Increase in people planning to buy cars
The latest figures from the Sainsbury's Finance Car Buying Index, which tracks the number of people planning to buy a car on a six-monthly basis, reveal a sharp increase in the number of people planning to buy a car in the six months to August this year.
Relative to the previous six month period (September 2009 - February 2010), the Index reports a 47% increase in the number of people planning to purchase a brand new, used or pre-registration car. 7.56 million people anticipate doing so between March and August this year compared to just 5.14 million people in the six months to February 2010. Collectively car buyers anticipate spending £49.1 billion in the coming six months, a 25.9% increase on the previous six month spend, and the highest expected spend since the six months from September 2008.
Despite the Government's beneficial Car Scrappage Scheme closing at the end of March, the Sainsbury's Finance Car Buying Index suggests a 24.2% increase in the number of people planning to buy a brand new car. In September 2009 just over 1.1 million planned to do so in the following six months. This number has climbed to 1.4 million now.
As a consequence of continued financial uncertainty, however, the Index records a marked decrease in the expected average spend on a new or used car. People typically expect to spend just under £6,500 on average on such a vehicle in the coming six months. This represents a 14.5% decrease on average spend on the previous six month period and is indeed the lowest expected average spend recorded by the Index since it was launched in March 2003.
Steven Baillie, Head of Loans, Sainsbury's Finance, said: "Overall, these latest figures should provide a great deal of optimism for the car industry. Recent industry figures showed a significant rise in new car sales in February and our Index suggests that that trend - despite the end of the Scrappage Scheme - is set to continue in the coming six months.
"There are obviously concerns that continued financial instability as well as uncertainty over the coming election will put people off buying new or used cars. However, the decline in new car sales in 2009 seems to have generated a better market for second-hand sellers. The likelihood is that many people will now be surprised at how much they can get for their existing car and will be looking to upgrade."
The latest index suggests around a quarter (24%) of people looking to buy a new or used car over the next six months will look to finance at least part of their purchase with a loan. Of the total amount that will be spent the research suggests around 15%, equivalent to just over £7.4 billion, will be financed by personal loans. Around half a million people (457,000) expect to purchase a car in the next six months with 100% of the cost financed by a loan.
With poor new car sales in 2009 boosting the second hand car market, the research suggests that 5.71 million people plan to buy a used car in the coming six months. This represents a 55% increase on the number of people who planned to do so in the previous six months period.
Looking at new and used cars together the research suggests that some 1.72 million people plan to spend more than £10,000 on a car, while 302,000 say they plan to spend more than £21,000.
Steven Baillie continued: "It's interesting to see that while there's been a marked increase in the number of people planning to buy cars in the next six months the average price they're willing to pay has decreased sharply.
"In September 2006 the Index suggested people were looking to pay an average of just over £8,500 so a move to below £6,500 as people look to cut costs represents a significant decrease of around 25% in less than four years."
Across Britain as a whole, the South West looks set to see the biggest increase in the number of people purchasing cars with an increase of 12 percentage points on the previous six month period. As per the previous six month period, the South East is likely to be the biggest spender on cars, with people in the region expecting to spend around £7.7 billion.
The research suggests that only the East Midlands and Wales are likely to see a decrease in car buying in the next six months, with the regions expecting to spend around £2.1 billion and £2.8 billion respectively. These figures represent decreases of around 45% and 7% on the previous six month period.
Sainsbury's Finance is offering its shoppers a personal loan rate of 7.9% APR Typical and double Nectar points on their shopping for two years when applying with their Nectar card on loans of £7,500 - £14,999 (1 - 5 years).
In addition to one of the most competitive rates in the marketplace, customers taking out a Sainsbury's Finance Loan benefit from:
A personally tailored repayment period, from 1 to 7 years
Fixed repayments for the whole period of the loan
An instant decision
Money directly into their bank account