Demand for new registration cars rises

Demand for new registration cars has soared 22 per cent in the last year as interest rate hikes fail to put the brakes on demand for new cars in time for the 57 number plate, according to new research from AA Personal Loans.

2007 has been a tough year for UK motorists with road user charges, petrol price fluctuation and increasing environmental taxes on cars; however AA Personal Loans’ Deals on Wheels reports show that motorists have not been put off brand new car purchases in the year ahead. In fact, one in three motorists (33%) say they plan to buy a brand new car in the next 12 months, compared to 26% in the same period last year. Recent reports have suggested that the real cost of cars has actually fallen by 26% in the last ten years, which could be impacting people’s decisions to make an investment in new wheels.

However, the second-hand car market is not seeing the same affects. One in three people (36%) intend to purchase a second-hand car less than three years old in the next 12 months, a 16% decline when compared to the beginning of 2007 (44%).

As part of the latest AA Deals on Wheels Report, the only dedicated study to track changing car demand for the year ahead, AA Personal Loans questioned a GB representative sample of 2,000 motorists about their car buying intentions for the year ahead.

Key Findings:

Grey pound driving new car market: Older people are driving new car demand, 52 per cent of over 55 year old drivers are looking to buy a car in the next 12 months, compared to 20 per cent of 25 to 34 year olds. Younger people are more likely to buy a used car.

Holiday vehicles in demand: Turmoil at the airports this summer? An increase in energy efficient consumers? Whatever the reason consumers are opting for cars that are comfortable for long motorway journeys, demand for such vehicles has almost doubled (81%) in the last year.

Southerners are putting the brakes on car buying: Drivers in the South of England are taking the slow lane when it comes to buying a new car. Just 26 per cent say they’ll opt for a brand new motor in the next 12 months. But the Scots are keeping their foot on the accelerator - 41 per cent buying new.

The top 10 factors driving demand for new cars

Reliability and mechanical problems (32%)
Running costs (28%)
Comfortable for long motorway journeys (20%)
The environment (18%)
Brand new car (15%)
Need for a bigger car as circumstances change (12%)
Better safety features (10%)
Need for a smaller car as circumstances change (9%)
Suitability for short trips to the shops (8%)
Sportier / Sexier car (8%)

Lloyd East, head of AA Personal Loans, says: “As interest rates rise, UK consumers are beginning to tighten their purse strings. But our research shows strong consumer demand for new registration cars ahead of September 1. This suggests that reasons for buying a car are not only influenced by price at purchase. AA Deals on Wheels reports show that drivers are increasingly concerned about the environmental impact, running costs and practicality of their vehicles.

“Approximately one in three people buying a car in the next year will take out a loan or finance to fund their purchase. With interest rates rising, the cost of buying a car on finance is increasing and it is therefore essential that people intending to buy a new or used car shop around for the best deal before heading for the forecourt.”