Consumers switching cars more often thanks to financing deals
People are changing their cars more often, thanks to the growing popularity of personal contract purchase (PCP), personal contract hire (PCH) and other finance options.
Automotive industry experts cap hpi said last week that UK consumers now change their car more often than they change their mobile phone or mattress.
Philip Nothard, retail and consumer specialist at cap hpi, explained: "What we are seeing is the 'iphonification' of the car industry as consumers increasingly pay to drive rather than pay to own their vehicles. It's the same model as the mobile phone industry where people are comfortable paying a monthly fee -- only they are now doing this with their vehicles as well as their mobiles."
Data produced by cap hpi reveals that some car manufacturers now see average returns of vehicles in 24 months, and there is evidence of a growing number of 18-month leases in the market. Car manufacturers are managing volumes in the used market by varying contract lengths by model and remarketing channels.
According to cap hpi, around 80% of new car sales are on finance and similar purchasing options are becoming more common in the used car market.
Nothard said: "Not so long ago it was fairly common for motorists to have their cars for a minimum of five years or longer but that has now changed dramatically and dropped to just two years for millions of motorists. After buying a house, the car was usually the biggest outlay for most consumers but now they are far more likely to change their car more often than their mattress.
"Consumer demand remains strong in the used car market and there are lots of used bargains waiting to be snapped up. As PCP becomes more popular and accessible in the used market, motor dealers expect its use to double in the future so we're going to see people changing their cars with increasing regularity."