DRIVERS are increasingly moving from car buying to leasing – and it’s due to online ‘rental’ firms such as Netflix and Spotify says Leasecar.uk head Mike Lloyd.
He says the popularity of streaming services is making consumers more comfortable with the idea of renting goods via monthly fees.
Responding to an industry report showing the first fall in new car sales in six years, Mr Lloyd said that 75% of Leasecar.uk’s orders are now direct to consumers rather than businesses.
He explained that the culture of “renting” digital content by streaming it online through providers such as Spotify and Netflix is beginning to show in offline goods.
Consumers now feel less need to own products and would often rather pay a monthly fee to rent or lease them than a loan or hire purchase agreement.
In terms of car leasing, this has the advantages of not purchasing a depreciating asset and being able to replace the vehicle regularly with a new model. Lessees also do not have to worry about fixing the car or disposing of it.
The report from the Society of Motor Manufacturers and Traders found that approximately 2.5 million cars were registered in 2017 – down 5.7% from 2016.
The SMMT expects the decline to continue this year, falling by 5% to 7%. Diesel sales also dropped by 17%.
Mr Lloyd said: “The SMMT report didn’t surprise us, as we had already seen a dramatic increase in personal car leasing.
“Nowadays, most people are comfortable renting music, books and other online content, so it’s not so much of a jump to leasing a new car.
“Consumers have become more financially savvy and they realise that the biggest cost to owning a car is the depreciation.
“They realise they can lease a brand new full sized family car for a couple of hundred quid a month.
“If they bought it, the car would depreciate at about the same rate, so leasing effectively funds only the depreciation.
“Cars are known to depreciate quickly, so for a lot of people it makes far more sense just to lease it, and then it’s very easy to replace it with a brand new one later.
“It’s also a more attractive option to spending Saturdays and Sundays underneath the car stopping oil leaks or fiddling with the spark plugs.
“And when it comes to the time to get rid of it, there’s no headache and they can lease a brand new car that looks great on the drive and has no issue.
“It is a generational change, but at the same time we’re seeing a rise in popularity of leasing across the board with people of all ages ordering cars.
“There’s also a strong word-of-mouth element when people see a friend driving a brand new car and ask how they managed it.
“When they hear it’s leased, they think, oh right, maybe I could do that too.
“There is definitely a cultural shift going on – it starts online with the digital goods, and then eventually it makes its way offline to other products.”