The UK is a nation of car lovers; 71% of Brits own a car according to Google’s Car Purchasing Process UK report. Of this number, almost half were purchased within the past two years, meaning that Brits love an upgrade! The UK is a very tech-savvy nation, so it stands to reason that they always opt for the newer vehicles on the market. This is a trend which is reflected across several different sectors in the UK.
According to the same study, 48% of car owners will look to purchase a new vehicle in the next two years, with 38% opting for a used car. So, what do these buying habits mean for the UK auto industry and how are British car buying decisions influenced? We’re taking an in-depth look with the help of used Ford dealership Motorparks.
How are UK purchase decisions influenced?
Significant changes to lifestyle are reportedly the largest influencing factor when it comes to new car purchases. 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.
Decisions are also influenced by new car launches and special discounts. 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.
Believe it or not, most vehicles are purchased outright using personal savings. The 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.
Contract purchase agreements and hire purchase agreements are the clear frontrunners when it comes to financial 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?
There are numerous benefits to entering into a financial agreement for a new car purchase. 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. Whilst analysing the methods of buying a new car, the 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 is the British car industry performing?
The UK currently has a thriving car dealership industry. 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.
Advancements in tech also play a huge role in the search for 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.
It’s not just the car dealership industry that’s performing well in the UK – new electric vehicle registrations have also reached an all-time-high. 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.
How do you make your own purchase decisions? This discussion provides a lot of food for thought for both buyers and players in the industry.