Glut of flash cars looms as buyers can't talk the torque
18 October 2008
Cameron Houston, The Age
THE collapse of global sharemarkets and record levels of mortgage stress are expected to signal boom times for Melbourne's used-car auctioneers, as far more luxury vehicles hit the market.
The economic downturn could also have a silver lining for "repo men" or mercantile agents, who are tipping a surge in the number of repossessed prestige vehicles over the next year.
Steve Anstas, a director of mercantile agency NCR Group, seizes about 20 luxury cars a week from people who default on finance companies and banks. He expects that number to soar by January.
"A lot of people didn't read the signs and are going to be hit hard early next year," he said. "There's a lot of 'new money' people, who have made huge paper profits, but much of it has been based on debt or margin lending."
He said prestige cars were usually the first thing to be jettisoned in tougher times.
More than 50 Mercedes, Porsches, Maseratis and BMWs went under the hammer in Sunshine this week; most repossessed by finance companies or offloaded by their owners.
Pickles Auctions manager Mark Thorne said 43 of the cars sold. "We made good money and there are obviously still a lot of people who want, and can still afford, these types of cars."
He tipped an increase in business over the next year, as corporate bonuses dry up and more luxury car owners come under financial duress. "When finance companies are involved there is normally a 60 to 90-day lag between the initial default to when they exercise the right to repossess."
Mr Thorne said many prestige vehicles tended to depreciate sharply over their first year on the road, which led to substantial losses when owners defaulted on finance companies.
Pickles recently sold a Ferrari F1 Spyder for $280,000, despite the car being just over one year old and selling for about $450,000 on the showroom floor.
Last month's sales figures showed the market for new cars had already softened, and 2500 fewer vehicles sold than in September 2008, a 3.1% fall.
BMW remarketing manager Mark Stackpoole said sales were still strong, but conceded that more customers were moving to refinance leasing agreements and loans.
While the rate of vehicle repossession had increased slightly on previous years, he was not alarmed. "It's running a little higher, but nothing that would make you think the world is coming to an end," Mr Stackpoole said.
Geoff Dutton said while his dealership maintained solid sales — other luxury car traders reported easing sales. "They're down with the late-model prestige cars — they are hurting a little bit, I hear," he said.
He said his classic car sales remained strong.
"Most of the people that buy our cars still have the cash. There is still plenty of money out there," he said.