Britons Will Struggle to Stay on the Posh Car Treadmill
Interest rates are climbing, but elevated second-hand values will cushion the impact for a country hooked on auto finance.
“I’ll take that one, please.”
Photographer: Simon Dawson/Bloomberg
Visitors to Britain are often struck by how many people drive fancy cars. If an Englishperson’s home is their castle, then their ride must be a top of the range BMW or Audi. As the cost of credit rises, maintaining that lifestyle is becoming harder, threatening to put a dent in automakers’ profits.
While real UK incomes have declined since 2008, ultra-low interest rates softened the blow by helping Brits acquire a sparkling new premium motor every few years — one they might otherwise not have been able to afford. Now, rising borrowing costs imperil this happy arrangement by pushing up the monthly cost of the Personal Contract Purchase (PCP) plans that finance the bulk of UK private car purchases.