Economic uncertainty has driven over a third of drivers (35%) – the equivalent of eight million Brits – to postpone or hold off buying a car altogether, according to a new report published today by Close Brothers Motor Finance.
Despite this economic uncertainty, the report found that 82% of current drivers are planning on purchasing a vehicle within the next three years; equating to almost 32 million new or used cars being sold in the UK by 2021.This is a significant increase on last year’s findings, when 71% of drivers planned to purchase a car in the next three years.
The Britain Under the Bonnet report looks at consumers’ attitudes and car buying behaviours – along with views from dealerships across the country – to give a comprehensive view of the UK’s motor industry in 2018.
It found that Brexit isn’t the only thing dampening consumer appetite – rising inflation (21%), the increasing cost of vehicles and fuel (32% and 29% respectively), and escalating vehicle taxes (27%) are other barriers to purchasing a car in 2018.
While there are clearly challenges for the motor industry, the report finds that the sector is optimistic about the year ahead. 95% of dealers across the country said they expect their business to grow in 2018, a huge increase from last year’s 63%. This is likely due to an anticipated rise in demand for used vehicles over the coming months, particularly as the report has found that 4 million (16%) will likely turn to the used car market, while 18% say they will be looking to buy a cheaper vehicle. 2017 saw the second highest number of used cars change hands in history , a trend that looks set to continue this year.
Rebecca McNeil, Chief Executive Officer at Close Brothers Motor Finance commented: “The motor industry is evolving, but it remains a stalwart of the British economy. Dealers and manufacturers are having to adjust to economic realities, but dealers are positive, because they see demand for cars persisting. Increased innovation and flexibility, as well as having the right cars on the forecourt will allow them to make the most of the trend towards used cars and maximise the business opportunities that continue to exist in this more competitive market.
Steve Jones, Director at Trade Sales South Wales commented: “Brexit hasn’t been a big factor, it’s business as usual. We just have to be smarter in the way we work. The biggest challenge is actually finding the right stock. Talking to other traders can help. It’s not just dealers travelling hundreds of miles for cars, customers are doing the same thing. People even come from abroad to purchase a car because they are cheaper.
“As a dealer, you just have to move with the times, be as versatile as you can and ensure you have different type of vehicles on the forecourt. Without the right stock and prices you won’t attract customers. The demand is there, but it is the supply which is the biggest issue.”
