2

I purchased a motorcycle in 2018. It was a new model. Towards the end of the year Honda launched yet a new version and to get rid of the 2018 stock dropped the price of of about 15% (£1000 from the original price). I bought the bike on a PCP finance and because of the price drop the bike is now worth less than the remaining amount. Can I ask for compensation? Is there any rule about price drops?

NOTE FOR CLARIFICATION: I understand goods depreciate after purchase and I would be OK with a "normal" depreciation. The thing is that Honda has done something unusual. My motorbike should be worth around £3500 now but because Honda HQ (not the single dealer) has announced worldwide a price drop of the model I purchased, my bike is now worth only £2500.

Since I purchased the bike with PCP, the finance company guarantees the value of the bike at the end of the contract. At the end of the contract my only option now will be to return the bike, otherwise I will have to pay for a difference that is nowhere near its actual value.

  • 52
    If the price for some reason went up by 15%, would you expect the dealership to call you and ask for another £1000? – Nuclear Wang Mar 11 at 19:21
  • 3
    Does this answer your question? Does the US Consumer Law entitle buyers to refunds for future price reductions? – Nij Mar 12 at 8:04
  • 1
    @MonkeyZeus We have GAP insurance in the UK as well - although it wouldn't cover this sort of scenario, it's for total losses like a wreck or theft. – motosubatsu Mar 13 at 10:08
  • 1
    So is your chief concern that you don't want to pay more than the bike is worth to PCP? Well assuming that they're human and partially intelligent then you can try negotiating the price of the bike at the end of the lease. "Look guys, the bike is currently going for £2500, I am willing to buy it for £2700 to save you guys a resale headache." The value proposition for you is that you are familiar with the bike and know its condition. Simply deciding to buy some other bike for £2500 with unknown reliability is not a pleasant thought. – MonkeyZeus Mar 13 at 18:24
  • 1
    Why the downvotes? While the question may seem naive, it is well-written and on-topic. Please do not downvote for lack of knowledge - rather give a good answer! :-) – sleske May 22 at 12:53
49

You paid a higher amount so you got to drive the latest model for a year.

I can buy a lower amount right now, but I only get to drive last year's model. Or I can pay a higher amount to drive the latest model again.

That's life. I have a Wii. I didn't buy it when people queued up for it, but when the shop was selling them off for half the price. That's life. You pay more for the latest and greatest, and then it gets cheaper.

The protection you are talking about is this: If the shop advertises a motorbike for £8,000 and when you go into the store the price is suddenly £10,000 then there is some protection in place. The protection means the shop will get a major telling off from trading standards if you complain, and possibly a fine. It doesn't mean you get the motorbike for £8,000. And it most definitely doesn't mean you get money back when they reduce the price a year later.

| improve this answer | |
  • That may be true for other products but not cars and motorcycle. You can still buy the previous year's model and you are likely to pay the same amount. Also the price drop came directly from Honda, not the dealer. – algiogia Mar 12 at 11:07
  • 14
    @algiogia No you can't. You have no right, for anything, to return bought goods simply to purchase a lower priced one. For buying on the internet you have a 14-day "cooling off" period. For anything else, the only reason you're allowed to return goods is because they aren't fit for purpose. Clothes shops usually allow returns for good customer relations, but this is their call and they're under no obligation to do so. – Graham Mar 12 at 12:12
  • 6
    @Graham and there is the problem. So many stores did it out of "I don't want the hassle, + it keeps good relations with customers and keeps them coming back" that now people think it's a RIGHT. I used to work retail and I had guys tell me to my face "only buying this to watch the game tonight. I'll be back tomorrow for a refund". It's..... insulting. – Patrice Mar 12 at 12:56
  • 7
    @algiogia That's simply not true. It's extremely common for previous model years of vehicles (even if still new) to sell at a lower price than current model years. Most manufacturers do end of year sales specifically to clear out their inventory of the previous model year. Even after the sale ends though, you can usually negotiate significantly reduced prices for previous model years with ease. I'm sorry, but you have no recourse here, this is how things work. – Doc Mar 12 at 15:00
  • 1
    @WoJ: If the store advertises something for X€ then they have to sell it at X€, or they can refuse to sell it. You have no right to actually get it for X€. If this is done intentional, then it is false advertising. They can claim it was a mistake and it's hard to prove otherwise. In that case, you can leave, come back two hours later, and if the "mistake" isn't fixed, call trading standards or whatever it is called where you live. – gnasher729 Mar 14 at 13:44
12

No sane nation would try to control prices like that. You paid more but you have held the product since that time. It is generally accepted that goods released with a brand year decline in value as they age. Some products have definite life spans and may not be able to be sold at any price after some point (would you like a set of 1995 Encyclopedias?) Certainly you wouldn't expect a discount on your Chanel outfit when it goes out of style and goes on sale everywhere. This is the same principle.

| improve this answer | |
  • I know that used good drop in price. The problem is that Honda dropped the price of that specific model less than a year after release and that made the price drop more than expected. – algiogia Mar 12 at 11:09
  • 5
    @algiogia every car, every brand, every make suffers from that. You really think that the 2017, when the 2018 model came out, didn't drop in price? Same for 2016, 2015, etc. It's just how it goes. – Patrice Mar 12 at 12:56
  • @Patrice Then the finance company is an idiot for guaranteeing the value of the motorcycle? – algiogia Mar 12 at 13:47
  • 4
    @algiogia not really. They're still making profit, aren't they? The difference in price is likely to be WAY less than the interests/fees you pay on the financing... – Patrice Mar 12 at 14:07
11

I purchased a motorcycle in 2018. It was a new model. Towards the end of the year Honda launched yet a new version and to get rid of the 2018 stock dropped the price of of about 15% (£1000 from the original price). I bought the bike on a PCP finance and because of the price drop the bike is now worth less than the remaining amount. Can I ask for compensation? Is there any rule about price drops?

In short no - that's not how these things work, you bought a product at a given price at a given point in time. Barring any retailer policy or being able to return the goods/cancel the purchase using normal returns policies/statutory rights, you're stuck.

Since I purchased the bike with PCP, the finance company guarantees the value of the bike at the end of the contract. At the end of the contract my only option now will be to return the bike, otherwise I will have to pay for a difference that is nowhere near its actual value.

PCP further complicates things here and paradoxically makes it simpler at the same time. You see what you actually bought isn't a bike - the way PCP works is that you aren't buying the vehicle you're paying a finance company what they estimate the depreciation on the vehicle to be due to you having the possession/use of the vehicle over the term of the finance agreement.

So how this simpler? Well, you still have the exact same options you always had. You either pay the fixed balloon payment and keep the vehicle or you hand it back at the end of the term and walk away. Since you have a fixed value in the agreement nothing regarding the current "market value" of the bike matters one jot in this scenario, if you return the vehicle the fact that the bike will be worth less than what the finance company estimated is their loss, not yours. Arguably unless you especially want to keep this particular bike then returning it is the sensible move for you, since even if you wanted that model of bike but weren't fussed about the individual one you could just hand the bike back and go buy a different one second hand for less than what your balloon payment would have been.

Of course the nature of these agreements is that it could also have gone the other way - if depreciation had been less than expected then you'd have had the option to pay a balloon payment that was less than the bike was worth and be quids in or the finance company would have reaped the rewards of the asset being worth more than they planned.

NOTE FOR CLARIFICATION: I understand goods depreciate after purchase and I would be OK with a "normal" depreciation. The thing is that Honda has done something unusual. My motorbike should be worth around £3500 now but because Honda HQ (not the single dealer) has announced worldwide a price drop of the model I purchased, my bike is now worth only £2500.

Nothing Honda has done is remotely unusual - it doesn't happen every time by any means but this sort of thing happens all the time.

| improve this answer | |
  • I was actually planning to swap for a different model BEFORE the end of the contract. I can't though, because of the extreme depreciation (I would have to make up for the difference). – algiogia Mar 12 at 11:57
  • 8
    @algiogia then unfortunately that's just the way the proverbial cookie crumbles – motosubatsu Mar 12 at 12:02
11

It's not your bike. This is actually a good thing for you.

If you've got a PCP deal, the finance company owns the bike and you are renting it from them for the duration of the contract. At the end of the contract, you have already agreed the price that it will be available for you to buy (£3500 if I read correctly). It's actually the finance company that is out of pocket now, as they've got a bike, worth £2500 that they were expecting to sell to you for £3500 at the end of the contract.

Don't buy it from them, give it back and buy an identical one on the second hand market for £2500. Problem solved.

To answer the question directly, the only thing you could reasonably ask for would be a reduction in the purchase cost from the finance company at the end of the contract. If your valuation is correct, they may well agree.

| improve this answer | |
1

I do not have any specific knowledge of British law, but as a European industrialized country they are likely to be in line with general principles elsewhere.

As a general rule, consumer protection laws try to mitigate an information deficit on the side of the consumer which is rooted in the better access to information and knowledge of the law on the side of the commercial seller, and other disadvantages originating in the asymmetry of the professional/private seller/buyer relationship.

For systematic reasons — all adults are principally considered self-responsible agents! — the mitigation only takes place when the disadvantage is deemed systemic and overly unfair. Examples are online purchase return rights, or cancellation rights for doorstep-purchases, or minimal mandatory warranties.

By contrast, the normal consumer goods model cycle which can be generally anticipated even by a private citizen with no special market insights is not unfair enough.

The situation would be different if the dealer had been made aware of an impending delivery of new bikes, and a corresponding announcement of impending rebates for the old model. If he then had raved about the excellent lasting value of the old model you could reasonably claim to have been misled. Whether that would be criminally fraudulent or at least an untrue claim which leads to a right of refund or compensation (provided you'd be able to prove it) I don't know — but I'd surely have more sympathy for your case.

| improve this answer | |
  • Well, when I took the PCP finance they DID tell me that, unless I damaged the bike or exceeded the mileage, the value of the bike at the end of the contract would be MORE than the guaranteed value... – algiogia Mar 13 at 11:11

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.