The voluntary termination of vehicle personal contract purchase (PCP) and hire purchase (HP) agreements are at an all-time high, according to Leeds-based car auction firm G3 Remarketing.
The company has seen a 35% increase in the volume of this type of car going through its programme of car auctions – up to 1,000 a month – compared with the same period in 2016.
The popular PCP and HP methods of financing a car come with the option to end the contract once 50% of the deal has been paid back – a condition which consumers are taking increasing advantage of.
G3’s director, Matt Dale, says this trend indicates strong demand for new vehicles, caused by relatively cheap finance agreements which make premium brand cars more affordable.
Dale commented: “The PCP model has forced a shift in the UK motor industry, with 60% of new cars now being bought via this method. And these figures aren’t set to fall any time soon.
“People are simply changing their cars more often than they ever have, and don’t want to be held back by finance agreements.”
Dale believes this is also having an impact on the used car market. “There’s no disputing the fact that values of used cars are falling. Ultimately, consumers are wise to the affordability of PCP agreements, so they now also expect to pay less for a used vehicle.”
G3 Remarketing recently launched an advanced audio and video inspection application – AVID – following 18 months of in-house technical development and £150,000 of investment.