Number of Brits planning to buy a car falls

The latest findings from the Sainsbury's Finance Car Buying Index, which tracks the number of people planning to purchase a car on a six-monthly basis, indicates that the number of people planning to buy a car is at its lowest level since the bank first launched the index in March 2003. The number of consumers intending to purchase a car is down by 2.94m on its peak in September 2006. The research indicates that 5.14 million people intend to buy a car during the period of September 2009 to February 2010, which is down by some 1.19 million (19%) on the 6.33 million people cited in the preceding six-month period.

The economic uncertainties witnessed during 2009 have also seen the expected spend on a new car drop to an all-time low, with the anticipated spend dropping to £39.0 billion, the first time the index has seen expected car buying spend fall below £40 billion. This also represents a £3.3 billion decrease on the previous March to August 2009 anticipated spend.

Despite the early success of the Government's car scrapping scheme, this latest Sainsbury's Finance Car Buying figures reveal that the number of people planning to purchase a brand new car in the next six months is down to just 1.1 million; a decrease of 21% on 12 months ago.

However, a decline in brand new car sales has prompted an increase in the value of second-hand car sales, which are growing in popularity as people look to save money, and Sainsbury's Finance anticipates that people looking to delay buying a car in the next six months will be tempted back once they find out how much they can achieve for their existing car when they look to trade up.

Steven Baillie, Head of Loans, Sainsbury's Finance said: "Our latest car buying index, which has been running now for seven years, reveals an all-time low 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 since launching the index, we see the anticipated spend on new cars over the next half-year drop to under £40 billion.

"However, we hope to see the number of people looking to buy a car start to increase again in six months time, the car industry is beginning to report a growing demand for second-hand cars in particular. This demand seems to in turn have led to an increase in the value of second-hand cars so many people could be pleasantly surprised at how much they might get for their current vehicle when they come to upgrade it for a newer version."

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 17.2% will be financed through personal loans, which equates to around £6.73 billion, up by half a billion on six months ago.

The bank's research shows that 3.68 million people will be looking to buy a second-hand car, is currently down by more than 600,000 on the previous six months' figure of 4.47 million. The 1.14 million people looking to buy a brand new car is also down on the previous half-year figure. Some 1.26 million people anticipate spending more than £10,000 on a car, while 467,000 say they plan to spend more than £21,000.

Looking at Britain as a whole, East Anglia is set to see the biggest rise in the number of people buying a car with an increase of 11 percentage points on the previous six months. The South East is the biggest spender on cars, with an anticipated £9.1 billion to be spent. The West Midlands reveals the most dramatic decrease in the number of people planning to buy a car, with a 13 percentage point decrease and an anticipated spend of just £3.4 billion, down by 63% on the previous six months.

Sainsbury's Finance is currently offering a personal loan rate of 7.9% APR Typical to Sainsbury's shoppers applying online with a Nectar card for loans of between £7,500 and £15,000. Customers taking out a Sainsbury's Loan can choose to make no repayments for the first three months, receive an instant decision and have their cheque delivered to their door within 24 hours.

For more information on Sainsbury's loans or its competitive car insurance, visit sainsburysbank.co.uk.