AutoTrader has said retailers should look to capitalise on more opportunities for PCP in the used car space, after PCP overtook HP for used vehicles in 2017.
In a market report released on Thursday, the retail platform said that finance offers, coupled with a wider and younger used car park, had the potential to entice more customers, but only if retailers improved the financing process when it came to used vehicles.
“With 88% of the new and approximately just 30% of the used car market bought on finance, there is clearly room for growth of finance uptake among consumers,” the report said.
It continued: “The flexibility of modern finance plans, such as PCPs, will make it a more attractive purchasing option than paying upfront.
“However, for retailers to capitalise on this opportunity, they need to evolve their second-hand PCP offers in line with new. New car finance is clear, transparent and easy for customers to understand. In contrast, the used car finance journey is less clear, typically involves a higher APR, and very often isn’t transparent online where car buyers do their research.”
The report also highlighted a shift in consumer perception of costs associated with car buying. Just 23% of consumers interviewed by AutoTrader considered APR an important element in car buying, with 53% saying conducting little or no research on the issue.
AutoTrader drew parallels with mobile and streaming subscription packages, and concluded that car buyers now evaluated cost on a monthly expenditure basis, rather than on a total cost of purchase one.
“Finance isn’t driving irresponsible spending, but it’s clearly shaping the way consumers view the cost of a new or used car,” it said.
It added: “Getting finance right offers a huge opportunity for growth in the new and used car markets.
“For those who went one to pay for their car outright, one in three compared different finance offers online or used an online finance calculator. Clearly, by making the process easier, there’s also an opportunity to convert those willing to pay in cash to a more lucrative PCP plan.”