Economic uncertainty from COVID and Brexit delays car buying plans

More than a third (38%) of drivers have delayed their car buying plans as a result of economic uncertainty caused by COVID-19 and Brexit, a report by Close Brothers Motor Finance has found.

Close Brothers' annual Britain Under the Bonnet report revealed that the number of people delaying their buying plans due to economic uncertainty has almost doubled in a year (from 22% to 38%).

However, COVID-19 has accelerated car demand for 12% of drivers, including a quarter (25%) of 17-24-year olds who plan to buy a car sooner than they’d planned.

The report also suggests that 14% of drivers are more likely to buy a used car, and 12% will go for a cheaper car. 8% of drivers are more likely to buy using finance, while the same number is less likely to do so.

The report shows that age is a differentiating factor when it comes to car ownership, with 10% of those aged 17-24, and 15% of those aged 25-34, stating that economic uncertainty has not impacted the way they think about buying a car – this figure increases to 45% of drivers aged over 55.

AM spoke to four senior directors in the sector – Daksh Gupta, chief executive at Marshall Motor Group; Paul Hendy, CEO of Hendy Group; Nathan Tomlinson, dealer principal at Devonshire Motors; and Graeme Potts, CEO at Eden Motor Group – to understand some of the positive outcomes the three coronavirus lockdowns have inspired.

According to Close Brothers' research, 29% said their decisions are unaffected by the pandemic, while over a third (37%) of drivers said they are going to drive more this year - led by 65% of 17-24-year olds and 52% of 25-34s.

The report suggests the main reasons for this are a reticence to use public transport (20%), working from home meaning more driving in the day (10%), and looking after vulnerable relatives (9%). 3% of all drivers expect to drive more as they’ve taken up a job as a delivery driver, including one in ten (10%) drivers aged 17-24.

Seán Kemple, managing director of Close Brothers Motor Finance, said: “2020 was set to be a year of recovery for the UK’s motor industry, but instead COVID-19 brought, as with so with many other sectors, unparalleled challenges.

“We will recover, and we must seize the opportunity to ‘build back better’. Many trends in our sector have been accelerated, and we’ll start to see the real impact of the speed of change as we move through this year."

“Some customers will be relatively unchanged in their car-buying and usership habits this year, but others will have made drastic changes to their lives and their plans for the future.

“More customers than before are likely to be classed as vulnerable, having lost their jobs, seen a fall in their disposable income, or experienced health problems.

“This means the sales process will need to be more personalised, and more considered – and dealers might need more hands-on support from their finance partner to ensure the sale is in the best interests of them and their customers.”