New Car Demand Set to Rise Thanks to Cheap Car Leasing Deals

The availability of cheap car leasing deals and a strong demand for fuel efficient cars is set to result in a rise in the sale of new vehicles rise over the next few months. Automotive Management says that experts ‘are now predicting that the recovery of consumer confidence is set to continue, and with it continued growth in demand for great deals on new cars.’

Car sales have increases for 15 successive months and new car registrations in May were at their strongest level for 6 years. We look at how cheap car leasing and contract hire deals are driving demand for new cars in the UK.

Cheap car leasing deals driving demand for new cars

May 2013 saw an 11 per cent increase in new car registrations, with 180,111 new cars sold. It was the 15th successive month of growth and private demand for new vehicles is now beyond pre-recession volumes recorded in 2007.

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), registrations have risen 9.3 per cent for the year-to-date to 948,666 units.

Scotland posted the biggest growth in May, with registrations up 17.54 per cent. Wales was up 17.36 per cent, Northern Ireland 12.21 per cent and England 10.44 per cent.

Automotive Management says that ‘trends among private buyers provide a good indication that the confidence of consumers is strengthening while they perceive there are bargains to be had.’

Mike Baunton, SMMT interim chief executive, said: “The performance of new car registrations in May marks a significant milestone for UK automotive, with cars registered by private buyers rising more than 20 per cent, bettering pre-recession volumes posted in 2007.”

Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: “It is now evident that consumer confidence in buying cars is back on track.”

There are a number of factors that are boosting the new car market in the UK. One of the main reasons why demand is high is because of the wide range of cheap car leasing and attractive finance offers that are available. With more and more car buyers using car leasing and dealer car finance to drive away a new car, low cost deals are encouraging many motorists into showrooms. Analysts at CAP Automotive recently claimed that motorists are enjoying the best cheap car leasing and new car deals since 1979.

In addition, many drivers are switching to more fuel efficient vehicles while a switch from used cars to new cars may also be in progress, as the recession-induced dip in new car sales has restricted the supply of quality used cars.

John Leech, UK head of automotive at KPMG, said: “The new car market in the UK continues to be buoyed by substantial discounts offered by car manufacturers directly to consumers, such as 0 per cent finance.

“Secondly, UK banks are midway through settling PPI mis-selling compensation claims with UK consumers, which have averaged £2,700 per claimant over the past two years and totalled £9 billion so far. These one-off lump sums have released pent-up demand for cars.

“Finally, there have been some real advances in fuel efficiency offered by car manufacturers in response to a trend for consumers favouring smaller, fuel-efficient cars, up 14 per cent year-to-date.

“At 7.5 years old, the average age of cars on UK roads is now higher than at any time in the past 20 years and consumers are increasingly switching older cars for newer, more fuel-efficient vehicles.”

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