Pickup Truck Finance Case Study - Mitsubishi L200 Animal Finance Lease Offer & Nissan Navara Acenta October 2009

Two of the most commonly asked questions by our customers when enquiring about any of our special offers are: 'Will I have any equity at the end of my agreement?' and 'Is the final payment that has been set fair and reasonable?'

Well, whilst we can't make any guarantees on what happens with the used vehicle market, we can do our best to understand the current situation and how it will positively impact the future re-sale value of your next vehicle.

There is real cause for optimism in the UK economy at the minute, and as a result, a huge uplift in demand from business users who are looking to lease a vehicle. This has not always been the case in the last 18 months, with the new car market being hit harder than most. Total sales have fallen more than 40% and the commercial vehicle sector has been hit even harder. Large corporate customers had been retaining their current fleet, daily car rental companies were cancelling renewals en-masse and both private customers and small business users were holding on to their current vehicle for longer. But that tide has begun to turn.

The combined effect of these actions meant that used car dealers were starved of the steady supply of good 3 year old part exchange stock that they had previously enjoyed.

The Good News

As a result, the trend of falling used car residuals seen in the second half of 2008 has been reversed and while they are not yet as strong as at the end of 2007, demand is high and auction houses across the country are reporting strong performance in certain sectors particularly in the used double cab market.

"The market for off road LCV's (pickups) continues in good form and this is particularly true of higher specced double cab pickups. Best results are reserved for the top end stock from Mitsubishi, Nissan and Toyota Hi Lux."

Source: George Alexander, Chief commercial Vehicle Editor. Glass Guide Oct 2009

A combination of interest rate reductions, the lower VAT rate and the effects of the extension of the Scrappage scheme have gone some way to reverse the fall in new vehicle sales. Positive economic data, rising business and consumer confidence will also further serve to increase the momentum in new car sales figures.

It will take some time before sales are back to the exceptional peaks of 2006 and 2007. The days of 'stack 'em high and sell 'em cheap' are likely to be over. What happened last year was a wake up call to vehicle manufacturers and dealers alike. Car makers who had reduced and in some cases ceased production are now manufacturing again but are taking a much more cautious approach to avoid being in the same position they were in last year, where too much supply coupled with reduced demand resulted in loss making businesses.

As we've stated, we can't guarantee what the future holds but it is clear from all the data available that the used vehicle market will continue to remain in shorter supply and as a result, used vehicle values and wholesale demand will continue to remain strong.

It is a fair assumption that if the new vehicle market is 40% down this year, the supply of used 3 yr old vehicles will be down by the same figure.

With these factors in mind we can now look at two of the deals we are currently offering - and more importantly how you can take advantage of the terms we have negotiated for YOU.

The two sources for the data we have gathered are www.autotrader.co.uk and the Glass Guide Oct 2009 edition.

In each case we looked at what the value of an equivalent vehicle would be today if it were 3 years old and in good condition. (In our opinion it would be safe to assume that today's prices should hold firm for 3 years time.)

Using the Glass Guide example, we looked at the minimum price you should expect if you were selling a 3 year old vehicle with 36000 miles in the trade.

These figures were

£9137 for the Mitsubishi L200 Animal &

£8325 for the Navara Acenta*:

Source: Glass guide Oct 2009

* The Acenta is the current version of the Sport used in this valuation.

We then looked at the vehicle through the eyes of a prospective purchaser searching for the same vehicle on www.autotrader.co.uk. (Autotrader is the Uk's undisputed No1 for used vehicle searches and attracts over 90% of used vehicle search traffic).

Again we used the same search format as for Glass Guide a 3 year old vehicle with 36000 miles. Autotrader will default to showing you the vehicles from a national search and in the order of lowest price first. So for this exercise we are showing the average price for the vehicles advertised on this 1st page and from both private and trade sellers.

The Figures were

£10467 for the Mitsubishi L200 Animal &

£9566 For the Nissan Navara Acenta *

source: Autotrader Oct 2009

In both examples these indicative values are an average of £1107 greater than the average final payment of these vehicles when selling to the trade, or an average of £2624 greater than the final payment when selling to the general public from a portal such as Autotrader. (Even allowing for a dealer margin you should be able to achieve a better p/ex price than when just selling to trade sources).

These are just 2 typical examples. We would recommend that you do your own research on Autotrader or any of the other valuation websites that you can find online, but you will find that whether you part exchange your vehicle with us or another trade source (or even choose to sell the vehicle yourself) you can be confident that you should have at least as much equity coming out of your agreement as you put into it at the outset.