The country’s new car buyers are increasingly using the internet to research the cars they are interested in before heading to the nearest dealership to buy the vehicle of their choice.
According to research, the internet is playing a greater role in influencing the new car buying decision than ever before. And it has undoubtedly played a key part in helping new car sales reach their highest levels since the credit crisis of 2007.
Sales at the end of last year finished 10% up on the back of many consecutive months of rising sales. By the end of April this year, they had risen for 38 months in a row with record registrations of new cars for that month of 185,778 – the best April performance since 2005.
So far this year, to the end of April, new car registrations are up 6.4% to 920,366, as the new car market juggernaut shows no sign of slowing down.
What’s driving sales to record levels?
Undoubtedly, one of the biggest single factors behind the increase is the availability of low cost new car finance. According to research, the internet is playing a greater role in influencing the new car buying decision than ever before. And it has undoubtedly played a key part in helping new car sales reach their highest levels since the credit crisis of 2007.
Four in five new car purchases are now made on credit, according to the Society of Motor Manufacturers and Traders, with many customers acquiring a new car through personal contract purchase (PCP) plans, which account for 70% of all new car finance deals.
Under this method, the buyer puts down a deposit, pays a monthly figure, for a set period, typically two or three years, and at the end of the term hands the car back to the dealer or buys it for a pre-agreed price.
According to the Finance and Leasing Association, which represents companies offering car finance, there were some 908,875 new cars bought on finance in the 12 months to March 31, at a value of £14.461bn. Meanwhile, the percentage of private new car sales financed through dealerships by FLA members reached a new high of 76.8% during the same 12-month period.
And new car finance sales continue apace this year. In March alone, there were more than 167,000 new cars acquired on finance worth £2.737bn, up 10% on the same month last year.In the first three months of this year, finance deals were recorded for 262,355 new cars worth £4.2bn, a rise of 6% over the same period last year.
This has been further bolstered by the significant number of people who held off for an extended period from replacing their car due to the uncertain economic or political circumstances, who are now more willing or able to act.
What role does the internet play?
Over the past two or three years the number of consumers that shop online has – driven by the rise of the internet and other major technological innovations such as smart phones – increased dramatically.
By 2020, analysts forecast that online transactions could reach 450 billion per day. Although e-commerce initially centred around lower end products, such as books and clothes, there is an increasing trend that online shopping is rapidly winning ground in more high-priced markets, such as new cars.
The latest research suggests that nearly half of the current generation is likely to buy their car online. Today’s connected generation views online as the primary channel for communication and is highly connected with other people and brands.
As a result of this internet connectivity and the continuous access to accurate information, car consumers are confident about what they want and how to purchase their next car. They feel secure in using the latest technology to increase their power as car shoppers.
Given this background, consumers are highly willing and increasingly likely to purchase a car online. A recent survey amongst more than 10,000 consumers across 10 countries showed that 97% used the internet for research, and that 44% of those that had actually purchased a car over the past year had done so online.
The survey also showed that this number was even higher for young consumers and shoppers in growth markets.
What are buyers looking for?
Key motivations to purchase cars online include a better price, and more information and knowledge.
When searching for a car online, consumers can access the necessary information anytime and anywhere they want. Not only can potential buyers find the specifics of a certain car, they can find satisfaction levels of existing drivers and dealer reputations, often from rankings through other websites or via social media.
Moreover, an increasing number of consumers trust user-generated content and feedback from their peers, and are themselves eager to share their opinions and experiences online.
For new car dealers, this thirst for knowledge offers them the opportunity to enhance customer relationships through better communication and information, or even create completely new customer contact points through innovative online approaches.
From a cost view, the digitisation of operations allows car dealers to boost their efficiency and, at the same time, improve the performance of key metrics as lead generation, average acquisition costs and service quality.
The connected generation has arrived – it is now up to new car dealers as to how they best capitalise on this technological phenomenon.
If you would like to find out more about the new car finance deals currently available, then please get in touch.