One in five motorists downsize leading to millions in savings

Almost one in five drivers (19%) has downsized or sold one of their cars since the onset of the credit crunch, in a bid to save money, according to research from car insurer LV=.

The main reason given by motorists for downsizing their vehicle over the last eighteen months was to save money on fuel (61%). Nearly a third (29%) said they did it to reduce insurance premiums and the same number said they wanted to cut the cost of road tax (29%).

On average, those one in five drivers who have downsized their car estimate they have already saved an average of £309.

Despite the emphasis from the Government on ‘greener' driving, only one in six (15%) of those who had downsized cited environmental concerns as part of their decision.

With more UK motorists downsizing, or buying second hand instead of new cars, the effect on new car sales has been catastrophic. Sales of new cars have fallen by a third over the last year, with 600 fewer vehicles a week being registered in November 2008 compared with 12 months before. As a result, car production has slumped by a third over the last year and the Government is now considering extending state aid to the troubled motor industry.

Almost a quarter (23%) of respondents to the LV= survey said they would consider buying a second hand car to reduce their insurance premiums. LV= analysts recommend taking the following additional points into consideration when buying a second hand car, to help reduce insurance costs:

Look for a common make of car; they are generally cheaper to repair if you are involved in an accident.

Buy a car with a smaller engine, as generally that will mean cheaper insurance.

Don't buy a vehicle that has had the engine or bodywork modified, as that could cost more to insure.

Don't buy an imported vehicle as they can cost more to insure.

Also, to ensure you have the best value insurance, take the following steps:

Shop around for insurance and don't just renew with your existing provider - the market is very competitive and you could make big savings.

If you keep your car garaged at night, tell your insurer as this could reduce your premium.

If your annual mileage is low, tell your insurer as this could mean a cheaper premium.

Make sure you have the right class of cover and are not paying for business or commuting use if you do not use your car for work.

John O'Roarke, Managing Director of LV= Car Insurance, said: "Buying a car is often the second biggest purchase people make after their house. So it's only natural that in the current economic downturn, when people are being more careful with their money, they also look to save on their motoring costs.

"This is undoubtedly a smart move, as the credit crunch looks set to bite deeper. By following the guidelines above, motorists downsizing should be able make significant savings every year without having to consider getting rid of their car altogether."