BANDON, Ore. — The number of consumers sticking to their new-car budget is decreasing, while the number of customer to whom price is no object is on the rise, according to CNW Research’s monthly automotive retail summary.
The firm reported that over the years, the percentage of “fixed” budget consumers — referring to customers who hold with 5% of budget when making a vehicle purchase —had diminished. That is, until the recession, when fixed budget consumers climbed to 57%, up from the 40% range in 2002 through 2007.
“It now appears that the ‘fixed’ grouping is finally returning to the pre-‘07 trendline as fewer consumers are staying within the 5% price v. payment differential,” wrote CNW’s Art Spinella in the firm’s monthly report. “We believe the share of ‘fixed’ will decline to around half in 2015 and drop into the 40% range the following year.”
Another group of consumers, who consider price to be no object, are rapidly growing. The group represented 8% of consumers last year, and CNW predicts that number will approach 9% in 2015 — the best it has been still 2002.
“What’s it mean for automakers? Higher profits all around,” Spinella said. “As consumers find extra room in their budgets for higher priced cars and trucks, they move upscale either in trim level or product line.”
Similarly, car buyers are also beginning to drive more. After the recession, the number of people driving over 20,000 miles fell to 7.6%, the lowest since 1998. Those who drive less than 10,000 miles annually now represent 47.1% of vehicles, down from nearly half in 2009.
“Looking at the total miles driven per vehicle, the numbers again point to more roadies with 2014 coming in at 10,116 miles average,” Spinella noted. “This includes secondary cars that may be used minimally as well as daily drivers. That’s the first year since 2008 that mileage exceeded 10,000.”
Combining new and used vehicles, 1998 showed about 9,500 annual miles, rising to nearly 11,000 in 2006 and steadily falling through the recession to about 9,700 miles. Since 2011, there has been a steady — albeit slow —increase in year-over-year miles driven.
“Aside from lower gas prices, vehicles have become far more fuel efficient, of higher quality requiring fewer repairs or ‘down time’ and have added conveniences,” Spinella remarked. “That, in turn, has encouraged more consumers to drive to destinations rather than take alternative means, mostly airlines.”