The shift in consumer demand in the British car market is quite prominent. In fact, that is the main reason why the UK’s new car market is under such intense pressure. Consumers are preferring second hand vehicles, instead of buying new ones.
What has caused this shift? What factors are influencing consumer demand towards such a major move?
If you have been looking for these and similar answers, here are all the facts and figures that will help you understand this shift in demand.
Increase in the number of used car buyers
The number of used cars purchased in June this year shows a 7% increase compared to the stats for the same month last year. This is further confirmed by the Finance and Leasing Association which is responsible for financing more than 85% of vehicles in the UK.
As far as financing for new cars is concerned, the drop was calculated at 8%. The change in percentage is quite significant, mainly because it alleviates concerns about motor finance credit.
Private lenders helping consumers finance the purchase of used cars is also troublesome for the Bank of England. The shift in the consumer behavior has caused the bank to rack up its debt. It could create a problem for consumers paying back their loans in the future.
Dealerships also offer car finance loans to buyers. The number of loans offered has increased at a rapid pace. They were calculated at £58 billion as of March this year.
Experts believe the trend will continue, while the market for new cars will stutter for the remaining year. On the other hand, the demand for used cars will surge as consumers will switch from buying new vehicles to pre-owned cars.
Next, if we look at the data provided by the FLA, we can see a dip in demand for new cars. Compared to the £1m spent on buying new cars through finance in 1 year, buyers invested £1.2m in purchasing used vehicles.
While the difference may not seem significant, if we factor in the price of new and used cars, we can easily determine that the number of used cars sold is much higher than that of new cars.
Other stats released by the Society of Motor Manufacturers and Traders show a 9.3% decline in the new car market in the UK in July. This makes it the fourth consecutive month where the demand has fallen.
The Society of Motor Manufacturers and Traders also revealed that a staggering number of used cars [4 million] have already been sold in the UK in the first half of this year. This percentage is expected to increase by 5% in the remaining months of 2018.
The shift has primarily occurred as a response to an excellent opportunity to own a car without burning a hole in the pocket. The decreasing prices of used cars in the UK is the number one reason why more and more consumers are closing deals on second hand vehicles instead of buying new ones.