[UK] ‘Highland’ order discussion

[FastLaneJB]

M3 sales in the UK:
2021. 34,783
2022. 19,071
2023. <13,672 (slightly less due to MS/MX sales).

Whether it is because of the wider availability of secondhand vehicles or not, Tesla will want the M3 sales to rise again so will have to incentivise potential buyers if the Highland update on its own isn't enough.

I think it'll just be a bump for a quarter or two tops before it'll tail back off.

Could be worse depending on how the stalks go, there's potentially people ordering that aren't aware the stalks are even gone. If you look on their website they don't mention they've removed them on the Model 3 page that I can see at all. Imagine you've seen your friends Model 3, quite like it and have decided to order one for yourself but completely unaware of the Highland refresh. Or maybe you know they've updated it due to the website but the fact they don't mention removing the stalks, you don't know. Are you going to accept the car when it comes or just refuse to buy it or reject it quickly there after?

Also consider a lot of the competition for the Model 3 is available with 0% APR deals and Model 3 is 9% APR currently. Model Y is 3.9% so they need to incentivise people to buy those to sell in the numbers they are manufacturing. I think Model 3 is only at 9% while they mop up the early adopters, sorry to people that have ordered one at a high APR rate.

CarWow 0% APR Deals

 

[Durzel]

On that note I think I’ll probably skip the rush this time around. I got burnt by getting a transient model (no dimming wing mirrors). I have a feeling APRs will come down, and that they’ll probably be a mid refresh early in its life (e.g. front bumper camera)

Also not going to buy outright like last time, that proved to be a poor decision. Tesla’s pricing shenanigans just make future residuals basically impossible to predict, so I’ll let a finance company take that risk.

 

[Foxsbiscuits]

I’ll let a finance company take that risk

Aren't you paying them interest for that risk? I still don't see leasing as a financially "smart" move but am open to hear otherwise.

 

[spdpsba]

see leasing as a financially "smart" move but am open to hear otherwise.

Though I don’t want to go into the full financial details, I paid 3 year lease for a basic Model 3, yes I saved some money not paying for petrol. But after 3 years the 2021 model 3 would have lost around £16-17000 as per the used car price if I had sold it. I could have even got worse if I had traded in. And that is what I paid towards lease. Yes I didn’t gain but I didn’t lose too. Also didn’t have to worry too much about battery degradation etc.,

 

[MrT3]

Aren't you paying them interest for that risk? I still don't see leasing as a financially "smart" move but am open to hear otherwise.

It limits/removes downside risk. If you want to be really financially smart then don't purchase a new vehicle at all.

With hindsight, purchasing a Tesla 2 or 3 years ago on some form of PCP or lease deal was probably smart because the expected valuation turned out better than reality. Not sure you will get such a good deal now, even if interest rates drop - the industry has lowered the expected future values to be more inline with reality now.

 

[Foxsbiscuits]

If you want to be really financially smart then don't purchase a new vehicle at all.

Thanks.
I think I get it when you're buying new. I was putting it alongside buying second hand and trying to work out if I was missing some aspect of leasing that could potentially work for me.
Seems that most people are leasing and refreshing their cars every three years and I was just interested in that thinking.

 

[WannabeOwner]

I still don't see leasing as a financially "smart" move

I prefer to buy cash because I can then do what I like. I've had circumstances change which would have been made much more difficult with a financial agreement - I suppose "cancel with no penalty", if that applies from day one until expiry, would be OK ... but ... also need cover for "I now need X to drive it" - or "Own it" - or I want to skimp on servicing cost - or I want to upgrade it - or do far more / fewer miles - and so on

 

[FastLaneJB]

On that note I think I’ll probably skip the rush this time around. I got burnt by getting a transient model (no dimming wing mirrors). I have a feeling APRs will come down, and that they’ll probably be a mid refresh early in its life (e.g. front bumper camera)

Also not going to buy outright like last time, that proved to be a poor decision. Tesla’s pricing shenanigans just make future residuals basically impossible to predict, so I’ll let a finance company take that risk.

A wise choice. I think probably only need to give until mid year maybe before APR's will drop a lot on the Model 3. Also as you say if you go a PCP route, the final value is fixed at time of purchase and not your problem if they don't hit it. Just means you cannot change the car early without taking a bath otherwise but keep it until end of the deal and you'll be fine.

Thanks.
I think I get it when you're buying new. I was putting it alongside buying second hand and trying to work out if I was missing some aspect of leasing that could potentially work for me.
Seems that most people are leasing and refreshing their cars every three years and I was just interested in that thinking.

It has a cost but some advantages. As others have said you have a guaranteed final value fixed at the time of purchase. If Tesla drops the value of the cars you don't take the haircut, the finance company will. If its worth more at the end of the deal, you can get the difference back so you profit there. You are effectively just paying for the depreciation of the car and interest of course as well.

For instance if you have two cars, both worth £50k and APR is the same but one is worth £30k at the the end of 4 years and the other is worth £20k at the end of 4 years. The one worth £30k at the end of the deal will cost quite a bit less per month. OEM's can bump those residuals sometimes to levels beyond what the car is worth as a form of discount, you can also get manufacturer or dealer contributions sometimes.

New cars, you'll always take a big hit on but if going new, PCP can be a good choice sometimes. I had my M5 and M760Li on 0% APR and got large discounts also by taking PCP. There's a lot of EV's available on 0% currently so good deals are still there.

 

[Foxsbiscuits]

For instance if you have two cars, both worth £50k and APR is the same but one is worth £30k at the the end of 4 years and the other is worth £20k at the end of 4 years. The one worth £30k at the end of the deal will cost quite a bit less per month. OEM's can bump those residuals sometimes to levels beyond what the car is worth as a form of discount, you can also get manufacturer or dealer contributions sometimes.

I'm not sure I follow ... I thought in both examples you'd be paying the same fixed monthly fee throughout the term and any difference in final value only affects the lease company (Or you if you buy it off them).

 

[Js1977]

I'm not sure I follow ... I thought in both examples you'd be paying the same fixed monthly fee throughout the term and any difference in final value only affects the lease company (Or you if you buy it off them).

Its swings and roundabouts. If your ballon payment is low but in reality you know it will be worth more or the ballon is high and your monthly payments are low and you have a sense of security.

The truth of the matter is that not many people ever settle either way and the house always wins and you become a captive of this vicious system...imho

 

[FastLaneJB]

I'm not sure I follow ... I thought in both examples you'd be paying the same fixed monthly fee throughout the term and any difference in final value only affects the lease company (Or you if you buy it off them).

No on a deal you are paying the difference between the purchase price and the final guaranteed value over the period of the deal. You can lower the monthly payments by paying a jump sum up front, they normally need something here. So a car that is worth more after 4 years costs you less than a car that isn't. This is ignoring the interest part of it but lots of 0% APR deals on EV's at the moment or low interest.

My M5 cost less than a M3 on finance despite being a much more expensive car.

 

[Durzel]

Aren't you paying them interest for that risk? I still don't see leasing as a financially "smart" move but am open to hear otherwise.

Yes. I don't imagine there will be anomalies like back in 2019 and early 2020 where finance companies didn't know how to price residuals, so ended up offering deals that ended up inadvertently benefitting their customers rather than themselves. Quite a few people got out of their 2-3 year old cars into new ones without paying a penny.

Under the normal run of things finance ought to be worse than buying outright, but that hasn't been the case with my car. Obviously if I kept it for a few more years it would end up being a better proposition, but in terms of calculating the depreciation per month over 3 years - it's not been any less than my monthly payments on a finance agreement would have been, and I would have had the ~£60k capital that I could have invested (e.g. in equivalent Tesla shares back in 2020 instead ).

It limits/removes downside risk. If you want to be really financially smart then don't purchase a new vehicle at all.

With hindsight, purchasing a Tesla 2 or 3 years ago on some form of PCP or lease deal was probably smart because the expected valuation turned out better than reality. Not sure you will get such a good deal now, even if interest rates drop - the industry has lowered the expected future values to be more inline with reality now.

Yeah I'll be looking at the deals available and working out what is best.. it's not a decision set in stone at the moment. As you say the market has turned and finance companies are also aware of Tesla's pricing antics and crushing residuals - so I'm not expecting it to be getting one over on them like a few years ago.