Drivers are more confident about car buying during 2010 than a year ago, but are planning to spend less, according to the latest Car Purchase Index (CPI) published by AA Financial ServicesA fifth (20%) of 13,489 respondents in the AA/Populus study of AA members say they expect to change their car over the coming year, compared with 18% a year ago.
Just over a fifth (21%) say their next car will be brand new regardless of when they buy it, up 3% over the past year.
Mark Huggins, director of AA Financial Services, said: “This suggests that metal is moving off forecourts and the slow recovery should gather momentum.
“I have no doubt the extension of the car scrappage scheme to the end of February 2010 is helping – but if this isn’t extended again new car sales could slow down again.
“In fact, the CPI found that over a quarter of those with a car aged 10 years or more could take advantage of the scheme: 22% saying they are thinking about it and 4% definitely planning to. A further 4% said they have already bought a new car through the scheme.”
Buyers spending less
However, despite more people saying they are going to buy a car, they expect to spend less on their new one.
Although the most popular price-band in the CPI is still £5,000-£10,000, with 32% saying they will spend this much, this is a fall of 3% compared to last year. More people are planning to spend under £5,000 (23% compared with 19% last year).
Young drivers seem to be most financially stretched with four times as many this year (12%) saying they will spend less than £1,000 on a car compared to last year (3%). At the opposite end of the age scale, a quarter (24%) of those aged 65 and over will spend between £10,000 and £15,000 on a car compared with 18% overall. But even this represents an 11% fall compared with a year ago, when 35% said they would spend this much.
Savings spent on cars
The most popular way of paying for a car is still to use savings, with two-fifths (41%) saying they’ll do so compared with almost half last year (49%). Fewer people also say they will take out a loan, 16% compared with 20% a year ago. But more than twice as many people say they can use ready cash to buy a car (14%) as last year 7%). This is particularly marked among those aged 65 and over: 20% against 8% last year.
“This suggests that many people are able to use funds such as redundancy payments or pension lump sums to help them buy a new car,” Huggins said.
Green slips the agenda
Concern about the environment appears to be having a decreasing influence on car choice with only 15% overall saying they would choose a car because it offers green credentials.
“This is 2% less than a year ago,” said Huggins. “Then, women seemed to drive the green agenda with a fifth (21%) being prepared to express their environmental concern through their car choice. Now that figure is just 14%.
“The greatest motivation for replacing a car is that the existing one is too old,” Huggins points out. “Nearly half (46%) gave this reason – more than twice as many as a year ago (22%). Then, buying a car that’s cheaper to run was the principal reason for a change at 45%, compared with a third (32%) now, suggesting many people have been hanging on to their motors until they have greater financial certainty.
“It could be that we will see the used car market being flooded with older cars over the coming year.”
Diesel vs. petrol
Diesels, generally more economical than petrol-engined cars, are gradually becoming more popular with 43% saying that’s the type of car they will be opting for, compared to 37% last year.
“But what’s interesting is that women are less likely to choose diesel,” said Huggins. “In fact, 49% prefer petrol, just 3% less than last year. Hybrids (3%) and electric (less than 1%) are barely making a mark in peoples’ preferences.”  (AM online, 19.01.10)

Motorists buying new cars in November bought 82% more cars using dealer finance than in the same month a year earlier, according to new statistics released today by the Finance and Leasing Association
In a race to beat the VAT rise, new car buyers took out motor finance deals worth more than half a billion pounds in November. Overall, in the 12 months to November, 45.8% of all private new car sales were financed through dealerships.
A further indication of new-found consumer confidence was that motor finance providers reported the first growth in the number of used or second-hand cars bought using dealer finance since March 2009. In November, consumers bought 4% more used cars this way than in the same month a year earlier.
Geraldine Kilkelly, FLA head of research and chief economist, said: “Today’s figures are encouraging, especially as there was also growth in the used car market.
"Buying a new car is a sign of consumer confidence, as replacing an older car is usually a discretionary, rather than an essential purchase.
"But the rise of 82% in November needs to be treated with some caution because it compares last November with November 2008, which was the height of the slump in business volumes. “In November 2008 22,402 new cars were bought by consumers using dealer finance, which was 40% down on November 2007.
"We expect December’s new car finance figures also to show strong growth as consumers scramble to beat the VAT increase."
(AM Online, 19.01.10)

""Almost all our growth has been winning market share from our competitors"" - Robert Jones, ASE
To most people it’s still just plain old Trevor Jones. But the 63-year-old footy referee and car dealer specialist accountant who founded the business is chairman of an organisation whose full Sunday title is ASE Ltd or Automotive Services Europe and has been for the last 20 years.
ASE makes a satisfying study for the Making Money series because its task is to ensure that dealers make as much money as they can from their trade on a daily basis.
But ASE is also in the business of turning itself into a successful international business with a tidy little profit of its own.
In 2009 it achieved a margin of 20% on worldwide turnover of £11 million.
The principal trick is sorting through monthly trading stats for car brands and their dealers and then selling the data back to them in a form that allows them to run the business more efficiently.
And with the business now managed by the younger son of the founder, there is more and more emphasis on getting the output down to such a concise summary that it can be retrieved as one page on a PDA.
Managing director Robert Jones (33) keeps in mind a vision of the zone manager pulling up outside today’s first dealer call and taking his gizmo out off his pocket for a refresher on the financial summary before he goes in.
That’s the snapshot of ASE at its most basic, but it is becoming much more than that.
“We have 169 bespoke management solutions across 31 countries and 29 languages. In the UK there are 350 clients for professional services and we work with 86% of the UK manufacturers.”
There are 110 employees in the UK, but there are also offices in Spain and Portugal, the Netherlands, Florida and Russia from March.
Other countries are covered by contractors while the business volume grows. Between them the country offices process 11,000 sets of business a month and ASE has just spent £1 million on a new computer system to crunch it all. All profit is being reinvested currently.
Robert Jones has taken on the task of bringing in the new business while elder brother Mike delivers the products.
Robert is a veteran of Arthur Anderson, where his specialisation became structured finance for large investment.
He joined the family firm as sales director in 2006 and took charge in March 2008. All the non-family shareholders have been bought out; a 3i heavy-weight has joined the board as a non-exec and in Robert’s judgement “in the last 12 months we have transformed the business into a dynamic commercial enterprise”.
The sales pitch to the manufacturers is a simple one: “Reduce the risk of having a dealer network.”
Robert Jones will also tell the clients that he has a better chance than other accountants and consultants of adding value for the carmakers because all the professionals he employs have car company experience.
Although he does not work for all 26 manufacturers in any market, he does work for all of them in one country or another.
Increasingly, OEMs want more than the raw data from their own network. They want some tailored market analysis as well.
Within the customer companies there is demand for different levels of data for different staff. The boss will want the simplified summary. Managers need the full detail on a small section.
Technology change is very demanding: “We have gone in only two or three years from 20-page documents to interactive web delivery.”
The business plan is simple enough. Every time they pick up a new OEM as a customer for one market they can pitch for business in other markets where those OEMs need data.
They can also go for OEMS in markets where they have not got them as clients. And they can add more services for the clients they have got. It’s methodical, successful and profitable.
There are still new markets to bring in. The US business has only been under development for three years. Africa and Asia are untouched.
There are competitors and in the UK the main players who also provide accountancy and tax services to the trade are BDO Stoy Hayward, Baker Tilly and Grant Thornton.
(AM Online, 20.01.10)

Motoring.co.uk chairman Kevin Gaskell has warned sales of new cars could dive in Britain following the end of the government scrappage scheme
Gaskell, who in the past headed up Porsche and BMW in the UK, said the scheme had brought forward into 2009 many new car sales which would otherwise have taken place in 2010.
German template
"In countries where the scrappage scheme has already finished, such as Germany, the sales trend is sharply down and the market is fearing a drop from circa 3.8 million registrations in 2009 to possibly as low as 3 million in 2010. It is possible that the UK could follow suit unless alternative promotional activities are introduced by the car manufacturers and dealers," he said.
But Gaskell said he thought carmakers would continue to provide other forms of support.
Carmaker support
"A number of manufacturers are likely to continue to support new car sales with their £1000 contribution," he said.
Gaskell said this could take the form of lower new car prices, subsidised finance schemes, free servicing or other customer support measures.
"These alternative support measures should be highly attractive to owners of older vehicles which didn't qualify for the scrappage premium and so opens the opportunity to buy a subsidised new car to a wider audience of potential buyers."  (Motortrader, 21.01.10)