Car Market Still Strong Despite Credit Crunch

Despite rising fuel costs, household bills and falling house prices, the British public are still enjoying purchasing and modifying their cars, with 153,420 new cars registered in July of 2008.

Motorists who modify their vehicles are said to be mostly 16-24 year olds who still live with their parents and are therefore not affected by rising prices and the tightening of credit to the same extent as those who own their own home. Popular modification gadgets at the moment, particularly for those with newer cars, include integrated satellite navigation systems that feature iPod playback. According to transportation groups, 60% of car owners carried out at least one vehicle modification in 2008, up from 57% in 2006.

Many expected the credit crunch to hit car dealerships hard, particularly with the cost of fuel currently being so high. Rather surprisingly, however, this has not been the case. Customers have been downsizing from four wheel drives and fuel burners to more efficient, eco friendly cars. Unfortunately, while there have been many enquiries from consumers regarding hybrid cars, very few car showrooms stock them, due to most petrol stations in the UK not being able to provide the necessary fuel. Business was brisk with fleet managers for the Honda Hybrid however, which was not only more fuel efficient but also benefitted from a substantial road fund tax discount.

The top end of the car market is also looking healthy despite the current economic instability. Sales of prestige and performance cars like the Bentley Continental and the ?143,000 Ferrari 430 are up 2% in some areas while the Maserati Gran Turismo has seen its sales go up by 15%. The budget used car market remains active and is likely to continue forward, contradicting several reports that the used car market was suffering badly.

However, Price may well become an issue if economic conditions tighten, and if they do then the nearly new market is likely to see it first. Prices in the nearly new sector tend to be more volatile as volumes are lower and prices can be affected by activity in the new car market, where specific manufacturer activity, such as 0% finance, cash-back deals or no-cost specification upgrades can affect user demand for used cars.

Of course, people will always need to drive and will therefore always be on the look out for cars that take their fancy. While the credit crunch has limited the amount consumers can borrow from many financial institutions, car credit is still readily available and is continuing to assist many who are feeling the strain of the credit crunch.

Disclaimer: Matthew Pressman writes for a wide variety of commercial clients. This article is intended for information purposes only and readers should seek additional information before taking any actions based on its content.