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In recent years, the rising cost of living has become a major concern for consumers worldwide. As the expenses associated with international travel and holidays continue to soar, more individuals are opting for holidays within the UK. This shift in consumer behaviour presents an interesting opportunity for the automotive industry, particularly in the used car market. With the increasing demand for local vacations, the rising cost of living is expected to have a significant impact on used car sales. In this article, we will explore how this trend might benefit car dealerships and brokers, while also examining the potential implications for the car finance industry.
The Rise of Domestic Holidays
The COVID-19 pandemic played a pivotal role in reshaping travel preferences. As international travel restrictions and health concerns limited people’s ability and willingness to travel abroad, domestic tourism experienced a significant surge. Many individuals discovered the beauty and charm of local destinations, leading them to explore the UK for their holiday experiences.
The rising cost of living in the UK has also prompted a significant shift in consumer behaviour when it comes to holidays. More individuals are now opting for vacations within the UK instead of venturing abroad. Several factors are driving this trend. Firstly, domestic holidays are more accessible, with a plethora of picturesque destinations right on our doorstep. From stunning coastal towns to breathtaking countryside retreats, the UK offers a diverse range of experiences for all types of travellers. The lower cost associated with domestic holidays is a major draw. With the rising expenses of international travel, including airfare, accommodation, and currency exchange, staying within the UK proves to be a more affordable option for many. Whether it’s exploring quaint villages, immersing in rich history, or enjoying the beauty of national parks, UK holidays provide an accessible and cost-effective escape for individuals and families alike.
Boosting the Used Car Market
The shift towards local vacations creates a unique opportunity for the used car market. Many consumers who previously relied on air travel or public transportation to reach their holiday destinations are now considering the convenience and flexibility offered by private vehicles. Opting for a used car provides an affordable alternative to purchasing a new vehicle, especially for those on a tight budget due to the rising cost of living. As a result, car dealerships can expect to see an upturn in demand for pre-owned vehicles.
Factors Driving the Increased Demand
Several factors contribute to the rising demand for used cars in the context of domestic holidays. Owning a vehicle allows individuals to have independence and flexibility to explore different regions of the UK at their own pace, without being restricted by public transportation schedules or limited routes. Many still harbour the fear of crowded public spaces, such as buses or trains, following the COVID-19 pandemic, making private vehicles a more appealing option for travel.
Used cars provide a cost-effective solution for families and larger groups travelling together. Renting multiple vehicles can be expensive while owning a used car offers greater convenience and flexibility. With the rising cost of living affecting disposable income, the affordability of used cars becomes even more attractive to consumers.
Impact on the Used Car Retail Industry
The shift in consumer behaviour towards domestic holidays has a significant impact on the used car market. As more individuals choose to explore the UK for their vacations, the demand for private vehicles increases. This surge in demand presents a unique opportunity for car dealerships, especially in the used car segment.
With the rising cost of living affecting disposable income, consumers are more inclined to seek affordable alternatives to purchasing new vehicles. Opting for a used car provides an attractive option for those looking for cost-effective transportation solutions. Car dealerships can expect an upturn in the sales of used vehicles as individuals recognise the convenience and flexibility offered for exploring different regions within the UK.
Car dealerships can anticipate increased footfall and sales in their used car divisions as more individuals opt for UK holidays. However, dealerships need to adapt their marketing and inventory strategies to align with the preferences and budgets of this changing customer base. By ensuring a diverse selection of affordable and reliable used cars, along with targeted marketing campaigns highlighting the benefits of private transportation for local holidays, car dealerships can effectively capitalise on this shift in consumer behaviour and boost their business in the used car market.
Impact on the Automotive Finance Industry
In the current cost of living crisis, consumers are increasingly inclined to choose car finance over buying a car outright due to the flexibility it offers in managing their finances. With the rising cost of living impacting disposable income and limiting savings for many individuals, paying a large sum of money upfront for a vehicle may not be feasible. Car finance provides an attractive alternative by allowing individuals to spread the cost of the car over a set period through smaller monthly repayments. This flexibility enables them to budget more effectively and comfortably manage their expenses while still being able to drive the car they need. Particularly for those with limited savings, car finance presents an appealing option to access the vehicle they desire without straining their financial resources.
Looking to expand your reach and tap into a wider market?
Unlock new opportunities and drive your business forward by partnering with Marsh Finance, the UK’s leading car finance lender. In the face of the cost-of-living crisis, where consumers increasingly choose car finance over outright purchases and affordability becomes a paramount concern, Marsh Finance stands out with its unique advantage. Marsh is one of the few car finance lenders in the UK to provide near-prime PCP products, catering to a broader range of customers. With their comprehensive range of financing solutions, they cater to the changing needs of customers and provide unparalleled support to car dealerships and finance brokers.
Join forces with Marsh Finance today to tap into a wider market, increase sales, and thrive in the evolving landscape of car finance.
Representative example: borrowing £10,000 over 60 Months with a representative of 17.9% APR, an annual interest rate of 17.9% (fixed) and a deposit of £0.00, the amount payable would be 59 repayments of £246.25 per month, with one final repayment of £256.25 (which includes the option to purchase fee of £10.00), with a total cost of credit of £4,785.00 and a total amount payable of £14,785.00.