All the way with Drive-away
BY JAMES STANFORD | 16th Sep 2008
The ACA Research study, which surveyed 1500 people who had purchased a new vehicle in the past three years, provides an insight into consumer behaviour and their buying experience and attitudes, with a particular focus on finance.
When provided with a list of offers used by dealers to clinch the sale, 41 per cent said a drive-away package was included, 28 per cent were offered free or discounted optional extras, 20 per cent and 19 per cent were lured with free or discounted extended warranty or roadside assistance respectively, and 17 per cent were offered free or discounted on-road and/or delivery costs.
A finance offer was made to 11 per cent of respondents, while free or fixed cost servicing (nine per cent), free or discounted fuel (six per cent) and vehicle insurance (four per cent) also made it into the deal. Thirty per cent were not offered incentives.
Other key findings were that 59 per cent of Australians purchased their vehicles using finance rather than cash. Of those opting for finance, 47 per cent did so through the dealership where they purchased the vehicle.
When asked to declare the “most influencing factors” that determined their choice of finance lender, survey participants revealed that the speed and ease with which the finance could be arranged was equally important as the price of the finance.
Thirty-six per cent of respondents nominated the lender’s actions in ensuring the finance was approved quickly as most important, matching the 36 per cent who said price was the critical factor. The remainder of respondents said the reputation of the lender was most important to them.
Few respondents spent much time looking at the best car deal for them and several took less than a day to make the decision. In contrast, eight per cent took more than six months to decide on their vehicle, with 23 per cent taking between two and four weeks to choose.
The market research consultancy estimates that $12.8 billion was spent on new-vehicle sales last year using finance, with a further $10.5 billion worth of cars purchased over the same period using cash.
ACA Research managing director James Organ told GoAuto that consumers considered finance as far less important than the purchasing the vehicle.
“There is a lot more emotion tied up in the choice of the car, but not when it comes to finance,” he said.
Mr Organ said there were three different types of finance customer: those who gain pre-approval before going to shop for a car those who shop around at the same time as they are researching the car and those who pick a finance provider after they have chosen their vehicle.
He said the big banks had an advantage when it came to gaining the business of those pre-approving, while all financiers had a good chance when it came to customers looking for finance when shopping for the car. Dealers had an obvious advantage when it came to customers who had yet to lock in finance when they entered the showroom to buy the car.
“There is a good chance they will sign up with the dealer because they make it so much easier for them,” said Mr Organ.
The ACA Research survey found that of those who chose to finance their car, 30 per cent did so with a traditional car loan, while 15 per cent chose novated leasing and another 15 per cent chose a mortgage drawdown facility.
Of the rest, the most popular option was a personal loan (13 per cent), followed by hire purchase (nine per cent) and a finance lease (eight per cent).
It also revealed that one per cent of respondents used a credit card.
Interestingly, the respondents’ choices showed the automotive finance sector as highly fragmented with no one lender enjoying a dominant role.
Of those surveyed, nine per cent signed with Commonwealth, eight per cent went with Esanda and Westpac, while seven per cent picked St George and GE Money. The remainder of the respondents took out finance with a large range of large and small players.
The ACA Research survey also asked respondents about their awareness of finance companies. Asked to name four finance providers, 64 per cent of respondents nominated one of the big four banks, 39 per cent mentioned second-tier banks, 39 per cent mentioned automotive finance companies and 32 per cent nominated large finance companies such as Esanda and GE Money.
ACA Research said the average price paid for the vehicles by the respondents was $38,636, with 19 per cent buying a vehicle between $10,001 and $20,000 and eight per cent spending $70,000 or more on their vehicles.