Spend on new cars set to increase

The latest findings from the Sainsbury’s Bank Car Buying Index indicates an increase in the number of people planning to buy a car and an increase in their expected spend on any car purchase.

The research indicates that 7.85 million people intend to buy a car between September 2007 and February 2008, an increase of 200,000 people on the preceding six-month period. The index also reveals that £58.6 billion will be spent on purchasing cars over the next half-year, representing a £5.4 billion increase on the previous March 2007 to August 2007 figures.

Steven Baillie, Head of Loans, Sainsbury’s Bank said: “It’s interesting to see that the significant drop in the numbers looking to purchase cars witnessed back in March appears to have been a short-term dip, with our recent findings revealing an increase in people looking to purchase a car over the next half-year. The amount people are willing to spend on their car purchase is also up by an average of £500 on six months ago.

"Although there would appear to have been some recovery in consumer confidence, the most recent index still represents a decrease of over £10 billion in total spend on new cars compared with the same period a year ago."

The latest index also indicates that almost one in three (31%) people who intend to buy a vehicle over the next six months will finance at least some of their purchase through a loan. The findings suggest that of the total amount of money that will be spent on buying vehicles, around 18.5% will be financed through personal loans, which equates to around £10.8 billion, up by some £2.4 billion on six months ago.

Steve Baillie continued: “The total amount planned to be taken out in loans for car purchases is up by 28% when compared with the previous six months, which means that motorists must make sure that they shop around for a competitive rate as they could potentially save hundreds or even thousands of pounds in repayments. Our typical APR is currently 6.5%, one of the lowest around.”

The bank’s research shows that 5.35 million people will be looking to buy a second-hand car, slightly down on the previous six months’ figure of 5.48 million, whilst 2.11 million people are planning to buy a brand new one. Over 2.2 million anticipate spending more than £10,000 on a car, while 670,000 say they plan to spend more than £21,000.

Looking at Britain as a whole, the North West is set to see the biggest rise in the number of people buying a car with an increase of seven percentage points on the previous six months. The South East continues to be the biggest spenders on new cars, with an anticipated £13 billion to be spent; this figure represents an increase of £2.5 billion on the previous half-year figure. This is followed by North West and Greater London, where people are expected to spend £8.7 billion and £8.5 billion respectively. Yorkshire/Humberside and the East Midlands see the biggest fall in the number of people planning to buy a car with a five percentage point decrease in both regions.

Sainsbury’s Bank, has cut its loan rates for any telephone and online applications of £7,500 or more (up to £25,000) to 6.5% APR typical. This is affective immediately and includes the offer of 5,000 nectar points. For more information on Sainsbury’s loans, its unique car purchasing scheme (Drive), or its competitive car insurance log on to sainsburysbank.co.uk.