Leasing the norm among younger drivers
In the past year, the proportion of drivers saying they will opt for finance, leasing or renting for their next car has increased by 15% and is now almost half of all drivers (43%)
Paying for a car upfront used to be the most common route to buying a car, but this has dropped from 63% of car buyers in 2018, to 57% this year.
The shift was particularly noticeable younger generations, for whom finding a large lump to spend on a care is more difficult. They are driving the industry towards so-called ‘mobility-related services’.
Three in five (60%) drivers under 25 said they were looking to pay for their next car either by using car finance, leasing, or by renting, more than double the proportion of drivers aged over 55 (28%).
For many leasing is a means to get a newer or higher specification model of car (48%), while just 20% said they would do this for financial reasons to allow them to spread the payments gradually and evenly.
This echoes recent data from the Finance and Leasing Association. It reported a 1% increase in the value of advances on new cars in the year to April 2019, and a 9% hike in the value of advances on used cars over the same period
Seán Kemple, director of sales at Close Brothers said: “The question on everyone’s minds in the automotive world is how to manage the shift from car ownership to usership, from owning to leasing. We’re now living in a world of monthly subscriptions from mobile phones to food boxes, meaning we can chop and change at the drop of a hat and only pay for what we use. This is now the norm for a whole generation coming through the market who are used to being able to upgrade and adapt to suit their needs, and the motor industry is by no means exempt.
“Looking into the crystal ball of motor finance, changes are on the horizon that could well be part of the solution to current industry problems. The challenge is that while this horizon may seem a long way off, it isn’t. We are potentially talking about a very different world of how we use and pay for cars, with some estimates as early as 2030.”