Car buyers are increasingly shopping  with a monthly, rather than total, figure in mind.

Research from AA Financial Services reveals that 94% of buyers surveyed had a monthly budget in mind, rising to 98% for buyers aged under 35.

New trends

“Most people now think about the monthly amount that they can pay on a car rather than the full price,” says James Fairclough, CEO of AA Financial Services. He adds that it is “symbolic of the seismic changes that are occurring in the car industry”.

It follows the trend of purchasing on a monthly contract basis, whether phones or TV and broadband. But more than that, James believes money os trumping everything else.

“People are increasingly and rapidly thinking about finance first, not the car itself, when embarking on getting a new car.”

The past two years have seen rapid growth in subscription services. These offer new and used cars for fixed monthly prices, inclusive of insurance, tax and maintenance, on a flexible basis. Volvo’s car subscription service – Care by Volvo – delivered 2,500 cars to customers in its first year, accounting for 15% of all its UK retail sales.

Stellantis is expanding its all-inclusive ‘Free2Move Car On Demand’ monthly car subscription service to the UK.

Money talks

Of those looking for a new car, the research found that, on average, buyers are looking to spend is £422 per month. There were, however, some notable differences in the average monthly budgets of some groups.

Men planned to spend, on average, 38% (£130) more each month than women. As a proportion of all outgoings for the month, men were prepared to commit 22% of their monthly income for their car.

This compares with 20% of female car buyers.

Car buyers in London have by far the largest monthly budget for that next car of £649. One in seven (15%) car buyers intending to spend more than £500 each month. This is more than double that of other regions, such as East Midlands (£280 per month) or the South West (£272 per month).

London car buyers are prepared to commit around 26% of their total monthly income to get the car that they wanted. The national average is 21%. Londoners also seem the keenest to change their cars more often.