More than a quarter of shoppers who would have bought a new vehicle within a year now report they’ll give it another 12 months. Additionally, interest in buying a new vehicle within the next six months has fallen below pre-pandemic levels, according to market research company GfK, which pointed to vehicle affordability as the culprit.
Six-month demand for a new vehicle dropped 13 percent across all consumers between January 2020 and December 2022, according to a January survey by GfK.
Demand fell 11 percent among households earning $50,000 to $99,999, a key consumer demographic. Interest in buying a new vehicle among households with a married couple and children in that income range dropped 18 percent.
Julie Kenar, GfK senior vice president of consulting, said at a Thursday, March 16 webinar that it’s really middle-class families “getting priced out of the market.” Those households are responding by delaying their purchases, she said.
Decreases in demand among middle-class shoppers were sharper than the 6 percent drop seen among households earning less than $50,000.
Even wealthier households were less likely to buy a vehicle in the next six months, the January poll found. Demand declined 7 percent from January 2020 for households making between $100,000 and $149,000, and it fell 1 percent among households with incomes of $150,000 or more.
The median US household income was $70,784 in 2021, the most recent US census estimate available.
The poll revealed that 60 percent of people planning to buy a new vehicle within the next year or longer said affordability is affecting their decision. Nearly half of those said they would delay their purchase at least a year.
“They’re playing this waiting game — for those who can afford to wait,” Kenar told Automotive News.
The study found that of those who had intended to make a purchase within a year, 65 percent of nonluxury buyers and 58 percent of luxury buyers said their plans were affected by affordability. Among them, 29 percent of nonluxury buyers and 28 percent of luxury buyers said they’d delay the deal another 12 months.
Not all shoppers planned to wait, and delaying the purchase was only the third most popular method to manage affordability among consumers who had wanted to buy within a year.
The No. 1 strategy was finding other expenses in life to cut, with 40 percent of non-luxury buyers and 37 percent of luxury buyers planning to do so. The No. 2 methods for mainstream buyers was to switch to a cheaper vehicle, with 32 percent citing this strategy, while the No. 2 methods among luxury buyers was to search for a longer finance or leasing term.
GfK also found reduced demand when looking out for the next decade. Nearly 60 percent of consumers polled don’t plan to buy a new vehicle in the next 10 years — up from 49 percent in 2019. However, some of these respondents might simply be planning to buy a used vehicle in that time frame, Kenar said .
Near-term, interest in used vehicles has grown. Only 40 percent of buyers intending to purchase a vehicle in the next year are seeking a new model, down from 48 percent in July 2020. Those who plan to buy used in the next year rose from 25 percent to 31 percent.