Confident Aussies keen to buy cars

Confident Aussies keen to buy cars

There’s been an increase in the number of Australians who intend to buy a vehicle in the next four years, with the number rising to 2.38 million.

The latest Roy Morgan Single survey of over 50,000 consumers found that in the three months leading to November 2017, the number rose by 142,000 people looking to buy a new vehicle.

The survey also found that those looking to buy a new car are more confident than the population average. “Over the November quarter, the consumer confidence for all Australians was 114.1, whereas those intending to purchase a new vehicle in the next four years had a much higher level with 122.8.”

New vehicle purchase intention: November 2017

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Source: Roy Morgan Single Source

Intentions to buy a vehicle in the next 12 months have also risen by 13,000 (2.2 per cent) over the same period last year, to 615,000. This segment also had higher than average consumer confidence than the general population. 

Over 50s are most interested in buying new vehicles

Roy Morgan also found that those 50 and over had the strongest growth with new vehicle purchase intent in the next four years. Those aged 65 or over had the highest growth rate, increasing by almost 250 per cent to 420,000. This was followed by the 50-64 age group, who saw intent rise 36 per cent.

Those under 35 all saw a decrease in new vehicle purchase intent in the next four years, with the strongest decrease coming from those aged 14-24 (falling 29 per cent).

According to Roy Morgan, these age groups are “demonstrating less interest in purchasing new motor vehicles but they remain the highest intenders for used vehicles.”

New vehicle purchase intenders in next 4 years by age

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Source: Roy Morgan Single Source

Norman Morris, Industry Communications Director, Roy Morgan said that over the last decade or more, there has been “considerable growth in the new vehicle market generated in part by higher confidence among buyers and reflected in recent record sales and buying intentions.”

“The increase in the trend for new vehicle purchasing intentions that we have seen over the last 15 years has come mainly from the over 50s age group and in particular those over 65.

“The under 35 age groups on the other hand have shown a long term decline in new vehicle buying intention levels. This is likely due to a number of factors including competing priorities in areas such as travel, dining out, housing costs etc. and income related factors caused by unemployment and longer time spent in higher education. This group has not lost interest in motor vehicles as shown by their very high intention levels to purchase a used vehicle.

“With the speed of change taking place in this industry currently, particularly in areas such as electric cars, it is important to track consumers’ likely interest in these potential fuel changes.

Currently, 37% of the population say that they would seriously consider purchasing an electric vehicle, up from 29% just one year ago. This is now not far below the level of interest in diesel with 45% and well ahead of LPG on 21%, both of which are showing downward trends.

“The changes in technology such as driverless cars and fuel preferences have the potential to impact rapidly on vehicle purchasing intentions as they can be regarded as major disrupters,” said Mr Morris.

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Learn more about car loans

What is proof of income?

Before giving you a car loan, lenders will ask for proof of income – documentary evidence that you earn as much as you claim you earn. Lenders will typically want some combination of tax returns, pay slips and bank statements. The reason lenders want proof of income is because they want to be sure you have the means to repay the car loan.

What is a dealership?

A dealership is a car yard or a place where cars are sold.

What is CTP insurance?

CTP insurance, also known as compulsory third-party insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your CTP insurance will be used to pay any compensation due to anyone who might be injured or killed. However, CTP insurance doesn’t cover you for vehicle damage or theft.

What is vehicle finance?

Vehicle finance, also known as a car loan, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Vehicle finance can be used for both new and used vehicles.

What is equity?

The equity is the share of the car that you own. For example, if you take out a $15,000 loan to buy a $20,000 car, you have $5,000 of equity in the vehicle, or 25 per cent. (The lender has the other 75 per cent.) Equity changes over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, you would still have $5,000 of equity in the vehicle, but your share would be 33 per cent.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

What is an interest rate?

The interest rate is the price you have to pay for borrowing money. The interest rate is expressed as an annual percentage of however much of the loan remains to be paid. For example, if you took out a $10,000 car loan with an interest rate of 8.75 per cent, you would be charged 8.75 per cent of $10,000, or $875 of interest per year. But if you then reduced the outstanding loan to $9,000, your annual interest bill would be 8.75 per cent of $9,000, or $787.50.

What is depreciation?

Depreciation is the reduction in the value of your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is stamp duty?

Stamp duty, or motor vehicle duty, is a tax you pay when you transfer a car into your name. Stamp duty applies to both new and used cars. Stamp duty is a state tax, so rates and conditions vary from state to state: New South Wales, Victoria, Queensland, Western Australia, South Australia, Tasmania, ACT and Northern Territory.

Should I service my own car?

There are also costs associated with vehicle ownership, such as paying for petrol and the obligatory ongoing maintenance. But should you cut down on costs by servicing your own vehicle?

If you’re considering getting out the tool box, spanner, and grease-laden towel, you need to carefully weigh up the risks and benefits. A trained mechanic will need to complete certain tasks, while you may be perfectly capable to handle other aspects yourself.

If you’re short on time, it may be worth paying for the convenience of a full vehicle service. However if you’re trying to slash your expenses, there are some basic maintenance tasks that you can complete yourself.

You should call a mechanic if you’re unsure about a vehicle maintenance task you’re about to take on. However there are a number of maintenance tasks that you may be able to complete with your own two hands including:

  • Replacing your car battery
  • Changing the oil
  • Replacing worn windscreen wipers
  • Replacing blown fuses

Remember to keep your car’s body in good condition, by washing and applying a protective wax on a regular basis, too.

Always check your car warranty agreement as some new car purchases come with an extended car warranty provided your services are conducted at the vehicle service centre where you purchased the car. In these circumstances, you may find the service fee is capped, alleviating some of the maintenance woes.

How much can I get towards a new car as a single parent?

It really depends on your financial circumstances as to how much a lender will grant you towards a new car as a single parent. With most lenders, the smaller the loan you apply for, the higher your chances are of approval, so getting a cheaper car or adding some savings of your own, may be a valid option if you are struggling for approval on a car loan.

How much can I get towards a new car as a single parent?

It really depends on your financial circumstances as to how much a lender will grant you towards a new car as a single parent. With most lenders, the smaller the loan you apply for, the higher your chances are of approval, so getting a cheaper car or adding some savings of your own, may be a valid option if you are struggling for approval on a car loan.

What is dealer finance?

Dealer finance is a car loan organised through a car dealer – as opposed to car loans organised by a finance broker or directly by the lender.

What is salary packaging?

Salary packaging is an arrangement you can make with your employer that can allow you to buy a car from your pre-tax salary. The advantage of salary packaging is that it will redue your taxable income.