Almost three-quarters of middle-class buyers in a Santander US survey said they purchased a different brand from their previous vehicle to find the right price or financing.
Driving the news: In Santander US’ Q3 Paths to Prosperity survey of 2,193 middle-income earners with incomes between $55,000 and $167,000, 79% said vehicle access enables them to get to work.
Almost seven in 10 indicated losing access to a vehicle would put their jobs in danger.
Additionally, 53% said they are driving to work more often than a year ago.
“The survey continues to emphasize how important access to a vehicle is,” Betty Jotanovic, president of auto relationships at Santander Consumer USA, told CDG News. “More and more of the participants surveyed are reliant on a car to go to work. More are going to work more days a week than they were a year ago.”
Affordability challenges: Of the middle-class buyers, 73% stated they had switched to a different brand to find the right price for a vehicle.
Nearly the same amount indicated they purchased a smaller or less expensive vehicle to cut down on cost.
And 69% declined add-on products to trim costs.
“That just further demonstrates how critical affordability has become to the consumers,” Jotanovic said. “...With inflationary pressures, and again, it's not just the vehicles; it's the insurance, it's the cost of everything, the food basket, that's impacting affordability. And with cars continuing to be a priority, the consumers are having to make those concessions.”
More than half delaying purchases: The percentage of buyers delaying vehicle purchases stayed at 52% for the second straight quarter, up from 49% at the start of the year.
The percentage of buyers considering buying a new vehicle in the next year fell by 3 percentage points to 47%.
But among active car buyers, 71% say the rising prices will make them more likely to buy in the next three months.
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Most considering used options: Seven of 10 buyers indicated they felt priced out of the new market.
That shows, with 82% of prospective buyers indicating they are considering a used vehicle.
And 90% of buyers said used vehicles come with modern features and that certified pre-owned is a good way to get a reliable vehicle.
“Consumers continue to be creative with their budget and identify ways to make concessions, whether it's deprioritizing other budgetary items or moving to alternative vehicles, whether it's a CPO versus new or shifting different makes and models to meet their budgetary constraints,” Jotanovic said.
Dealerships play key roles: More than seven of 10 buyers took out an auto loan to buy a vehicle.
Of those, 78% of recent buyers relied on the dealership to help find financing that works with their budget.
On budgeting, 84% stated they focused more on monthly payments than total cost, and three-quarters considered loans with terms past 72 months.
And overall, more than 60% of respondents said they are using AI for research in financial decisions.
“AI continues to support the trend of consumers becoming more and more informed as they shop for a vehicle purchase or shop for vehicle financing,” Jotanovic said.
Bottom line: Affordability is on the mind of the middle-class buyer, who is changing their purchasing decisions across different makes and models.
But consumers are still shopping and looking for dealers to help.
“The dealer continues to be integral to the car purchase and the car financing process,” Jotanovic said. “... With dealers, a critical element is to understand their client base and think about supply and demand and understand the markets that they are in and the right product, the right collateral for their customer base.”
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