A decline in long-term car ownership triggered by PCP and PCH finance offers is driving the swifter return of motorists to the UK’s car dealerships, an AA Populus survey has revealed.
The number of drivers who plan to hang onto their current car for more than five years has dropped by 11% since owning their last car, the survey of 20,666 drivers found, meaning that there are now 3.4 million fewer drivers who have long term intentions for their current vehicle.
Almost a fifth (18%) of cars on the road are currently funded using various forms of car finance, according to the research, which equates to around 700,000 more cars funded using these deals since drivers last bought a car.
A statement issues by AA Cars said: “Those who used one of these routes to buy their current car are much less likely to hold onto their car in the long term. Only a quarter (27%) of drivers using one of these finance options plan to keep their car for more than five years. Four-in-10 (39%) intend to hold onto their car for less than three years.
AA Cars noted that the current crop of finance offers are designed to give drivers the ability to upgrade or buy their vehicle once the initial term ends.
The survey found that just two-in-10 (20%) consumers using PCP plans actually buy the car at the end of the deal, suggesting that the option to ‘upgrade’ to a new car is propelling the sharp fall in long-term ownership.
James Fairclough, the chief executive of AA Cars, said: “Even a few years ago, the majority of drivers would have expected to hang onto their car for as long as possible in an attempt to wring as much value out of it before heading back to the forecourt.
“The growing confidence in car finance products has helped to change this dynamic. The three-year cycle of PCP and HP deals mean that drivers are returning to dealerships much sooner than they would have.
“This is good news in a number of respects; as technology advances, cars are becoming cleaner and more efficient. The cyclical effect of these deals means that buyers are introducing these more environmentally-friendly motors to the roads, rather than persevering with older and less environmentally friendly cars.
“The domino effect for the used car market is that a glut of nearly-new stock continues to flood forecourts and is available to buyers who are looking to prioritise value over a brand new registration.”
AA Cars offered consumer advice as part of its statement related to findings from the AA Populus survey.
The online used car retail platform highlighted the provision of soft credit check services which won’t leave footprints on your credit record, which allow car buyers to glance at their potential finance offers.