Growing trend emerges as motorists change their vehicles increasingly early
Nottingham, 24 April 2013 — New analysis from Experian®, the global information services company, has revealed that of all the new and used cars bought through a motor finance deal that were due to expire in 2012, 54 per cent changed registered keeper before the term was due to end.
In comparison during 2009, only 35 per cent of motorists changed their cars before the end of the finance agreement and the figure stood at only 28 per cent in 2007. These figures show that motorists are opting to change their vehicles increasingly early, indicating that they are either seeking to rearrange their finances or are being attracted by an upgrade or the desire to change to something better suited to their current needs.
Experian’s analysis of over 87,000 hire purchase (HP) and personal contract plan (PCP) motor finance agreements across the UK revealed that during 2012, a keeper change occurred on average nearly 13 months before the original finance term was due to end.
The analysis also revealed that motorists buying used cars were likely to change much sooner – on average 18 months before the finance agreement was due to end, compared to new car owners who changed vehicles seven months before the end of the finance agreement.
In comparison during 2009, a keeper change on a new vehicle occurred on average five months after the end of the agreement and only one month before the agreement was due to end on used cars. During 2007, motorists were even more likely to hold onto their cars for longer with new car owners changing 13 months after the end of the finance agreement and used car owners changing after seven months.
The vehicle types that were more likely to be changed before the end of the car loan in 2012 were luxury vehicles such as the Mercedes S Class. This was followed by upper medium cars (such as the Ford Focus) and MPVs (such as Vauxhall Zafira). The vehicles types that consumers were most likely to hold onto were basic models and executive models (such as the Mercedes C Class).
The analysis also found that despite the fact that consumers were opting to change their vehicles sooner, longer agreement terms were still the most popular, with over 80 per cent of motorists opting for average car loan terms of 26 months or more.
In addition, although hire purchase remains by far the most popular option, comprising of 86 per cent of agreements in 2012, there has been a slight shift towards personal contract plans which are up from 6.12 per cent in 2007 to 13.69 per cent in 2012.
Andrew Ballard, Principle Consultant at Experian’s automotive business said: “This analysis shows a significant shift in the way people are choosing to manage their finance agreements. The preference towards longer terms and the increase in PCP agreements suggests consumers have a need to keep initial outlay and regular motoring costs low.
“However, shorter length of ownership suggests that they are either considering their own finances and ability to keep paying or are swayed by the wealth of subsidised finance deals and incentives available to upgrade or change to something new. Either way, regular customer contact will enable dealers to better understand customer’s needs and changing circumstances, allowing the right deals to be offered to the right customers at the right time.”
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Findings are based on an analysis of a total of 87,098 HP and PCP records, reviewing data captured in May of 2007, 2009 and 2012.
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com.