With inflation at a 40-year high contributing to a cost-of-living crisis, car buyers are being forced to delay purchases, cut budgets and consider more affordable brands, according to a new report.
What car? a survey of 1,232 people in the process of replacing their cars found that 37 percent decided to postpone their purchases because of the crisis.
Almost half have delayed placing orders by at least three months, while a quarter said they would wait until 2023 in the hope that financial pressure would ease.
Cost-of-living impact on car purchases: Inflation at highest level in 40 years is contributing to cost-of-living crisis, new report says.
The survey results were released just days after it was confirmed that UK inflation had jumped to a 40-year high.
The core CPI rate rose to a staggering 9.4 percent in June, up from 9.1 percent the previous month.
Adding to the pain for households, the Bank of England has hinted that it will raise interest rates by another 0.5 percentage point to 1.75 percent next month to combat rising prices.
The CPI rate is forecast to soar to around 11 per cent in the autumn when the cap on electricity bills rises again.
Steve Huntingford, editor of What Car? magazine, said it would have “serious” implications for the car industry as research shows car buyers are already planning to hold off on their purchases for now.
“Rising inflation is affecting the automobile sector with serious consequences,” he said.
“As our research shows, a significant proportion of buyers are reassessing their budgets, delaying car purchases and considering other makes and models than before to offset the rising cost of living.”
The study also found that 40 percent of buyers have switched brands or models because of the cost-of-living crisis.
Almost three-quarters (72 percent) are now considering a completely different make and model, with most turning to more budget-friendly options.
The crisis also affects how much motorists are willing to spend: more than a third (35 percent) of buyers say What Car? they cut their budgets for the next car.
When asked how much they will reduce their spending, one in five (23 percent) said at least a fifth, while another quarter of those surveyed believe they will spend 10-15 percent less than they originally planned.
Some said the recent drop in the cost of living has hit their budget so hard that they’re now looking for a used car instead of a new one.
About 21 percent said they turned to the second-hand market primarily because of the ongoing financial crisis.
Auto Trader said the average price of a used car last month was £17,252, up from £12,798 in June 2019. Although the value of used cars is on the rise, they are unlikely to start falling.
However, these drivers are unlikely to make significant savings by entering the used car market as second-hand prices are still £4,500 higher than they were before the pandemic due to reduced new car production and a shortage of zero-mileage engines .
Auto Trader recently told This is Money that the average price of a used car last month was £17,262 – up from £12,798 in June 2019 – and while figures are showing signs of stabilising, there is “no sign” of prices falling any time soon.
What car? also surveyed car buyers of 401 respondents and found that a fifth (21 percent) said the cost-of-living crisis had influenced their buying decision in some way.
Lisa Watson, director of sales at Close Brothers Motor Finance, said the current supply chain issues were creating more challenges for the car industry than last year’s lockouts and it was clear buyers were looking to delay purchases.
“It’s understandable that buyers don’t want to place car orders without a firm idea of delivery dates, but it’s disappointing that so many have lost confidence in what should be an exciting new car selection process,” she said.
“The sector is working hard to improve turnaround times.
“Our research shows that dealers need to work with buyers to understand where trade-offs can be made to get more vehicles to customers’ driveways as quickly as possible.
“If the supply chain crisis wasn’t enough, the industry is also starting to see the impact of cost of living pressures and record high fuel costs.
“Potential buyers who may already be put off by shipping delays will be looking even more closely at their purchases in the coming months.”
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Car buyers say the lower cost of living has changed their buying plans
Source link Car buyers say the lower cost of living has changed their buying plans