How do Brits buy their cars?
The UK is a nation of tech lovers; whether it’s our phones, laptops, or vehicles, Brits love to stay up to date with the latest gadgets. It’s not surprising then that over 70% of the British population own their own vehicle, according to Google’s Car Purchasing Process UK Report. The report also found that almost half of all respondents planned to buy a new car within the next three years.
Of this number, 48% reported that they would buy a new car, with 37% opting for a used car. But why is this replacement cycle so short, and how do we fund our habits for frequent new vehicle purchases? We’re here with used Volvo Xc60 dealership Motorparks to find out…
1. The decision-making process
Business is booming for UK car dealerships in 2019. From independent dealers, comparison website and private sellers, to franchise and manufacturer dealerships, the car supermarket is populated with a whole host of channels trying to get car buyers to buy their vehicle through them. And the market is evolving. The dealership still appears to be at the heart of British car buying habits, with the average auto buyer visiting the dealership 2.1 times, and having 1.3 test drives before making their purchase. Over a third (36%) of those looking to buy a car online in the coming years would choose an independent site. Manufacturer websites are only just falling behind, with 33% choosing main manufacturers.
New technology is also a huge influencing factor when it comes to buying a new car. Car buyers are increasingly starting their research for their new car on digital platforms – which could be one of the reasons why independent websites have now become more popular than official manufacturer websites. When beginning the car buying process, 51% of buyers now start their research online, with 32% using their smartphones to aid a ‘Which car is the best?’ moment. Digital has transformed the way buyers do their research before purchasing, and in some cases, has completely transformed how they buy a car – with 54% of buyers considering buying online either now or in the future. However, as it stands, the majority of purchasing (96%) still happens in-store.
Figures show that the EV market is also performing well in the UK, with new registrations reaching record highs in 2018. The success across the market could be attributed to some of the latest developments in the industry meaning that some of the initial set backs are becoming less of an issue to drivers – and the news that the government plan to ban the sales of petrol and diesel vehicles by 2040. The success of the EV market in the UK can also be attributed to the development of related services; electricity suppliers such as Northern Powergrid have been working on EV charger installation across the country.
2. Outside influences
Changes to lifestyle are reportedly the number one influencing factor for Brits who decide to buy a new car. The report reveals 28% buy a new car because their financial situation had improved, 12% because they had a new job, 11% because of expanding their family, 7% because they moved into a new home and a further 5% because of health or age reasons.
That doesn’t mean to say that British people don’t buy a new car for practical reasons. In fact, the report also revealed that decisions have be heavily influenced by new offers, vehicle launches and desires. 41% choose to buy a new car because they ‘need one’, 35% because they just wanted a new vehicle, 24% due to wanting better fuel efficiency, 20% because they notice a good offer or promotion and a further 11% as a result of a brand-new vehicle launch.
The replacement cycle is pretty regular, with the average person buying a new car every two or three years. Google’s reports highlight that car owners who bought their new vehicle more than two years ago are the group most likely to purchase a replacement vehicle in the next six months (30%) or between seven and 11 months time, with the most likely factor to influence the decision being typical car warranties running out after three years.
3. Finance options
There are multiple finance options available for those looking to buy a new car. The majority of vehicles are purchased using personal savings – the Google ‘Car Purchasing Process UK’ report revealed that of those looking to purchase a car in the next few years, 59% said they would use their savings! Part exchange took second place, with 37% saying their part exchange would help fund their new vehicle. For many people, using the capital in their existing vehicle provides a sizable deposit for their next vehicle, deducting an amount from the value of the new vehicle.
The report found that contract purchase agreements and hire purchase agreements were the most popular finance options. 13% of buyers said they would think about HP and 10% said they would consider PCP. Lease Purchase and Contract Hire only account for 6% of the market each. So, what makes HP and PCP more attractive to car buyers?
Paying in stages is often the easiest way to afford a car. Finance agreements often make buying a car more affordable, with fixed monthly payments across an agreed period of time also coming with the option for people to purchase the vehicle at the end of the term by paying the remaining balance on the vehicle. For some car buyers, monthly payments are more achievable and affordable than paying for the vehicle outright with a cash purchase. Whilst analysing the methods of buying a new car, the Google ‘Car Purchasing Process UK’ report reveals further figures that prove the interest in finance options for car purchasing. Owners of new cars purchased in the last two years, as well as those planning to buy new in the coming three years, show strong interest in the use of PCP, PCH and lease purchase. Around a fifth (21%) of those who have bought new in the last two years would use PCP to pay for their next car, while 16% who plan to buy new in the next three years would use PCP.
How are your buying decisions influenced? This discussion provides a lot of food for thought for both buyers and players in the industry.