Speculating on the value of new cars is a practice perhaps most commonly associated with the trading of supercars in the early 1990s, when the recession caused a crash in values, leaving many speculators with huge losses. However, according to vehicle pricing specialist Glass’s, the UK’s automotive speculator market remains alive and well and now covers a wider range of vehicle sectors than ever before.
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Ultra-expensive vehicles still attract the attention of those wanting to make a quick profit, but Glass’s reports that even volume-brand, lower-priced niche models such as the Peugeot 206CC can change hands for a premium immediately after their launch. Glass’s says 10-15% profit is often achievable for the right cars at the right time.
“Although it may appear easy to predict those vehicles that will command premiums, knowledge of the supply issues for each new vehicle and a keen awareness of the marketplace are essential,” a spokesman said. “It is also vital to be at the front of the speculating queue.”
Over recent years, the most reliable profits for speculators have been found in the prestige 4×4 (SUV) sector. These vehicles are produced in limited numbers and continue to be hugely popular. Many months after launch, a number of models are still commanding hefty premiums. This is due, in no small part, to limited competition, although this will undoubtedly ease with the arrival of several new prestige 4x4s over the next two years. However, for now this sector seems set to continue as the strongest area for speculation.
Glass’s says new Volvo XC90s and BMW X5 diesels have waiting lists of around six months and can be sold immediately after delivery for premiums of around £1,000-£1,500 over the original list price. To achieve such profits, the most sought-after cars need to be specified in desirable colour and trim combinations, together with the correct specification – satellite navigation on prestige 4x4s, for instance.
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By GlobalDataThis specialised, high-risk market has its foundations in the need of buyers to own the latest ‘must-have’ car. However, there are no guarantees in this business, as recently demonstrated by the new BMW X3. Premiums over the full purchase price did initially exist, but they were short-lived, largely due to the lack of a diesel version at launch and a list price higher than many had initially anticipated.
One recent example of the impact of changing tastes on speculator profits is the Bentley Continental GT. Here was a car launched to much fanfare and, for its small target market, was generally regarded as good value for money at £110,000. Huge levels of demand meant the car commanded premiums as high as £20,000 for the first examples ordered. However, popular attention has since shifted to the new darling of the sector, the Aston Martin DB9, and this has caused the value of newly delivered Bentley GTs to fall back to the original purchase price.
The seasonality of certain cars and the timing of their launch can have a significant impact on a speculator’s profits. For example, the eagerly-anticipated BMW Z4 was launched in October 2003, not a time of year normally associated with roadster sales. The car attracted lots of interest in advance from speculators, but many were caught out when their cars arrived at the onset of winter. This contrasts sharply with the Mini Cabriolet which was launched in June – an optimum time for quickly selling an unused, highly-desirable open-top car for significant profit.
Glass’s claims BMW and Mercedes are set to create an all-new market sector with the launch of their own prestige MPVs within the next two years. These are destined to elevate the price boundaries of the MPV sector over the £50,000 mark, will bear little relation to general mass-market MPVs, and will be more akin to cutting-edge 4×4 cars with more space and better packaging.
These cars will take more sales away from the traditional luxury saloon sector, and Glass’s predicts that the speculator’s market will, in the short term at least, deem these vehicles to be the height of desirability.
