New car buyers are changing their cars more regularly than ever before due to the popularity of PCP finance deals, according to new data from automotive valuation firm Cap Hpi.
Some car manufacturers are reporting average returns of vehicles of 24 months along with a growing number of 18-month leases, while finance deals are predicted to be used more regularly on the used car market.
The new car market has seen a strong period of growth in recent years. Around 80% of new car sales are sold through finance deals, triggering a move in mentality from ‘ownership’ to ‘usership', according to Cap Hpi.
Philip Nothard, retail and consumer specialist at Cap Hpi, said that a few years ago having a car for five years or longer was not uncommon and that younger buyers are driving the shifting trend.
“Young buyers are the new consumers coming through,” Nothard said.
“The mentality is: the car does a job, it costs a certain amount each month, and if they can afford it they get it. There’s a lot more of that to come.”
Currently the average month on a 24-month PCP agreement is 20-22 months, while on a 36-month arrangement it's 27-29 months.
Nothard doesn’t believe the trend of changing cars will get much shorter and expects it to stay around the 20 to 24-month period, with 12 months being too short for many drivers.
The increasingly regular change in ownership is most prominent on the new car market and has saturated the used car market, but finance deals on used cars are also likely to see a sharp increase.
“Manufacturers are not showing any signs of easing off," Nothard said. "Finance deals are at the centre of many marketing campaigns.”
"It provides a good source of cars for used dealers because they know exactly where the car has come from. We’re going to start to see growth in the used car market in PCP deals."