Buying a car is no longer a priority. This does not necessarily mean that there is less need to own a vehicle, but that more and more drivers are opting for other types of alternatives, from rental to hourly rental. Ahead are other types of essential expenses, such as housing or shopping cart. Preference is even given to other expenses, such as vacations, at a time when hotel prices are skyrocketing.
The automotive industry speaks openly about how this reality has changed. “Currently, buying a car is no longer a priority for many consumers. Factors such as housing, whether purchased or rented; and expenses linked to supplies and basket have become more pressing concerns,” explain sources from Faconauto, the professional association which brings together the official resellers of the brands. Added to this are interest rates, which have discouraged purchases on credit.
“The car has become a possible management element. Today, families invest less in purchases and more in other expenses, in the rental of more services, they seek temporary mobility solutions, such as “car rental”, goes in the same direction José- Martín Castro, president of the Spanish Rental Association. vehicle. “Having a car has gone from a fixed expense to a variable expense.” Ultimately, this is the same thing we see in other very different sectors, such as content platforms. “Mobility follows the same trend, we want to have everything without being tied to anything,” they say from Ganvam, the association which brings together both dealers and workshops.
You still go to the dealership, but less
Even though ownership, in the traditional sense, is no longer the only alternative to vehicle ownership, the sector continues to be guided by registration figures, which detail monthly trends in car sales. And they’re doing well, just not as fast as the industry would like. Until September, more than 744,000 cars were sold in Spain. Figure which includes both combustion vehicles and low-emission vehicles, sold to individuals or businesses. These sales are 4.7% higher than last year, but we are still very far from pre-pandemic data, as 23% fewer cars are sold than in 2019.
When you buy it, it’s not like before either. You now arrive at the dealership “with 80% of the research done,” argues Faconauto. “According to our data, 93% of consumers consider it necessary to see and test the car before making the purchase,” adds this association. “However, the dealership visit ratio has fallen to 1.2 or 1.5, whereas decades ago a buyer would visit at least five dealerships before purchasing their vehicle.”
“People now know very clearly what they want. They come very informed and the distributors also become technology advisors, because sometimes they come with the idea of one type of vehicle and, in reality, another is better for them,” Ganvam sources point out.
New purchasing models
One of the tests of the model change is pay-as-you-go. Of all the cars sold this year in Spain, almost 250,000 correspond to rental companies. A segment growing by 12.4% compared to the same period in 2023. In other words, three out of ten cars put into circulation correspond to this type of contract. In total, the rental stock amounts to around one million units, or more than 930,000 at the end of August.
“There is a change in the structure of the client who comes for rental, there are fewer companies and more independents and individuals,” explains José-Martín Castro. “And within that we have an individual under 40, who follows new patterns, who works in a very planned way, who doesn’t want any scares because he knows very well what his salary is and prefers that all their expenses are blocked. These are people who consider car ownership as a problem rather than a solution,” he adds.
“We are seeing notable growth”, in this usage contract, “from millennials and generation Z”, underlines Faconauto, because they prefer not to have the financial commitment that traditional purchasing implies. Furthermore, the various sources consulted emphasize that it is a gateway to low-emission mobility. “These are drivers who initially do not buy an electric vehicle, but who opt for alternatives that allow them to use a low-emission car, for example to enter city centers.”
This is where carpooling and other types of alternatives also come in, even if not everything has worked there. For example, Seat decided to abandon this activity – both in the field of motorcycles and cars – after losing more than 31 million euros. There are other companies that offer other types of contracts, but they don’t work as well as they did a year ago. The Chinese brand Lynk & Co, which offers “car sharing”, as well as a subscription model starting at 525 euros per month and another for traditional sales, saw its sales fall by 72% this year until in September. Last year, it registered more than 3,700 cars between January and September and in 2024, over the same period, it will slightly exceed 1,000 units.
The used option
Buying and selling used cars rose to prominence three years ago when the auto industry’s supply chains came to a screeching halt due to a lack of electronic chips. “With the chip crisis, the change in demand was noticeable, but still more used cars were sold than new ones,” Ganvam explains. The ratio, two for one. “But in other European countries, it is even higher, three used vehicles for a new one or more,” they add from this association of automobile sellers and repairers.
Last year, this relationship remained at two to one. In Spain, more than 1.9 million used vehicles were sold. It is worth remembering that Spain has one of the oldest fleets in Europe, as the average age of cars in circulation exceeds 14 years.
With the crisis in supply chains, “what was available at that time was second-hand goods over 10 years old, which were revaluing, because there was a great shortage of second-hand goods from zero at five years,” explains the Faconauto association. “Now production has normalized, so stocks are made up of these young used vehicles which are again the most in demand and those which attract this market.”
One of the factors that is changing this segment is relocation, “it is for customers who are interested in the second-hand market but with certain guarantees,” explains José-Martín Castro. “This makes it easier for those who buy a used vehicle, with a monthly payment that lasts between six and 18 months, and then decide whether they will keep it.” There, says the head of the rental association, “there is a greater desire to keep the vehicle” than if it were a new car.
In recent years, the strategy of large multinationals regarding this sector has also changed. For example, in 2020, Banco Santander bought the site Coches.com focused on the used vehicle and rental market. And manufacturers like Stellantis, the parent company of Opel, Fiat, Peugeot and Citroën, have Spoticar under their umbrella, also linked to this segment.
