AA Car Purchase Index

More cars being bought – but buyers spending less

19 January 2010

Drivers seem to be a little more confident about car buying during 2010 than a year ago, but are planning to spend less, according to the latest Car Purchase Index (CPI) published by AA financial Services.

A fifth (20%) of 13,489 respondents in the AA/Populus study of AA members say they expect to change their car over the coming year, compared with 18 per cent a year ago. And, in an encouraging message for manufacturers, just over a fifth (21%) say their next car will be brand new regardless of when they buy it, up 3 per cent over the past year.

Mark Huggins, director of AA financial Services says: "This suggests that metal is moving off forecourts and the slow recovery should gather momentum.

"I have no doubt that the extension of the car scrappage scheme, initially to the end of February and now to the end of March 2010 is helping – but car sales could slow down again when the scheme ends.

"In fact, the CPI found that over a quarter of those with a car aged 10 years or more could take advantage of the scheme: 22 per cent saying they are thinking about it and 4 per cent definitely planning to. A further 4 per cent said they have already bought a new car through the scheme."

Buyers spending less

However, despite more people saying they are going to buy a car, they expect to spend less on their new one.

Although the most popular price-band in the CPI is still £5,000-£10,000, with 32 per cent saying they will spend this much, this is a fall of 3 per cent compared to last year. More people are planning to spend under £5,000 (23% compared with 19% last year).

Young drivers seem to be most financially stretched with four times as many this year (12%) saying they will spend less than £1,000 on a car compared to last year (3%).

At the opposite end of the age scale, a quarter (24%) of those aged 65 and over will spend between £10,000 and £15,000 on a car compared with 18 per cent overall. But even this represents an 11 per cent fall compared with a year ago, when 35 per cent said they would spend this much.

Savings spent on cars

The most popular way of paying for a car is still to use savings, with two-fifths (41%) saying they'll do so compared with almost half last year (49%).

Fewer people also say they will take out a loan, 16 per cent compared with 20 per cent a year ago.

But more than twice as many people say they can use ready cash to buy a car (14%) as last year (7%). This is particularly marked among those aged 65 and over: 20 per cent against 8 per cent last year.

"This suggests that many people are able to use funds such as redundancy payments or pension lump sums to help them buy a new car," Huggins says.

'Green' slips down the agenda

Concern about the environment appears to be having a decreasing influence on car choice with only 15 per cent overall saying they would choose a car because it offers green credentials.

"This is 2 per cent less than a year ago," says Huggins. "Then, women seemed to drive the green agenda with a fifth (21%) being prepared to express their environmental concern through their car choice. Now that figure is just 14 per cent.

"The greatest motivation for replacing a car is that the existing one is too old," Huggins points out. "Nearly half (46%) gave this reason – more than twice as many as a year ago (22%).

A year ago, buying a car that's cheaper to run was the principal reason for a change at 45 per cent, compared with a third (32%) now, suggesting many people have been hanging on to their motors until they have greater financial certainty.

"It could be that we will see the used car market being flooded with older cars over the coming year."

Diesel vs. Petrol

Diesels, generally more economical than petrol-engined cars, are gradually becoming more popular with 43% saying that's the type of car they will be opting for, compared to 37% last year.

"But what's interesting is that women are less likely to choose diesel," says Huggins. "In fact, 49% prefer petrol, just 3% less than last year. Hybrids (3%) and electric (less than 1%) are barely making a mark in peoples' preferences."

The AA financial Services Car Purchase Index is the most comprehensive study of its kind and looks at car buying intentions, rather than what has been sold. It is the most accurate barometer of car sales and is carried out every six months.


AA/Populus questioned 13,489 AA members online between 2nd and 16th October 2009.

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11 January 2010