I also hope that increased production will not ruin the once rock solid residual value of the cars as this already seems to have slipped (Roadsters seem to be dropping very quickly).
Nevertheless, one of the real USPs of the Trad cars would surely have to be the rock solid resale value of preowned cars? If production increases and demand doesn't grow back to the 2-5 year list of many years ago, won't the market just be flooded and used prices drop drastically?
I recognise this is a very simplistic view but the question is a valid one I believe. Simon
You are right on. Simplicity is a function of solid observation.
Let's speak to trad residuals only. For the last 50 years, residuals have always been at the foundation to the survival of Morgan. High used car prices counter balance all the drawbacks in buying a Morgan (a very expensive, oddly constructed car with a minuscule service network) by eliminating or mitigating the risk. After all, what is the risk in buying a 50k automobile if you can sell it for the same price or more at any time?
Outside of the UK, residuals remain high..and where supply has been suspended, incredibly high. A Roadster in the US sells for more than it was purchased for 2 years ago. A 10 year old Plus 8 sells at a 15% premium..and the premium increases the older the car is. The NZ, Australian and Canadian experience is the same and all three countries have a deep tradition of mog restoration. Restoration makes marque residuals age- and mileage-resistant. European used mog prices are very buoyant for other reasons. It was undersold there for a very long time.
The local problem with the UK is that it was heavily oversold recently. The Company kept pumping sales (admittedly, there wasn't much choice at the time) with a constant supply of different Specials, Anniversary cars, "last" cars, "first" cars, showroom cars etc etc
It is generally accepted that these selling techniques only convince next year's buyers to buy this year. They do not create new buyers. When next year arrives, new buyers have become hard to find and throughout this process, residuals plummet. MMC UK sales dropped from over 60% of all Morgan sales to 30% in 18 months. The Company responded by appointing new dealers, lowering commissions and abandoning the dealer allocation system in the UK.
Happily, the short-lived but huge US sales carried the company until European sales robustly took up the slack. The UK market is now recovering and I expect that it will reclaim a part of its lost production share by the end of this year (back up to 42- 45%). That is great as there is always a question of how long the European market (or any single market for that matter) will remain "hot".
However, the outlook for UK residuals may not be rosy for a little bit longer. There will likely be yet another Special for 2009 and very large supply that year. That will depress used car prices until it is over (and perhaps new cars sales after). Alternatively, they can choose to raise prices rather than production. That will increase new buyer risk but help used car residuals.
In either case, the profit issue still has to be addressed.
Lorne
P.S. As to the waiting list, Mr. Peter Morgan never trusted it and he was right. He kept production limited to what he knew he could count on to be sold and make profits with and allocated that production carefully amongst the dealers' network to keep everyone alive and the network as widespread as possible.
The present MMC doesn't trust a waiting list either. Their solution is to require UK dealers to buy their supply a year in advance. Those who don't buy a sufficient number may be removed.
