How do Britons buy their cars?

21/05/2018

A desire to save money is seeing many Britons buying cars second-hand or through lease agreements, causing new car sales to plummet – new registrations in the UK fell 15.7% year-on-year in March 2018. Our research partner, Canvas8 spoke to 20 drivers about their car ownership and how they'll buy next time.

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After hitting an all-time high in 2016 when 2.69 million new cars were registered, the British auto industry suffered a 15.7% year-on-year decline in new car sales in March 2018. [1][2] Technology is disrupting the market as people look online to find the cheapest finance and leasing offers, while Vauxhall is reportedly cutting its dealership presence by a third, citing their redundancy as thrifty consumers use the likes of Auto Trader and CarMax to get a better deal.[3] Indeed, research conducted by Canvas8 and Toluna found that only 40% of British drivers got their car brand new, compared to 48% who bought theirs second-hand, while others are choosing to rent or borrow from family members when they need to drive somewhere. [4]

Yet there’s more to the decline in new car sales than thriftiness alone; 21% of respondents to the Canvas8 survey said they don’t drive at all. [4] The proportion of young Britons on the road has been on the decline for the last 25 years, with a study commissioned by the Department of Transport suggesting that this ongoing trend is linked to lower paid and less secure jobs, increased higher education participation, and rising urbanisation, which makes owning a car less important for getting around. [5]

Among those who do drive, finding a good deal is essential in a climate of economic uncertainty. Just over a third (36%) of British drivers have financed or leased their car, highlighting how important it is to find competitive payment options and flexible agreements. [4Canvas8 spoke to 20 people from across the UK to understand how they approach car-buying and how they might go about the process in the future.

co-own a converted van with a friend, and it was purchased outright and second-hand via Auto Trader. New is too expensive – older vehicles are perfectly good and much cheaper. I got it outright because I was able to and would rather not be on a payment plan that is more expensive in the long-run. I don't think I would rent because of the nature of my work. I often need to move large equipment and so renting wouldn't work for me, and I need a car/van that is big enough. The van we currently own is also recreational, functioning as a camper van for trips outside of London. If I were to purchase another vehicle at some point, I would certainly look for something second-hand again. I may need to do this soon due to the incoming London diesel ban.
Luisa, 32, London

My current car has been passed down from family members – it used to be my mum's, but now me and my siblings share it. I would try and buy my next car outright as I know finance deals can often be expensive and you don’t own the car at the end. At least if I owned it, I could sell it for money if needed.
Oliver, 22, Watford

I bought my car second-hand via a local garage I've used for years, so was assured about its safety. I would probably do the same when buying my next car.
Lyn, 57, Nottingham

I bought my current car second-hand from my father's partner. I got a good deal so it was an attractive purchase. As it's a wasting asset, I will run it till it doesn’t go anymore. Providing we're not in a fully autonomous vehicle future, I would buy second-hand again when I need to replace my car in order to get the best bang for my buck.
Tom, 34, Manchester

My current car has been leased for three years with the option to buy outright or trade in for a new lease agreement at the end of the contract. I took advantage of the incredible deals on offer although I was in a position to buy a car outright. I still have two years left on the current agreement and I expect I will make my decision on what to do next when the time comes. My feelings right now are that I may keep the car or trade it in for a more eco-friendly electric model.
Joanne, 62, Hertford

My first car was given to me by my grandad and it was 15 years old. Now, I borrow my mum’s car; I only need it on the weekends, so can’t justify buying or leasing. I’d get a car if me or my partner worked farther away or were to start a family. We would almost certainly buy second-hand or lease, strictly due to the costs.
Anil, 27, Hayes

My second-hand car was bought outright from the brand’s showroom as it had the added protection of a guarantee and other attractive add-ons that we worked out during the purchase. I would very likely repeat this exercise for future car purchases. Although there are many different ways to buy a car now, the simple visit to a local car dealer and a chat with a salesperson is easy and effective.
Christine, 62, Maidstone

My wife and I just bought a new car in December. We've had cars before, mainly bought second-hand, because new was not financially feasible and they apparently lose a lot of value as soon as they come out of the dealer. But this time we decided to buy a new car. I guess that's what happens when you have kids – you want to invest in something more trustful and hopefully niggle-free. It's definitely more expensive, but you also invest in the long-term. The money upfront is the tough bit – it’s a big chunk depending what you buy – but we've been saving and knew what we could afford for the money we had put aside and what we were ready to pay monthly. Plus, car brands and dealerships nowadays offer loads of things to entice you to buy – like insurance, design upgrades, free services for up to three years, extended warranties – which were appealing for us.
Gerald, 42, Weston-super-Mare

Insights and opportunities
Attitudes towards car ownership are strongly influenced by people’s individual circumstances. As 37-year-old Londoner Ed notes: “I live in London and don’t really need a car as I can cycle or use public transport to get around.” Reliable public transport provides a faster and cheaper option for many urbanites (particularly those living in the capital), and new green infrastructure initiatives – such as the plan to replace a car park with a car-free park in York’s city centre – are responding to concerns about the environment and public health. [6] And as the government nudges people to use public transport in an effort to meet emission targets, with plans to ban the sale of all petrol and diesel cars and vans by 2040, a considerable shift in private transport is on the horizon. [7][8]

The thriftiness of the drivers Canvas8 spoke to suggests that many people are purchasing cars out of utility and no longer see a new one as a necessity. Indeed, some even see it as a luxury or long-term investment. “I absolutely love my car, so it feels like a small price to pay each month considering the convenience I get from it,” says 23-year-old Amy from Northwood, who finances her new car. “It meant that I was able to get a car that’s pretty much new and it doesn’t feel like too much of a sting.” One key advantage of a new car is that it allows people to express themselves by customising the interior and exterior features, which can provide a way for manufacturers to appeal to prospective buyers.

As the UK government sets out plans to shift away from petrol and diesel in the medium term, various brands are adapting to appeal to a more eco-conscious public. The Chevy Bolt, for instance, is designed to look and feel like its fossil-fuel counterparts. Speaking of her leased car, 62-year-old Joanne from Hertford says: “My feelings right now are that I may trade it in for a more eco-friendly electric model,” suggesting that people from all demographics are warming to more energy efficient technologies. Yet research carried out in 2016 found that 55% of Britons hadn’t considered purchasing an electric vehicle at all. [9] Environmental legislation coupled with new car-free city planning could change this, nudging consumers to redefine what car ownership means in a more economically thrifty and eco-friendly society.

There’s also an opportunity to redefine what ownership means in the future. Lusia, a 32-year-old Londoner, told us she co-owns a converted van with a friend, while 23-year-old Emma from Ruislip explained that she shares her mum’s car since “she doesn’t use it every day.” Care by Volvo allows people to subscribe to a new car like they would any other on-demand service, and Koolicar GO in France is using AR to make car-sharing even easier using mobile technology. As Zipcar now boasts more cars parked on London streets than there are Starbucks locations in the city, this model can both introduce people to eco-friendly options that they may later purchase and help lower-income individuals access convenient private transport. [10]

Our partners, Canvas8 carried out this research in collaboration with Toluna, surveying 3,300 people across the UK in April 2018. The original article can be seen here.

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