One in four UK adults (23%) is considering buying an electric car within the next five years, according to new research from Sainsbury’s Bank Loans. The supermarket bank’s latest Car Buying Index, which tracks consumers’ car purchase intentions, reveals that recent Government announcements designed to boost the switch to zero-emission vehicles are convincing large numbers of motorists that their future is electric.
First came news from the DVLA that Vehicles registered from 1 April this year would see CO2 calculations change. After the first year, the amount of tax depends on the type of vehicle, with petrol or diesel vehicles charged £140 a year compared to £130 for alternative fuel vehicles and no tax at all for vehicles with zero CO2 emissions. Vehicles with a list price of more than £40,000 will be charged a rate based fuel consumption, and an additional rate of £310 a year for the next 5 years.
In June’s Queen’s Speech the Government announced it would introduce an Automated and Electric Vehicles Bill which would require the installation of charging points at motorway service areas and large fuel retailers(3). In July it committed to banning the sale of all new petrol and diesel cars and vans from 2040 as part of its clean air plan(4).
While 23% of adults are considering buying an electric car in the next five years, a total of 41% believe they will buy one in the next decade.
The surge is not likely to be immediate, however, with just 3% of those who intend to buy a car over the next six months planning to choose one powered by electricity, compared to 52% who will opt for a petrol vehicle, 22% who plan to buy a diesel car and 14% who will opt for a hybrid. One in ten (11%) did, however, say they are ‘seriously considering’ buying an electric vehicle for environmental reasons, increasing to 16% who would seriously consider doing so if all petrol stations and motorway services had electric charging points.
Registrations of electric vehicles are increasing, with 13,800 being registered in the first quarter of 2017, a 17% rise on the same period the year before.
Sainsbury’s Bank’s research found that recently introduced vehicle tax changes were affecting the vehicle choice of many motorists. One in five who plan to buy a car (19%) said they would deliberately avoid buying new vehicles with higher petrol or diesel emissions because they are more expensive to tax, and 15% said they would deliberately spend less than £40,000 on a new car in order to avoid the vehicle tax surcharge.
Robert Oag, Head of Loans at Sainsbury’s Bank said:
“Over the last six months around four in ten of our personal loans were arranged by customers in order to buy cars. As well as considering the type of car that’s going to be economical for you, and the environment, it’s important you consider the best way to finance the vehicle too.
“Right now, personal loan rates are very low which means monthly repayments and total interest could work out lower than some other finance options. Make sure you do your homework and make a decision that best suits your needs.”
Six per cent of those planning to buy said they had bought a diesel or petrol car since 1 April this year and been caught out by the new vehicle tax rules, while 13% said they were unaware that the calculations had changed.
Concern over potential future rules is also proving a deterrent to buying diesel vehicles for some motorists, with 19% of buyers saying they would deliberately avoid buying one because they fear new rules such as city centre low-emission zones would be introduced that would cost them more money.
Sainsbury’s Bank is offering customers a typical rate of 3% APR representative on loans between £7,500 and £15,000 taken over one to five years.
Nectar customers taking out a loan over one to three years could get an even lower rate. Sainsbury’s Bank has a loan calculator to help customers gauge what their monthly repayments and total repayable amount would be with different Sainsbury’s Bank loans.
Sainsbury’s Bank offers the following tips for those looking to buy a car:
– Check the new vehicle tax rules carefully before you buy – while some pure electric cars remain eligible for no tax, this is not the case with low-emission hybrids or combustion-engined cars, though tax is now partially calculated based on the level of CO2 emissions. You can check the new tax rules here
– Know the market: the What Car? Target Price for each make and model is a good guideline
– When a new model or facelifted version of a car is launched, or is imminent, the ‘old-look’ model can be bought at a greater discount.
– Larger discounts are often available before the introduction of new registration plates.
– If asking for a drop in price is a daunting prospect, try getting additional extras thrown in with the deal, such as a SatNav, Bluetooth or metallic paint.
– Make sure you’re fully decided on the car you want, and on your budget. Don’t be persuaded into spending more than you can afford – and if you don’t like the deal, walk away.
– Shop around. Visit more than one dealer to compare prices and test their willingness to do you a deal. Let them know you’re considering other options.
– Never respond too quickly to an offer/deal. Pause before answering – or say you’ll think about it – to let the dealer know that you’re not desperate.