Is economic uncertainty deterring car buyers?
‘Britain Under the Bonnet’ report reveals that up to eight million people may be putting off their next vehicle purchase
Over a third (35%) of UK drivers, some eight million people, are likely to postpone or avoid purchasing a car altogether in the short-term due to economic uncertainty. That’s according to a recent survey published by Close Brothers Motor Finance.
The ‘Britain Under the Bonnet’ report, which examined consumer attitudes and vehicle purchase intentions, also revealed that more than four fifths (82%) were planning to buy a new car within the next three years. In terms of volume, this is more positive news for motor retailers in the longer term, as it represents almost 32 million new or used cars being sold in the UK by 2021.
Alongside uncertainty over what Brexit will mean on a political and economic level, the report also found that rising inflation (cited by 21% of respondents), the increasing cost of fuel and vehicles (32% and 29% respectively) and escalating vehicle taxes (27%) were further barriers to purchase. Registration data from the SMMT underscores this with figures for the first six months of the year recording a reduction in the overall demand for new cars of minus 6.3% to 1,313,994 units compared to last year.
Although Brexit-related concerns are impacting consumer confidence, in terms of the wider perspective, it is arguable that the downtick in new car sales is not solely attributable to the decision to leave the EU. The motor industry is also in a period of fundamental change through the shift to electrification, the emergence of autonomous driving technology, online vehicle purchasing and new ‘car on demand’ usage models. Furthermore, confusion about diesel and subsequent increased Vehicle Excise Duty for non Euro VI compliant vehicles has also had a negative impact on sales of diesel cars.
Growth in the used car market also provides dealers with the chance to further capitalise on this opportunity by securing incremental revenue from every pre-owned vehicle sold through add-on products such as LifeShine.
The report also showed that sales of used cars are at a historically high level. A survey of 200 retailers found that 95% of dealers expected their business to grow this year. This represents a considerable increase in positive sentiment from 2017, where just 63% of dealers anticipated growth. This optimism reflects retailers anticipating continuing growth in demand for used vehicles with the report highlighting the switch from new to used, where 16% of consumers said they would opt for pre-owned, while 18% said they were seeking to purchase a cheaper car.
Set against this backdrop, it is clear that the motor industry continues to make a significant contribution to the UK’s economy despite the current uncertainty and reduction in new car sales. As with all retailers, car dealers are also faced with the challenge of addressing rapidly changing consumer buying habits. These include people shifting away from dealers to online resources for researching their car purchase and funding their vehicles with leasing or rental-based motor finance products. Importantly, the Britain Under the Bonnet report found that consumers still viewed motor retailers as a valuable resource prior to purchasing their vehicle.
Rebecca McNeil, Chief Executive of Close Brothers Motor Finance commented in the report: “The motor industry is evolving, but it remains a stalwart of the British economy. Dealers and manufacturers are having to adjust to economic realities but dealers are positive because they see demand for cars persisting. Increased innovation and flexibility, as well as having the right cars on the forecourt will allow them to make the most of the trend towards used cars and maximise the business opportunities that continue to exist in this competitive market.”
Growth in the used car market also provides dealers with the chance to further capitalise on this opportunity by securing incremental revenue from every pre-owned vehicle sold through add-on products such as Autoglym’s market-leading LifeShine vehicle protection system (VPS). LifeShine’s paint protection formulation now features colour enhancement properties to provide superior depth of colour, helping to return even pre-owned cars closer to their former ‘as new’ paint finish. Tests carried out with four competitor products showed that the improved LifeShine product had a superior depth of colour difference of up to 31%.
To find out more about how LifeShine can benefit your business, call 01462 677766 or email firstname.lastname@example.org.
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