Funding cars by PCP (Personal contract purchase) is rapidly becoming the norm, it is reckoned that as many as 60% of car buyers use a PCP to buy their next car and this figure is only going in one direction.
Although many of us do not necessarily like the thought of another monthly commitment it is invariably better than to have an older car that we own outright but could cost us a lot of money at any time if not protected by age or manufacturer’s warranty.
The fact is that once a budget has been established there is almost always something for everybody’s pocket. For example I saw a new fiat 500 being advertised recently outside a sports centre for no deposit and £149 per month, which almost anyone could probably afford and means that many of us could have a brand new car which we almost certainly wouldn’t if we had to pay cash or were limited to traditional loan agreements.
This probably goes a long way to explaining why, despite the gloomy economic outlook, the car business on the whole has continued to be successful and grow profitably.
The fact that we can now change our car regularly is a fantastic thing and perhaps more importantly puts new car ownership within reach of far more car drivers and, let’s be honest, with the winter we have had driving a car which is old and rickety just doesn’t compare to a modern car where many comfort features are standard.
So affordability, comfort and choice mean that maybe the car will not necessarily be the 2nd biggest purchase you make any longer, and when entering a showroom and haggling over a deal, the sticker price will have less relevance than what the best monthly payment and lowest deposit is for car buyers trying to get the best deal.
Realistically for dealers with so many add-ons to sell which are all designed to protect the buyer in some way, the chassis profit will not be as important either.
The changing world of cars is certainly having a positive effect on customers and dealers alike.