Don't damn a complete genre until you have exploited its wrinkles.
I bought the Audi on carwow which offered me 9% discount on the car or 15.5% if I took the Audi PCP with it. The APR was 6.4% on it, not good or bad. As someone on another forum pointed out the terms of the Audi PCP are quite flexible and you can pay it off in one hit if you want.
So the incentive VWFinServ offer a dealer to sell their PCP products was being used to discount the car to me. It gives you an idea of the profit/incentive the dealers make in the attachment of this finance package. A dealer is able to sell any financial product they like but in most cases they default to the vendors. I know a couple of people who bought using this 15.5% discount and then two months later paid off in full without penalty and only incurring 2 months interest. Thats a good deal by any criteria.
The Audi/VW package is very flexible and a "better" example of the PCP finance product as it is intended to let you sell/upgrade/replace within the Audi products so you can step out at almost anytime with little or no penalty from the contract.
I totally agree that the issue is when poorly informed selling has occurred and the final value is not where it should be. There are a lot of variables that result in the FGV (final guaranteed value) element but the main issue is YOU own the FGV problem not them with a PCP. If you set it too high then you step out with a deficit.
The car industry in the UK certainly seems to be getting more like the stereotype US dealer farms. Selling is about stock, discount, extras and hard telephone push tactics (recent MB experience) driven by incentives to push new/old stock.
Salesreps get a bad name. They are people who are programmed with incentives to make their wage. How would you like to start the month on 50% of your salary and little or no promise. The incentives behind them drive their actions (above the good/average/poor/evil quality of them as people and their capabilities in the role). Even great salespeople just may not click with you and so not try their best. Its a two way thing sadly.
The UK still seems to have a larger employer car allowance program than most of Europe. If you are looking to have a great car for a set payment then contract hire is also good. Its like a PCP where they own the entire thing (car included) and you just make monthly payments. At the end you walk away.
I did the MB E63 on this. MB have been aiming to move more product in the UK for some time and so have offers floating around. When I was looking the E63 estate was up for grabs with large MB funded discounts. I found an advert from a broker for the car at £540/month inc VAT. for 3 payments up front and 23 remaining payments for a 2 year contract. £14040 to run an AMG E63 Estate for 2 years. This would be an out of the showroom loss if you bought it. They owned the whole thing including the FGV issue.
When the termination came I offered to buy the car and they wanted a payment of £60k. This was £20k above the market price the car was going for so they really did lose their shirt. They sold a lot on this program.
As for the RS6. I got the carwow discount on a brand new released model (Performance edition) put down the minimum deposit and used the Audi PCP. I hated the car and so sold it after 12 months. Audi released the PCP, if you terminate early the additional interest is not claimed. As the car was in demand it sold at a premium and so it nearly covered the outstanding FGV. I ended up out of pocket to the tune of £6800 for 12 months in a £90k car. If I had gone the 3 years it would have been different as the FGV would have undoubtedly sagged and the cost would have been worse. My car allowance more than covered this so I had a far better car for my cash than if i had tried to purchase it.
I don't say this to be clever and totally respect the better values of not taking debt you cannot complete in a rush. I just want to indicate that you can play them at their own game and leverage these things if you want to enjoy good cars for less cash - if you are willing to carry the risk.
In all cases the simple rule remains.
Buy low (find out the vendor discounts but not on stock that is going to crash value)
Sell high (watch residual % and sell when there is demand)
Ensure you have the flexibility in the contract
I look at it as total payments over number of years. With PCP you pay a set amount and if done well have a £80k car instead of a £40k car. However I am treating it as a part of the job not an asset. Thats because it is my toy as I don't play golf, take big holidays or have kids to finance through University.
It works well if you scout out your prey.
