Buyers changing cars like phones 23 | 08 | 2016
NEW CAR BUYERS are changing their cars more regularly than they upgrade their mobile phones. Boosted by the growing popularity of PCP finance deals, buyers are changing cars faster than ever before, according to new data from automotive valuation firm Cap Hpi
Some car manufacturers are reporting average returns of vehicles of 24 months along with a growing number of 18-month leases, while finance deals are predicted to be used more regularly on the used car market.
“What we are seeing is the ‘iphonification’ of the car industry as consumers increasingly pay to drive rather than pay to own their vehicles,” Philip Nothard, retail and consumer specialist at Cap Hpi, said.
“It’s the same model as the mobile phone industry where people are comfortable paying a monthly fee, only they are now doing this with their vehicles as well as their mobiles.”
A few years ago having a car for five years or longer was not uncommon, but now, according to Nothard, younger buyers are driving the shifting trend.
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“Not so long ago it was fairly common for motorists to have their cars for a minimum of five years or longer, but that has now changed dramatically and dropped to just two years for millions of motorists,” Nothard explained.
“After buying a house, the car was usually the biggest outlay for most consumers but now they are far more likely to change their car more often than their mattress.
“Consumer demand remains strong in the used car market and there are lots of used bargains waiting to be snapped up.
“As PCP becomes more popular and accessible in the used market, motor dealers expect its use to double in the future so we’re going to see people changing their cars with increasing regularity.”
Behind the reduction in the ‘ownership’ period is the growth of both personal contract purchase (PCP) and other finance options.
Personal Contract Hire (PCH) is also on the increase, as consumers increasingly look towards usership rather than ownership. According to Cap Hpi, around 80% of new car sales are now on finance.
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Jim McGill