With figures showing that consumer spending is tightening while new car prices are going up, new research from a novated lease provider reveals how far Aussies will go to get a better price on a car. A whopping per cent of people researched will haggle, downsize, downgrade or compromise to fork out less for a new car.
The findings were derived from a survey of an independent panel of 1010 Australians commissioned by Novated Lease Australia, a novated lease provider helping Australian motorists access the many benefits that novated leasing has to offer. The full survey results, including age and State breakdowns, can be found here: novatedleaseaustralia.com.au/research/save-on-car-purchases-in-fy24
In what will be unwelcome news for dealerships, Novated Lease Australia found that 40 per cent of respondents, if they were in the market for a car, would negotiate on the advertised price. More than a quarter (27 per cent) would only buy during a sale. One quarter (25 per cent) would not pay for extra features, while an equal 18 per cent would choose a cheaper brand or avoid the premium model in the range. A quarter (24 per cent) would buy a demo or a smaller car. Nearly one third (31 per cent) would choose a used car. However, only 8 per cent of survey respondents would get a novated lease through a salary sacrifice arrangement with their employer, despite the potential significant cost savings.
Shaun McGowan, Founder and Managing Director of Novated Lease Australia, explains how the lack of knowledge on novated leases could be preventing Aussies from saving thousands of dollars. “With a novated lease, drivers can save money on GST and income tax, and they don’t have to pay the full cost outright. Plus, by novating an electric vehicle or plug-in hybrid – up to the luxury car tax threshold – employers won’t be subject to fringe benefits tax.
“For example, the Tesla Model 3, now Australia’s most popular EV, can have a weekly net cost of less than $200pw for someone on a $65k salary, which is on par with the Toyota Corolla Hybrid. Yet it is deliverable within 3-8 weeks, whereas there could be a 12 to 18 month wait for the Corolla. There’s an awful lot of savings for both drivers and their employers through a novated lease arrangement, without having to compromise on the age or spec of the vehicle.”
A closer look at the data reveals that cost saving preferences varies according to gender and age. Older Australians are keen to negotiate on cost, with 44 per cent of over-50s reporting so, compared with 39 per cent of 31-50s and 33 per cent of 18-30s.
Women are more likely than men to purchase a used car, with 35 per cent of female respondents choosing this option, compared with 26 per cent of men. Younger drivers are also more willing to buy a used car: this option was by 38 per cent of 18-30s, compared with 31 per cent of 31-50s and 27 per cent of over-50s.
The survey also found that if in the market for a second-hand car, over a quarter (26 per cent) of Aussies would purchase a car between 3-4 years old, in a bid to get a more affordable vehicle. Further to this, one in ten Aussies (10 per cent) were willing to get a car 9-10 years old to be able to afford it.
With the survey results in mind, it’s easy to comprehend that Aussies are considering alternative ways to purchase cheaper, or more cost effective, vehicles.
Last year, Australia’s car industry delivered a total of 1,081,429 new vehicles to drivers around the country, despite post-pandemic supply chain challenges and delivery delays.[1] SUVs and light commercials accounted for 76.8 per cent of car sales in 2022, suggesting that the majority of purchases were for business and trade purposes.[2]
Shaun points out that there’s an opportunity for both the business and its employees to save money through novated leasing. “Looking at car sales from last year, it’s clear that – despite purse strings tightening – Aussies are prioritising purchasing a vehicle that offers a commercial or business purpose too. If a salesman needs a car to travel for work, it’s non-negotiable, so if they need to make the purchase, they should explore whether they can get a novated lease through their employer. Which offers cost savings for themselves, and their business too.”
The full survey results, including age and State breakdowns, can be found here: novatedleaseaustralia.com.au/research/save-on-car-purchases-in-fy24