Most motorists using savings to purchase cars more expensive than initially planned

25/02/2015

SPA Future Thinking, the business intelligence research consultancy, has today revealed further findings of Automotive Trends 2015 (pdf), an independent study of the UK automotive sector. The survey monitors the sentiments of over 1,200 consumers that either own (56%) or are intending to purchase (44%) a car.

The report, conducted in the fourth quarter of 2014, revealed that the most popular method motorists use to finance the purchase of a new car is through savings (40%), and 34% who may look to purchase a car would also take advantage of the opportunity of low finance deals. More than half (51%) plan to spend, or have spent, up to £10,000 on the purchase of their car (either new or used).  The average price spent on a new car was £20,528, whilst those purchasing a used car spent an average of £8,125. For those acquiring a new company car where they were able to select the model, expenditure was higher at £26,413.

The survey revealed that once buyers of new cars become committed to the purchasing process, their actual spend is over £5,000 more than what they expected. As a result, buyers will have to dig deeper into their savings or commit to additional financing schemes in order to get the car they want. On a positive note, 26% of those who had purchased a car took advantage of the availability of low interest rates, indicating that car repayments have become more affordable as repayment rates have declined over the last four years.

Average expect to spend on a new car in the next six months (new & used buyers)

£10,909

Average spend on car in the last six months (new & used buyers)

£16,778

 

Whilst the consideration process can frequently be as long as 12 months, once the need for a new vehicle is identified , 70% of private new buyers purchased their car within three months of actually deciding to buy that model, illustrating an extended purchase funnel throughout which manufacturers should seek to communicate.

Having a physical presence through dealerships is clearly important for motoring companies: the majority of motorists use manufacturer-franchised dealers to research their car purchase. A third (30%) of motorists will visit dealerships as soon as they have decided to purchase a car, whilst 20% of used car purchases will be through a franchised dealer (new or used vehicle). By contrast, 17% opted for a local independent car dealer.

Richard Barton, Group Managing Director of SPA Future Thinking, comments:

“The unprecedented interest rate environment is having a dramatic impact on UK car sales, helping consumers buy more expensive models than they think they can afford. The extended purchase process that car buyers go through offers all manufacturers multiple opportunities to communicate, increasingly through digital.

“Understanding the impact of digital on purchase process and spending trends of consumers is an essential marketing exercise for all B2C organisations, particularly in the automotive industry.

“Through robust, accurate market intelligence, businesses can implement a more effective, and cost-efficient marketing strategy to target new and existing customers. Advertising products becomes a lot easier when a company knows their audiences, the consumers path to purchase as well as the effectiveness of advertising campaign.”

For more information about the findings of the Automotive Trends 2015 report, please contact [Richard Barton richard.barton@spafuturethinking.com on+44 (0)20 7843 9777]

To download the report in full, visit the website

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