Luxury cars now on more driveways across the UK - despite country officially getting poorer amid high cost of living
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Sales of luxury cars including Mercedes-Benz, Audi, BMW and Land Rover have boomed over recent years despite the country officially getting poorer. These makers are consistently among the top cars that are purchased every year and the latest models appear to be outside households across the country almost immediately after they are released.
On the other hand, brands such as Ford, Vauxhall, Peugeot and Seat have seen their sales fall over the last decade. Last year Ford discontinued its Fiesta despite selling 4.8 million cars since 1976.
The growth in the amount of luxury cars being sold means drivers have been taking out huge loans - totalling over £17 billion today. In 2009 the average UK earner took home £435 a week and borrowed just under £12,550 to finance their vehicle. But according to data from The Car Expert, this year earnings are £209 higher but the average amount borrowed to pay for a car has more than doubled to £25,566.
Cheap financing deals including personal contract purchase (PCP) have allowed drivers to get hold of flashy cars that they would never normally afford. Most drivers signing a PCP will never actually own their cars and after around three years they can trade up without ever having to pay significantly more money.
In 2009 just over half of new cars were financed. But now the popularity of PCP has meant that the amount of people buying cars on finance has increased. The figure reached an all-time high of 93pc of new cars bought in 2020. However, the figure dropped down to 10pc on that number in 2022 and was 78pc in the first half of this year as rising household bills may have forced many to cut back on spending.
Now luxury cars are seeing a huge boom in how many vehicles are sold. Porsche’s share of the new car market in the UK between 2009 and 2022 has seen a 267 per cent increase. Land Rover is up 80 per cent, while Lexus is selling 75 per cent better. BMW and Mercedes are up 37 per cent and 35 per cent, while Audi is doing 48 per cent better.
Brands that performed better when most drivers bought their cars outright in 2009 have lost significant ground. Almost 233,000 Vauxhalls were registered in 2009 compared with only 81,873 in 2022, a decline of 57pc. Just over 60,000 new Fiats were given new plates in 2009 but only 19,647 were registered in 2022. Ford, Citroen and Subaru all lost around 50pc of their market share, while Peugeot and Renault lost 39pc.
Edmund King, president of the AA, told The Telegraph that for some households having a newer car is just about keeping up appearances and a PCP deal is an easy way of achieving this. He said it’s “keeping up with the Joneses” and that people start to “think how could I do that [buy a nicer car] or maybe do that on a lease”.
Ian Plummer, commercial director at online car reseller Auto Trader, said that PCP has “enabled more people to access a higher quality [of car] and they are able to renew more frequently.” He added: “There’s a feeling when you have a PCP that you own the car. It’s outside your house and your name is on the documents. But you don’t own it.” He told The Telegraph that there are no signs drivers are trading down for more mid-range vehicles and it is “often seen that finance is a way to afford a more expensive car.”
According to figures by the Society of Motor Manufacturers and Traders, sales figures for new cars are still roughly 40pc lower than pre-pandemic levels in March 2018 and 2019. However, Stephen Haddrill, director general of the Finance and Leasing Association, told the Telegraph that drivers are still wanting to buy larger premium vehicles like SUVs.
He said: “If they [drivers] can afford it through a monthly contract then why not? Mortgages enable us to buy bigger houses than we’d ever be able to do otherwise.” Despite inflation and higher cost of living, Mr Haddrill added that cars are “one of the last things” that “people give up.”