Car buyers becoming savvier shoppers

It's quality not quantity that counts for car buyers, according to the latest Car Purchase Index (CPI) by AA Personal Loans. While the average value of a car loan has remained largely unchanged since March 2008, consumers are now two thirds (62%) more likely to spend their hard earned money on a second hand or ex-demonstration model rather than a brand new model.

Despite the current economic climate, the CPI shows that the average expenditure of a car buyer has remained the same, with more than half of respondents (52%) saying they intend to purchase a ‘new second hand' vehicle costing between £5,000 and £9,999.

And with new car sales having fallen by as much as 31%, consumers are turning to the used car market knowing they have more flexibility when negotiating for a better deal. Furthermore, recent figures from the second hand car market indicate that with some vehicles depreciating by as much 31%, car buyers can now buy a better class of vehicle for the same amount of money than they could have a year ago.

The findings correlate with what many second hand car dealerships are experiencing across the country.

James Baggot, editor of Car Dealer magazine, said: "It's been a turbulent year for the used car dealerships: not only has the industry had to deal with consumers changing their spending habits because of the credit crunch, it's also had to compete with massive variation in fuel prices. All this has led to a shift in what car buyers look for in a second hand vehicle, such as better economy, better comfort and better performance, but crucially they're now looking to get more for their money than ever before.
"While sales are still strong at dealerships across the country, many forecourt salesman are selling cars that would be worth £24,700 two years ago, for just £17,525 today. That's a saving of over £7000."

Mark Huggins, Head of AA Personal Loans, comments: "The credit crunch has turned into a recession which means consumers are now looking to get even more value for money than before. As a result, second hand car dealerships across the country are finding themselves having to offer higher value vehicles at lower prices to make a sale, with savings of almost a third on certain models.

"Comparing information from the Car Purchase Index and industry figures on depreciation, it's clear to see that while the purse strings may be drawn a little bit tighter, this could actually be one of the best times to buy a car. Now is the time to spend the pennies if you want to get the car of your dreams."

"AA Personal Loans has established a strong reputation for providing car loans with competitive interest rates. As part of the AA we have an excellent understanding of what consumers are looking for from their vehicles and coupled with our knowledge of the financial industry we are well placed to give the best possible advice for people looking to get a car loan."

The AA Personal Loans Car Purchase Index (CPI) is a bi-annual report focussing on car buying trends and consumer decisions. Using a sample size of around 8,000 people on the AA/Populus panel, the CPI is the biggest car buying trend tracker in the motor industry.

With the car industry suffering significant falls in new car sales, particularly at the luxury end of the market, the CPI is an important monitor of significant changes in future consumer car buying decisions.

To find out more about AA Personal Loans visit theAA.com/loans