Motors losing magic as more buyers ‘have no plans' to buy
As the first shiny ‘13' plate cars roll out of showrooms this March, the latest annual Car Purchase Index from AA Financial Services suggests that drivers are less likely to buy a car than at any time over the past five years.
The AA Car Purchase Index is the only study of its type that explores car buying intentions, attracting over 20,000 respondents
The research shows that 45% of 22, 287 respondents to the AA/Populus study say they have ‘no plans' to buy a car: the highest number to express that view since 2009, when just a quarter (24%) weren't planning to buy a car over the following two years.
Mark Huggins, director of AA Financial Services, says: "A car is a purchase decision that is not taken lightly for families who are struggling to juggle their finances.
"The growing number of those with no plans to change their car is perhaps a barometer of spending power as well as modern car reliability. Families have competing priorities for limited financial resources so if the car's running well, then changing it slips to the bottom of the wish list."
The research also suggests that of those who are planning to buy a car, 22% say that it will be a brand new one; or just 3% of the total number of respondents.
Mr Huggins says that this won't be welcome news for the motor industry. "I expect a lot of forecourt deals to be offered after the initial rush for the ‘13' plate, which means those who bide their time could make some decent savings."
Perhaps unsurprisingly, it is those aged 65 and over who are most likely to opt for a brand new model (31%)
But only 15% of those in the market for a car, say they will wait more than two years to buy their next one, a figure that has been steadily falling since 2009. A similar percentage (16%) will change their car within a year, down from a high of a fifth (20%) in 2010.
Buyers are most likely (29%) expect to spend between £5,000 and £10,000 on their next car. The number who will spend under £1,000 is risen to 3% and, perhaps not surprisingly, it is young aspiring car owners who have least to spend (14% of 18-24 year olds). In the same age group, 35% will spend between £1,000 and £5,000.
How will car buyers finance their purchase?
For the first time since the Index started in 2009, more than half of car buyers will use their savings (52%). That's 13% up from a low in 2011 when just 39% said they save to buy a car.
Says Mark Huggins: "Savings interest rates are at an all-time low and it seems clear that many people feel that they will lose little by putting their cash towards a car. That way they avoid lending interest rates which would more than cancel out the interest they would earn on savings."
More people also say they will cash in some investments (9%) - a figure that has been steadily rising since 2010 when just 5% used this as a means of funding a car.
Despite falling lending rates, the AA's study also shows that the number of buyers who will finance their car with a personal loan (10%), has halved since 2009 when 20% planned to do so.
The number of people opting to use car dealer finance (which includes personal contract plans) has also fallen to an all-time low, at 14% (from 17% in 2012).
Fuel for thought
The higher cost of diesel fuel appears to be putting more people off buying diesel cars. Last year, for the first time, the number of people saying they planned to buy a diesel car exceeded those opting for petrol (48% diesel, 44% petrol). Now unleaded petrol is the fuel of choice for 45%, diesel 40%.
Hybrid cars are attracting growing interest although only 5% say they would choose one, up from 3% in 2012. And despite the huge marketing emphasis on improving electric car technology, only 19 respondents said this would be the type of car they would opt for.
However, the prospect for such vehicles appears to be brighter if the technology advances further and price comes down with half (50%) saying they would consider a hybrid and a quarter (25%) saying they would consider an electric car.