Number of people planning to buy a car drops to four-year low

The number of people planning to buy a car is at its lowest level since 2005 with the number of consumers intending to purchase a car down by 1.75m on its peak in September 2006, according to the latest findings from the Sainsbury's Finance Car Buying Index.

The research indicates that 6.33 million people intend to buy a car during the period of March 2009 to August 2009, which is down by over half a million on the 6.85 million people cited in the preceding six-month period.

As consumers face up to increasing economic uncertainties in 2009 the index reveals that the expected spend on a new car is also dramatically down, with £42.3 billion to be spent on purchasing cars over the next half-year, representing a significant £7.3 billion decrease on the previous September 2008 to February 2009 anticipated spend.

However the slump in the car market does not spell bad news for those consumers who are looking to purchase a new or second hand car over the next six months. Cars have never been such great value and all buyers should be able to negotiate some great bargains on their next car, with some new cars being sold at less than half the list price.

Steven Baillie, Head of Loans, Sainsbury's Finance said: "Our latest car buying index, which has been running now for six years, sees a real dip in both the number of people who intend to buy a car and also in the amount of money they are intending to spend. For the first time in four years, we see the anticipated spend on new cars over the next half-year drop to a low of under £43 billion, representing a 39% decrease on the period for September 2006 to March 2009."

The latest index indicates that one in four (24%) of 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 14.7% will be financed through personal loans, which equates to around £6.20 billion, down by some £2.94 billion on six months ago.

The bank's research shows that 4.47 million people will be looking to buy a second-hand car, down by more than 600,000 on the previous six months' figure of 5.10 million. The 1.33 million people looking to buy a brand new car is also down on the previous half-year figure. Some 1.42 million people anticipate spending more than £10,000 on a car, while 327,000 say they plan to spend more than £21,000.

Looking at Britain as a whole, the West Midlands is set to see the biggest increase in the number of people buying a car with an increase of eight percentage points on the previous six months. The West Midlands has also overtaken the South East as the biggest spender on cars, with an anticipated £9.3 billion to be spent; albeit that is down by £1.5 billion on the South East's previous half-year figure. East Anglia reveals the most dramatic decrease in the number of people planning to buy a car, each seeing a significant 26 percentage point decrease and an anticipated spend of just £116 million.