Cash-strapped consumers reversing on car buying plans

Consumers are continuing to change their car buying plans because of the cost-of-living crisis according to the latest Forecourt Foresight research from Close Brothers Motor Finance.

Relentless economic stresses are still placing pressure on the finances for many car buyers who are having to alter plans and make cutbacks to save money.

The research, which asked dealers their views and attitudes towards consumer car buying behaviours, found that drivers are opting for older models to keep costs down. More than six-in-ten car dealers (62%) stated customers are looking to buy older vehicles in a bid to lower costs, and more than half of dealers (55%) agree that customers are buying smaller vehicles.

Almost three-in-five dealers (57%) have noticed customers are cutting back on the number of cars per household. However, those who are still planning to buy are sacrificing extras in order to minimise the cost, according to 57% of dealers.

Buyers also appear keen to reduce the initial financial outlay associated with buying a car. More than a third (36%) of dealers stated that buyers are more open to paying for a vehicle using finance, preferring to pay a monthly figure as opposed to a larger lump sum to buy a car outright.

Lisa Watson, director of sales at Close Brothers Motor Finance, added: “Given the well-documented pressures currently facing consumers, it’s no surprise that many are having to adapt their plans to ease the cost of buying and running vehicles. The recent ULEZ expansion in London and similar plans likely to follow in other regions, coupled with the push back of the ban on new diesel and petrol vehicles, will only add to uncertainty for buyers.

“The hope is that this will aid alternative fuel vehicles (AFV) adoption, as the additional five years should allow more used AFVs to enter the second-hand market, and prices should hopefully lower as a result; making AFV ownership a more realistic prospect for many.

“For the time being, dealers will need to use the tools and insights at their disposal to track changing trends and demand to make sure their forecourts are stocked to meet buyer needs.”

Increased financial strain, heightened buying costs and uncertainty surrounding proposed bans on internal combustion vehicles are all factors weighing heavily on consumers’ minds, which in turn is changing the way in which people purchase a vehicle. Less than two-in-five (38%) dealers reported that customers are buying a car in the same way they would’ve done 12 months ago.