Car buying to increase in 2007

Demand for cars will grow rapidly over the next 12 months, according to research by AA Personal Loans. The findings show a 20 per cent leap in the number of people who plan to purchase a vehicle in 2007, compared to 2006.

Despite now costing as much as £5,500 per annum to keep a car on the road, the latest findings reveal that as many as one in four (25%) people intend to buy a car in 2007 – compared with one in five (20%) people in 2006. Furthermore, the findings also reveal a year-on-year increase in demand for new and nearly new vehicles – from 27% to 29% respectively in 2006, to 29% to 44% respectively in 2007 – yet a fall in demand for cars over 3 years old (28% in 2006, compared with 22% in 2007).

In its second year, the AA’s Deals on Wheels reports look at actual demand for new and used cars in the UK. AA Personal Loans asked a representative sample of over 2,000 Brits whether they planned to replace their vehicle in the next 12 months and, if so, what type of car would they plan to buy.

The amount of money people are prepared to spend on their vehicles has also increased since 2006. The average person was prepared to fork out £9,342 last year, compared with a planned budget of £10,136 in 2007.

Small family cars remain motorists preferred mode of personal transport – almost one in four (24%) will buy a small family motor in 2007. In contrast, demand for gas-guzzling 4x4’s has fallen over the past 12 months – constituting 8 per cent of total car purchases in 2006, to just 5 per cent in 2007.

Men continue to drive the UK’s car market. As many as 29 per cent will buy a car in 2007, compared with 20 per cent of women (21% and 18% respectively 12 months ago).

Lloyd East, Director of AA Personal Loans, says: “We have now been tracking the new and used car market for over a year, and the findings show that despite motorists enduring difficult times – with increases in the price of petrol, the threat of road pricing and tax hikes – it’s clear these cost changes have done little to dampen the demand for cars.”

The findings also suggest that whilst people are beginning to think more carefully about their specific needs when buying a car i.e. not just at what might look good or perform well, the increased polarisation within the car market suggest many might still be missing a trick.

Lloyd East adds: “A modern car will last up to 20 years and when you consider most cars lose up to a third of their value as soon as they leave the showroom, perhaps more should be thinking more carefully about the investment they’re making when buying a new car, ensuring the get as much car for their money as possible.”