Car Market - Into and Out of Recession - UK
The Car Buyer – New or Second-hand?
Key points
●
Potential demand
for second-hand cars far outweighs potential demand for new cars and demand for
used is still skewed to 15-34 C1C2DEs while demand for new is still skewed
towards over-45 ABs.
●
Although the use of
a mortgage specifically for the purpose of buying a car is rarely admitted by
consumers, the availability of surplus funds following the remortgaging of a
property appears to be a major determinant influencing new car purchases.
●
Potential used car
buyers are more likely to be renting property or living at home with parents
and so the decline in the UK housing market in terms of property values and
housing transactions is less likely to be an influence on demand for used cars
than new.
●
Owning property
outright, as a high proportion of potential new car buyers tend to do, means
that new car buyers with homes paid for are unconstrained by mortgages from
buying a new car and are ideal prospects for point-of-sale motor finance.
●
The majority of intended
car purchases are for a replacement vehicle, particularly among older and more
affluent groups, which implies the purchase of a new rather than second-hand
car.
●
Purchasers of a
first car are the youngest and least affluent, indicating that the bulk of
these will be purchases of second-hand cars.
Property ownership – a major influence on new car
demand
●
Used
car buyers form the largest proportion of those intending to buy a car and used
car buyers are more likely to be the younger and less affluent groups aged
15-34 and in C1C2DE groups with incomes under £29,999.
●
While
some used car buyers might be buying their own home, they are more likely to
rent property or are still living at home and still single.
●
New
car buyers, by comparison, are more likely to be older, affluent, over-45s and
in the AB socio-economic group. They are also more likely to be separated,
divorced or widowed without any children living at home and have an income of
above £30,000.
●
New
car buyers are more likely to either own their home outright or be in the
process of buying their own home. Property status and the absence of a mortgage
or only a relatively small one are therefore likely to be a significant factor
influencing the decision as to whether or not to buy a new car.
FIGURE 21: Type of car intend to buy, by demographic
sub-group, 2008
Base: adults aged
17+ who intend to buy a car in the next 12 months
|
|
New
|
Second-hand
|
Don't know yet
|
|
|
%
|
%
|
%
|
|
|
|
|
|
|
All
|
20.2
|
56.2
|
19.2
|
|
|
|
|
|
|
Gender:
|
|
|
|
|
Male
|
20.5
|
56.7
|
18.5
|
|
Female
|
19.8
|
55.7
|
20.1
|
|
|
|
|
|
|
Age group:
|
|
|
|
|
17-24
|
8.2
|
61.2
|
28.6
|
|
25-34
|
8.9
|
62.9
|
22.5
|
|
35-44
|
21.5
|
57.9
|
17.4
|
|
45-54
|
24.6
|
57.2
|
14.2
|
|
55-64
|
33.1
|
48.4
|
13.7
|
|
65+
|
39.4
|
37.3
|
13.8
|
|
|
|
|
|
|
Socio-economic group:
|
|
|
|
|
AB
|
28.0
|
51.8
|
17.5
|
|
C1
|
18.4
|
58.2
|
19.2
|
|
C2
|
14.1
|
58.4
|
21.2
|
|
D
|
13.2
|
58.3
|
23.4
|
|
E
|
22.0
|
59.4
|
11.0
|
|
|
|
|
|
|
Marital status:
|
|
|
|
|
Single
|
10.3
|
62.3
|
23.4
|
|
Married/civil
partnership/living as a couple
|
22.9
|
54.9
|
18.1
|
|
Separated/divorced/widowed
|
27.0
|
49.8
|
15.7
|
|
|
|
|
|
|
Children in household:
|
|
|
|
|
Yes
|
17.5
|
58.3
|
20.1
|
|
No
|
21.9
|
55.0
|
18.6
|
|
Child(ren)
under 1 year
|
10.5
|
73.2
|
15.9
|
|
1-4 years
|
17.7
|
55.4
|
25.4
|
|
5-9 years
|
23.1
|
53.2
|
17.6
|
|
10-15 years
|
18.1
|
59.3
|
16.2
|
|
|
|
|
|
|
Family income before tax:
|
|
|
|
|
Up to £9,999
|
12.9
|
61.4
|
21.2
|
|
£10,000-19,999
|
17.2
|
58.1
|
18.8
|
|
£20,000-29,999
|
15.9
|
63.5
|
18.0
|
|
£30,000-39,999
|
21.2
|
55.5
|
17.6
|
|
£40,000-49,999
|
27.3
|
57.4
|
10.8
|
|
£50,000 or over
|
25.8
|
49.3
|
23.1
|
|
|
|
|
|
|
Accommodation status:
|
|
|
|
|
Own home
outright
|
30.4
|
46.4
|
17.8
|
|
Buying home
|
19.5
|
59.6
|
18.0
|
|
Rent from
council
|
14.1
|
53.6
|
25.9
|
|
Rent from
someone else
|
9.5
|
64.6
|
21.5
|
|
Occupy
rent-free
|
6.8
|
64.9
|
7.2
|
|
Rent-free –
council
|
0.0
|
35.8
|
12.4
|
|
Rent-free –
someone else
|
10.5
|
80.4
|
4.5
|
|
Own/buying home
|
23.4
|
54.8
|
18.0
|
|
Rent home
|
11.5
|
59.9
|
23.4
|
|
|
|
|
|
|
Region:
|
|
|
|
|
Scotland
|
26.4
|
50.3
|
17.5
|
|
North West
|
20.0
|
44.6
|
27.0
|
|
North
|
21.9
|
52.8
|
22.0
|
|
Yorkshire &
Humberside
|
26.1
|
53.0
|
18.9
|
|
East Midlands
|
15.8
|
66.9
|
12.6
|
|
East Anglia
|
23.3
|
65.4
|
10.4
|
|
South East
|
21.5
|
58.5
|
16.5
|
|
Greater London
|
17.2
|
53.8
|
23.9
|
|
South West
|
17.2
|
65.6
|
12.3
|
|
Wales
|
18.9
|
57.2
|
20.9
|
|
West Midlands
|
15.3
|
56.7
|
24.0
|
Taken from the
TGI survey of around 25,000 adults
SOURCE:
GB TGI, BMRB 1998 & Q3 2008/Mintel
New or second-hand? – influenced by lifestage and life
event
●
The
young age profile of those intending to buy a second-hand car means that by
lifestage buyers are more likely to be Fledglings, those that have Flown the
Nest and ABC1 Nest Builders. Less affluent parents of school age children plus
C2DE Mid-life Independents and Unconstrained Couples are more likely to be
buyers of second-hand cars.
●
Potential
new car buyers are, by comparison, more likely to be the affluent equivalent of
used car buyers, namely ABC1 parents of school age children; whereas used car
buyers comprised the younger end of the lifestage spectrum, new car buyers
predominated the older end of the spectrum.
●
Where
the young end of the spectrum for used car buyers comprised both ABC1 and C2DE
groups, the older end spectrum for new car buyers also comprised both ABC1 and
C2DE groups for both Senior Sole Decision Makers and Empty Nesters – the
primary groups for new cars.
●
In
terms of life events, new car and second-hand car prospects occupy opposite
ends. For younger second-hand car buyers it is starting or changing a job,
moving out of home or in with a partner and getting engaged that are the life
events that can trigger the desire or need to buy a second-hand car.
●
For
new car prospects, making major home improvements, the marriage of an older
child, the birth of grandchildren and entering into retirement are the life
events that can trigger the desire or need for a new car.
●
Clearly,
life events can be a key determinant in influencing the need or desire to buy a
car, whether a first car, second car or replacement. Whether it is to be new or
second-hand is more likely to be influenced by lifestage, which in turn is
related to affluence in later life after children leave home and become
independent and as financial commitments such as mortgages diminish.
●
The
opposite of course is true for second-hand car buyers where embarking in life
in marriage, raising children and mortgage commitments result in scarce
financial resources making ownership of a second-hand car a more practical
choice.
FIGURE 22: Type of car intend to buy, by lifestage
and life event, 2008
Base: adults aged
17+ who intend to buy a car in the next 12 months
|
|
New
|
Second-hand
|
Don't know yet
|
|
|
%
|
%
|
%
|
|
|
|
|
|
|
All
|
20.2
|
56.2
|
19.2
|
|
|
|
|
|
|
Lifestage:
|
|
|
|
|
Fledglings –
ABC1
|
10.8
|
63.8
|
22.0
|
|
Fledglings –
C2DE
|
8.9
|
62.5
|
24.4
|
|
Flown the Nest
– ABC1
|
6.9
|
62.0
|
27.8
|
|
Flown the Nest
– C2DE
|
17.1
|
66.5
|
16.3
|
|
Nest Builders –
ABC1
|
10.8
|
62.0
|
23.1
|
|
Nest Builders –
C2DE
|
3.7
|
51.5
|
40.6
|
|
Playschool
Parents – ABC1
|
24.2
|
58.9
|
15.9
|
|
Playschool
Parents – C2DE
|
6.8
|
62.4
|
28.8
|
|
Primary School
Parents – ABC1
|
24.0
|
50.1
|
22.9
|
|
Primary School
Parents – C2DE
|
13.5
|
59.0
|
13.3
|
|
Secondary
School Parents – ABC1
|
24.0
|
56.5
|
14.8
|
|
Secondary
School Parents – C2DE
|
14.2
|
59.3
|
18.8
|
|
Mid-life
Independents – ABC1
|
18.8
|
65.7
|
12.2
|
|
Mid-life
Independents – C2DE
|
14.5
|
72.6
|
8.5
|
|
Unconstrained
Couples – ABC1
|
25.5
|
53.9
|
18.1
|
|
Unconstrained
Couples – C2DE
|
18.2
|
71.3
|
7.7
|
|
Hotel Parents –
ABC1
|
19.6
|
59.3
|
15.8
|
|
Hotel Parents –
C2DE
|
23.5
|
52.3
|
19.2
|
|
Senior Sole
Decision Makers – ABC1
|
41.4
|
38.2
|
15.0
|
|
Senior Sole
Decision Makers – C2DE
|
25.3
|
42.5
|
16.2
|
|
Empty Nesters –
ABC1
|
43.5
|
40.8
|
11.6
|
|
Empty Nesters –
C2DE
|
31.4
|
49.5
|
12.8
|
|
Non-standard
Families
|
13.7
|
46.8
|
34.2
|
|
Unclassified
|
3.6
|
89.0
|
2.2
|
|
|
|
|
|
|
Life events experienced in the last 12 months:
|
|
|
|
|
Finish school
|
11.0
|
52.1
|
32.6
|
|
Start
university
|
10.0
|
55.7
|
19.1
|
|
Start first job
|
2.4
|
61.4
|
29.7
|
|
Change job
|
9.5
|
56.5
|
32.7
|
|
Move out of
parental home
|
2.9
|
62.6
|
34.0
|
|
Move in with
partner
|
4.4
|
60.0
|
34.8
|
|
Get engaged
|
7.5
|
62.5
|
29.5
|
|
Get married
|
6.3
|
50.6
|
42.4
|
|
Purchase/sell a
house/flat
|
16.2
|
53.0
|
25.6
|
|
Make major home
improvements
|
21.4
|
54.9
|
20.9
|
|
Birth of your
first child
|
13.2
|
50.8
|
31.2
|
|
Birth of your
second or subsequent child
|
1.4
|
59.8
|
30.5
|
|
Child goes to
university
|
20.8
|
65.9
|
12.5
|
|
Child gets
married
|
44.4
|
41.1
|
12.1
|
|
Birth of
grandchild
|
26.1
|
57.7
|
10.1
|
|
Divorce/separate
from long-term partner
|
12.0
|
67.4
|
16.2
|
|
Enter
retirement
|
25.1
|
51.6
|
17.9
|
Taken from the
TGI survey of around 25,000 adults
SOURCE:
GB TGI, BMRB 1998 & Q3 2008/Mintel
Replacement or new demand?
●
For
the majority of those intending to buy a car, the car to be purchased is a
replacement for an existing car while for approximately a third of respondents
it is a first car with just 10% intending to buy an additional car.
●
The
demographics of those intending to buy a replacement car correspond with those
of new car buyers, with those more likely to buy a replacement car being
over-35s in the affluent AB group. High replacement demand among the C2 group
implies either potential new car buyers or purchasing of used or nearly new
cars.
●
Those
intending to buy a car as a first car are more likely to be women than men,
aged 15-34 in the DE socio-economic group, which corresponds to the ownership
demographics of used car buyers.
●
The
intended purchasing of an additional car is skewed towards the young and the
middle-aged, affluent ABs and less affluent Ds. This is likely to reflect
different demand characteristics at different lifestages and as different life
events occur.
●
The
regions that will potentially benefit from higher replacement demand will be
the North, Yorkshire and Humberside, East Midlands and the South West.
Additional demand for cars is more likely to occur in Scotland, East Anglia,
the South East and Wales. New demand is most likely to occur in Greater London
and the West Midlands, indicating an increase in demand for cars in areas of
high population densities.
FIGURE 23: Type of car intend to buy, by demographic
sub-group, 2008
Base: adults aged
17+ who intend to buy a car in the next 12 months
|
|
A first car
|
An additional car
|
A replacement car
|
|
|
%
|
%
|
%
|
|
|
|
|
|
|
All
|
30.7
|
9.6
|
54.2
|
|
|
|
|
|
|
Gender:
|
|
|
|
|
Male
|
28.7
|
9.9
|
56.0
|
|
Female
|
33.1
|
9.4
|
51.9
|
|
|
|
|
|
|
Age group:
|
|
|
|
|
17-24
|
53.8
|
11.4
|
32.4
|
|
25-34
|
39.0
|
8.8
|
46.5
|
|
35-44
|
21.1
|
14.0
|
61.1
|
|
45-54
|
22.5
|
10.7
|
60.7
|
|
55-64
|
19.4
|
5.1
|
69.1
|
|
65+
|
18.2
|
1.8
|
67.1
|
|
|
|
|
|
|
Socio-economic group:
|
|
|
|
|
AB
|
20.4
|
11.2
|
64.4
|
|
C1
|
32.5
|
8.1
|
52.5
|
|
C2
|
29.6
|
9.1
|
55.7
|
|
D
|
41.2
|
12.9
|
40.2
|
|
E
|
62.9
|
3.3
|
27.6
|
|
|
|
|
|
|
Marital status:
|
|
|
|
|
Single
|
50.7
|
9.8
|
35.1
|
|
Married/civil
partnership/living as a couple
|
23.3
|
10.4
|
60.9
|
|
Separated/divorced/widowed
|
31.6
|
3.1
|
55.9
|
|
|
|
|
|
|
|
|
|
|
|
Children in household:
|
|
|
|
|
Yes
|
34.3
|
12.1
|
50.2
|
|
No
|
28.4
|
8.1
|
56.7
|
|
Child(ren)
under 1 year
|
23.7
|
12.6
|
56.4
|
|
1-4 years
|
29.0
|
13.6
|
53.6
|
|
5-9 years
|
31.1
|
11.5
|
55.4
|
|
10-15 years
|
35.6
|
12.4
|
48.6
|
|
|
|
|
|
|
Family income before tax:
|
|
|
|
|
Up to £9,999
|
45.7
|
7.8
|
37.5
|
|
£10,000-19,999
|
35.5
|
6.5
|
51.2
|
|
£20,000-29,999
|
30.9
|
8.8
|
56.1
|
|
£30,000-39,999
|
26.7
|
10.2
|
57.3
|
|
£40,000-49,999
|
27.4
|
13.1
|
55.1
|
|
£50,000 or over
|
13.1
|
14.1
|
68.7
|
|
|
|
|
|
|
Accommodation status:
|
|
|
|
|
Own home
outright
|
19.4
|
8.0
|
65.2
|
|
Buying home
|
25.4
|
10.0
|
59.4
|
|
Rent from
council
|
51.3
|
7.7
|
36.3
|
|
Rent from
someone else
|
52.1
|
13.2
|
31.2
|
|
Occupy
rent-free
|
39.7
|
9.1
|
50.6
|
|
Rent-free –
council
|
56.6
|
8.3
|
33.5
|
|
Rent-free –
someone else
|
30.7
|
9.6
|
59.7
|
|
Own/buying home
|
23.3
|
9.3
|
61.5
|
|
Rent home
|
51.8
|
10.8
|
33.4
|
|
|
|
|
|
|
Region:
|
|
|
|
|
Scotland
|
30.1
|
13.0
|
52.2
|
|
North West
|
33.9
|
7.8
|
46.4
|
|
North
|
27.3
|
5.9
|
60.1
|
|
Yorkshire &
Humberside
|
30.4
|
2.7
|
60.2
|
|
East Midlands
|
18.5
|
8.4
|
69.5
|
|
East Anglia
|
21.2
|
22.4
|
53.4
|
|
South East
|
28.2
|
11.8
|
55.7
|
|
Greater London
|
50.1
|
7.3
|
38.2
|
|
South West
|
22.3
|
10.8
|
62.2
|
|
Wales
|
27.4
|
13.7
|
55.4
|
|
West Midlands
|
33.8
|
6.5
|
54.2
|
Taken from the
TGI survey of around 25,000 adults
SOURCE:
GB TGI, BMRB 1998 & Q3 2008/Mintel
The impact of lifestage and life event on new or
replacement demand
●
High
replacement demand is apparent across a range of lifestages from Nest Builders
to Empty Nesters, but at the younger lifestages, replacement demand is higher only
among the affluent ABC1s. It is not until the more Mid-life Independent
lifestage is reached that there is higher replacement demand among C2DEs.
●
Higher
demand for additional cars is more apparent among younger C2DE lifestage
groups, particularly parents with school age children, but also among affluent
Mid-life Independents and Hotel Parents. This indicates demand for a second
vehicle as lifestyles change as parents and couples operate more independently
of each other.
●
Demand
for a first car is generally higher in the early lifestages for both ABC1 and
C2DE groups as both types begin to move away from the family home. Demand for a
first car then rises again among C2DE parents of school age children as one
parent becomes a car owner for the first time and requires a car for the school
run and other parental duties.
●
In
terms of life events experienced, the birth of a first child is a major demand
determinant for first and additional cars as are starting or changing jobs,
getting engaged or getting married. Replacement demand is also influenced by
getting married and by the birth of second or subsequent children, but also by
the marriage of older children and divorce or separation from a long-term
partner.
FIGURE 24: Type of car intend to buy, by lifestage
and life event, 2008
Base: adults aged
17+ who intend to buy a car in the next 12 months
|
|
A first car
|
An additional car
|
A replacement car
|
|
|
%
|
%
|
%
|
|
|
|
|
|
|
All
|
30.7
|
9.64
|
54.2
|
|
|
|
|
|
|
Lifestage:
|
|
|
|
|
Fledglings –
ABC1
|
54.1
|
10.5
|
28.5
|
|
Fledglings –
C2DE
|
61.9
|
12.9
|
24.9
|
|
Flown the Nest
– ABC1
|
69.5
|
0.0
|
30.5
|
|
Flown the Nest
– C2DE
|
86.8
|
4.3
|
8.8
|
|
Nest Builders –
ABC1
|
28.9
|
7.1
|
58.2
|
|
Nest Builders –
C2DE
|
34.3
|
26.9
|
31.9
|
|
Playschool
Parents – ABC1
|
19.1
|
14.7
|
60.6
|
|
Playschool
Parents – C2DE
|
36.4
|
15.0
|
47.6
|
|
Primary School
Parents – ABC1
|
20.8
|
9.6
|
67.1
|
|
Primary School
Parents – C2DE
|
43.0
|
9.7
|
44.5
|
|
Secondary
School Parents – ABC1
|
20.2
|
15.7
|
59.3
|
|
Secondary
School Parents – C2DE
|
31.4
|
8.8
|
52.4
|
|
Mid-life
Independents – ABC1
|
18.9
|
25.4
|
52.0
|
|
Mid-life
Independents – C2DE
|
19.4
|
2.8
|
68.9
|
|
Unconstrained
Couples – ABC1
|
16.5
|
7.6
|
72.8
|
|
Unconstrained
Couples – C2DE
|
24.4
|
4.9
|
62.3
|
|
Hotel Parents –
ABC1
|
20.1
|
13.7
|
59.8
|
|
Hotel Parents –
C2DE
|
33.8
|
4.5
|
54.1
|
|
Senior Sole
Decision Makers – ABC1
|
27.6
|
2.5
|
61.4
|
|
Senior Sole
Decision Makers – C2DE
|
28.3
|
2.3
|
46.7
|
|
Empty Nesters –
ABC1
|
11.9
|
3.5
|
78.2
|
|
Empty Nesters –
C2DE
|
24.6
|
2.6
|
62.4
|
|
Non-standard
Families
|
38.7
|
3.3
|
50.4
|
|
Unclassified
|
52.8
|
0.0
|
42.1
|
|
|
|
|
|
|
Life events experienced in the last 12 months:
|
|
|
|
|
Finish school
|
75.9
|
5.9
|
15.9
|
|
Start
university
|
35.7
|
15.4
|
36.3
|
|
Start first job
|
74.6
|
12.2
|
12.1
|
|
Change job
|
35.4
|
10.0
|
49.6
|
|
Move out of
parental home
|
44.3
|
19.8
|
35.9
|
|
Move in with
partner
|
50.6
|
19.4
|
29.7
|
|
Get engaged
|
60.9
|
7.2
|
31.5
|
|
Get married
|
31.1
|
6.3
|
60.5
|
|
Purchase/sell a
house/flat
|
19.9
|
8.6
|
65.4
|
|
Make major home
improvements
|
27.9
|
9.8
|
57.2
|
|
Birth of your
first child
|
40.9
|
14.4
|
43.0
|
|
Birth of your
second or subsequent child
|
26.8
|
6.8
|
57.4
|
|
Child goes to
university
|
20.8
|
4.0
|
63.4
|
|
Child gets
married
|
23.0
|
1.5
|
69.7
|
|
Birth of
grandchild
|
29.9
|
4.7
|
59.4
|
|
Divorce/separate
from long-term partner
|
25.8
|
8.1
|
61.4
|
|
Enter
retirement
|
28.2
|
3.8
|
59.6
|
Taken from the
TGI survey of around 25,000 adults
SOURCE:
GB TGI, BMRB 1998 & Q3 2008/Mintel
