the effect of a total diesel ban I can afford to park it well outside of any town and hire a luxury limo into town whenever I want.

How on Earth are electric vehicles in my lifetime ever going to impact on California residuals? There has to be another alternative. Possibly hydrogen, but electric? No. Never.

A continuation of my reply above really, but I just don't get why people say that because EV ownership isn't viable in every situation yet, that it won't be within our lifetimes. A decade ago the best offering from a major manufacturer was the Nissan Leaf, which would do about 60 miles before you needed to charge it. Ten years later, for similar money you can get a Kia e-Niro which will do coming on for 300 miles between charges, and has twice the horsepower. That's astounding progress in ten years. As for affordability, payments on my e-Golf are around £300/month. Payments on a similarly spec'd petrol Golf would have been over £200/month with the same finance terms. I'm saving close to £100/month on petrol, so at worst I think I'm breaking even by going with an EV.

So, I agree that EVs don't make sense for everyone yet, but I wouldn't be so certain that they never will.

 

[WingingIt]

big difference with an E Golf and a camper you might just want to drive into the back and beyond. How many charging stations are going to appear in Iceland back country, Morocco, Nordkapp, the E gap of Italy, even pennine black spots?

It will take massive battery weight to provide for a E-power plant to take a 3 ton vehicle into where you currently bite your fingernails between diesel supply, let alone charge stations, and how much of that extra weight will translate into extra license requirements?

What's the range of the T6 currently? I genuinely don't know... 500 miles? Well then couldn't I say the same about petrol (ok, diesel) stations? What if I venture to the middle of nowhere in the Pennines and don't find a petrol station? You may say that petrol stations are everywhere, but EV chargers are harder to find and I would agree with you... in 2020. But have you seen how quickly they're putting in chargers now? A lot easier to wire in an EV charger than build a petrol station

Not to mention, do the majority of California owners really go to Morocco? It's the majority of buyers who will determine resale value.

I'm not saying the ID Buzz beats the California in 2020... I mean, it's only a concept car at the moment after all. I'm just saying, the reality of using an electric vehicle in 2025, or 2030 may be very different to the reality of using it now if the pace of change continues as it is currently.

 

[calikev]

So are EV's going to be free to charge?

 

[Digger]

I think you have made up your mind. The California is not for you.

 

[WingingIt]

So are EV's going to be free to charge?

No, but currently they're a lot cheaper to charge per mile than diesels are. Maybe charging costs will go up, but considering VW say they're going to stop making diesel vehicles within the next decade, I don't think it's crazy to say that they may not be the future of motoring

 

[GrannyJen]

A continuation of my reply above really, but I just don't get why people say that because EV ownership isn't viable in every situation yet, that it won't be within our lifetimes. A decade ago the best offering from a major manufacturer was the Nissan Leaf, which would do about 60 miles before you needed to charge it. Ten years later, for similar money you can get a Kia e-Niro which will do coming on for 300 miles between charges, and has twice the horsepower. That's astounding progress in ten years. As for affordability, payments on my e-Golf are around £300/month. Payments on a similarly spec'd petrol Golf would have been over £200/month with the same finance terms. I'm saving close to £100/month on petrol, so at worst I think I'm breaking even by going with an EV.

So, I agree that EVs don't make sense for everyone yet, but I wouldn't be so certain that they never will.

Tell me one vehicle that has provided quantum leap. The brilliant new E offering from Honda has a range of 137 miles best. The much vaunted Zoe manages 180. The Kia you mention has that range at optimum driving conditions, you are stuffed if you get in a traffic queue in winter when you need the heater running.

This is a camper forum. Campers, like commercial vehicles, are built to do long mileages, not pop around an inner city. Long mileages mean long fuel gaps. Where are the charging stations? I'm off to Glasgow in a month, I couldn't even do that in reasonable time in a Tesla 3 so how on Earth am I going to do it in an E-Cali? Even less how am I going to do it in an E-40 ton truck?

Your mind seems made up so I am not quite sure you are postulating an argument. To compare a three ton leisure vehicle with long distance credentials to a Nissan Leaf is not valid. If I had to replace my Alfie tomorrow, and as he is just 26 months old I am not going to, with a diesel California then I would not lose a second of sleep. The residuals will continue as they are for the lifetime of the replacement at least.

 

[Digger]

Without nuclear or other reliable power sources on instant demand there is not a cat in hells chance of producing the electricty to power the millions of extra vehicles as we are short of power even now in cold winter spells.

 

[WingingIt]

I think you have made up your mind. The California is not for you.

Ok, well sorry to have offended anyone... guess I'm not welcome here for wondering about residuals against the backdrop of considerable change in the automotive industry.

If I do buy a California (I still might, even though there doesn't seem to be a welcoming online community for them), I guess I'll have to try to find another forum to join.

Thanks to those of you who did make me feel welcome here, some of the people on this and my other thread actually did, I really appreciate your insight!

 

[GrannyJen]

Ok, well sorry to have offended anyone... guess I'm not welcome here for wondering about residuals against the backdrop of considerable change in the automotive industry.

If I do buy a California (I still might, even though there doesn't seem to be a welcoming online community for them), I guess I'll have to try to find another forum to join.

Thanks to those of you who did make me feel welcome here, some of the people on this and my other thread actually did, I really appreciate your insight!

18 posts and now you are saying you are not welcome because we have argued in defence of a diesel-powered 3 ton leisure vehicle.

I am sorry we have offended you.