Car buyers say the cost of living crisis has changed their buying plans

With inflation at its highest level in 40 years fueling the 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 who are in the process of replacing their car revealed that 37% have decided to postpone their purchases due to the crisis.

Almost half have delayed placing orders by at least three months – and a quarter said they will wait until 2023 in the hope that pressure on finances will ease.

Impact of cost of living on buying a car: With inflation at its highest level in 40 years, adding fuel to the cost of living crisis, drivers are being forced to put off buying their car vehicle, according to a new report

The survey results were released days after UK inflation was confirmed to have risen to its highest level in 40 years.

The headline CPI rate rose to 9.4% in June from 9.1% the previous month.

To add to the pain for households, the Bank of England has hinted that it will raise interest rates by 0.5 percentage point to 1.75% next month to combat soaring prices.

The CPI rate is expected to climb to around 11% in the fall, when the cap on energy bills is expected to rise again.

Steve Huntingford, editor of What Car?, said it would have “serious” ramifications for the auto industry, with his research showing car shoppers are already planning to delay purchases for now.

“Rising inflation is impacting the automotive sector with serious consequences, he said.

“As our research shows, a significant portion of buyers are revising their budgets, postponing their vehicle purchases, and considering different makes and models than before to offset the rising cost of living.”

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The research also found that 40% of shoppers switched brands or models due to the cost of living crisis.

Almost three-quarters (72%) are now considering a completely different make and model, with most turning to more budget-friendly options.

The crisis is also affecting how much motorists are willing to spend, with more than a third (35%) of buyers saying What Car? they cut their budgets for their next car.

When asked how much they would cut spending, more than one in five (23%) said at least a fifth, while another quarter of the poll estimated they would spend between 10 and 15 % less than he originally expected. .

Some said the recent cut in the cost of living had affected their budget so much that they were now looking for a used car rather than a new one.

Some 21% said they switched to the second-hand market mainly due to the current financial crisis.

Auto Trader said the average used car last month was £17,252 compared to £12,798 in June 2019. As the rise in used values ​​stabilises, they are unlikely to start falling, did he declare.

Auto Trader said the average used car last month was £17,252 compared to £12,798 in June 2019. As the rise in used values ​​stabilises, they are unlikely to start falling, did he declare.

That said, these drivers are unlikely to be able to make significant savings by entering the used market, with used prices still £4,500 higher than pre-pandemic due to the decline in new vehicle manufacturing and a shortage of zero-mile engines.

Auto Trader recently told This is Money that the average used car price last month was £17,262 – down from £12,798 in June 2019 – and although values ​​are showing signs of stabilising, there is no has “no sign” of falling prices any time soon.

Which car? also polled those who had bought a car, with 401 respondents taking part and found that a fifth (21%) said the cost of living crisis had impacted their buying decision in some way. of another.

Lisa Watson, sales director at Close Brothers Motor Finance, said ongoing supply chain issues were causing more problems for the auto industry than last year’s lockdowns and it’s understandable buyers are looking to delay their purchases.

“It is completely understandable that buyers are unwilling to place orders for vehicles without any clear idea of ​​delivery dates, but it is disappointing that so many people have lost faith in what should be an exciting process of choosing a new car,” she said.

“The industry is working hard to improve lead times.

“Our research shows that dealerships should work with buyers to understand where trade-offs can be made to get more cars onto customers’ lanes as soon as possible.

“If the supply chain crisis weren’t enough, the industry is also starting to see the impact of cost of living pressures and record fuel costs.

“Potential buyers, who may already be discouraged by delivery delays, will think even more carefully about their purchases in the months ahead.”

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