PCP renewals continue to drive the market, but one in five buyers are concerned about maintaining payments
Weekly poll: How Covid-19 has changed the attitudes of PCP customers
This is the latest report in a series of weekly updates for industry colleagues from Rachael Prasher, managing director of What Car? and Haymarket Automotive. Quoted poll data is from more than 6400 whatcar.com users.
One of the key drivers behind the unpredicted yet welcome year-on-year increase in vehicle sales in July was existing finance and leasing buyers renewing their deals. Like all buyer demographics, their needs and priorities have changed in recent months according to our data.
From our poll of 6400 in-market buyers this week, more than a third had a PCP that was set to mature, prompting them to look to start a deal on a new car within the next three months. Of those, 27% were looking to purchase within the next four weeks, underlying that there is still a level of pent-up demand to serve.
How has COVID-19 impacted their decision-making?
Importantly, more than a fifth reported a rise in their vehicle budget, with 24% now looking to purchase a larger vehicle and another 24% considering a different powertrain than before lockdown.
However, on the flip side, more than one in four reported that they are concerned about keeping up with the finance payments as a result of the economic uncertainty; among those buyers, a third are ‘very’ worried. This sentiment is something we will keep a close eye on over the coming weeks and months.
While the PCP buyer may be the closest thing retailers have to a ‘captive audience’ as existing deals come to an end, their responses also tell us that these buyers have a larger number of cars on their shortlist than those committed to buying with cash or for the first time.
According to our live weekly customer behaviour data, nearly one in five are considering more than four different vehicles, and 37% have at least three cars that they’re looking to choose between.
If that was not enough, the way PCP buyers narrow that shortlist differs from how cash buyers do; they are more likely to contact a dealer via an online tool such as a virtual tour or live chat service.
This is where retailers can win – and most definitely lose – a prospect on their journey to purchase.
More than 67% of PCP buyers say they won’t chase a retailer even once after making an enquiry, and because they enter the process with a slightly longer shortlist, it’s easy to envisage why this will result in a loss of business.
Test drives are also less of a priority for these buyers, with more than a third willing to buy their next car on finance without test driving it first. This is a far greater number than cash buyers, where just 26% are comfortable enough to buy a vehicle without a test drive.
However, when it comes to stock availability, existing PCP buyers rated this more important than their cash equivalents did – suggesting that speedy availability is critical, even if the test drive is not.
The final piece of the jigsaw comes in the guise of mileage. More than 73% of PCP buyers admit that they expect to drive less than before lockdown, and believe that they will continue to. Naturally, this raises an expectation of lower costs, with the mileage limit on their next deal being reduced accordingly.