Cars are more affordable than at any time since the late-1950s, according to new data.
An investigation into the cost of cars as a proportion of earnings found that, despite the sometimes eye-watering price of new cars, Britons spend less of their income on them now than any time in the last 60 years.
The study, conducted by Mini Financial Services, looked at car prices in 1959 (the year the original Mini launched) and for every year since then up to 2018. It found that in 1959 the average car cost around 130 per cent of the average annual wage but by the 1970s that had dropped to around 80 per cent and in 2018 it had fallen to 60 per cent.
Using data from Mini’s own sales, Autotrader and the Office for National Statistics (ONS), it found an every bigger difference in terms of disposable income. As salaries have risen, Britons have found themselves with more spare cash than before and where the average car – including new and second-hand – was 300 per cent of the average household disposable income in 1959, now it’s just over 50 per cent.
In 1959, when the original Mini was launched, just one in three households owned a car. In 2018, that figure was more than three quarters (78 per cent) as cars have become more attainable for more people.
The growth also reflects a change in the way many people buy their cars. When the original Mini launched, customers could buy a car outright, take a bank loan or use hire purchase. While all three are still options today, figures from the Finance and Leasing Association show that around 90 per cent of all new car purchases involve a finance deal from one of its members and Mini’s own figures show that personal contract purchases (PCP) account for 80 per cent of all new Mini sales.
Its research also found that more than half of customers treated a car in the same way as a mobile phone or TV package. Fifty-two per cent of those questioned said they considered the monthly cost of the car more important than the full list price, with even more (57 per cent) not intending to keep the car for longer than three years – the usual PCP deal term
Lenders have also recently begun to offer PCP deals for second-hand cars as well as brand new models.
However, separate research by InsuretheGap found that two-thirds of car owners still bought their last car outright, while 10 per cent used a PCP deal, seven per cent bought on hire purchase and five per cent leased their car.
It found a significant age split, with the over-55s most likely to buy a car outright – 72 per cent – and the under-35s least likely – 42 per cent. And while Mini’s research found more than half of drivers will change their car after three years, the InsuretheGap study found nearly a fifth of UK drivers (18%) keep their vehicle until it breaks down completely or it will cost more to repair than it is worth.