A Look At Autumn Spending And What It Tells Us Moving Forward

As Christmas and the New Year approaches, businesses are eagerly awaiting the Christmas surge of shoppers. In the car industry, Christmas can be a slightly quieter period, with customers choosing spending on smaller Christmas presents than a large outright purchase. Nevertheless, it’s important for all organisations to gain insight into customer intentions as we move through Christmas and into the New Year. The data provided by PWC looks to understand customer sentiment and spending intention changes vs previous years and months. We’ve taken a look and put together the main headlines, as well as how this could impact future spending.

The Headlines

• Consumer sentiment is at its lowest level in 2024 so far and has encountered its biggest drop in two years. Sentiment is still higher than this time last year though.
• Economic factors like stable inflation, increases in real wages and interest rate cuts should have kickstarted spending, but this hasn’t come true.
• Decline in sentiment felt the strongest in over 65s and the least affluent socioeconomic groups. This has been linked directly to concerns around benefits and taxes.
• Sentiment has risen in the younger generation. This has been put down to national insurance cuts and the subsequent increase in the national minimum wage.
• Household finances are in a better position than last year, although 72% of respondents say they are looking to save where they can.
• Although sentiment is down, spending intentions for the coming 12 months haven’t been impacted in certain areas.

What Does This Tell Us About Future Spending?

With the budget freshly released, sentiment could yet change even more. Specifically for the car finance market, a trend of customers spending elsewhere could see a car purchase being kicked down the road, presenting finance providers with a short-term issue to solve. The desire for increased future spending does bring cause for optimism, but this should be met with caution.

How Can Finance Providers Adapt In The Short Term?

Taking a proactive approach, finance providers should tailor their products to support customers currently on the fence about purchasing a car. Can you offer slightly lower rates, or a larger grace period for missed payments? Can you revise your vulnerability detection processes to catch issues early on, as well as training staff in customer vulnerability and support? You could offer valued-added finance products, that provide a more complete car package. These small tweaks could set you up to meet unsure customers in the middle and provide a service that values their current financial position whilst still helping meet their car needs.

The Latest Budget And Its Potential Impact

The budget announced by Rachel Reeves in late October 2024 is set to add further uncertainty to customer and household finances. The upcoming changes to road tax could spark even more scepticism, and for finance providers this could present a serious challenge. Again, providing support and care, as well as value-added finance products that help the customer save even slightly on future maintenance could be key in getting a sale over the line.

Summary

The UK economy is faltering, with customers starting to save more and put off larger purchases. For car finance providers this is nothing new, with the uncertainty caused by COVID and the hike in energy prices bringing down spending. To thrive in these hard times, streamlining your processes and developing your support systems for vulnerable customers is key to making the most of a tricky situation. Considering value-added products could also be a great way to present a cost-saving proposal to a customer, at a time when they need it most.