Why this is a great time to buy a new car

Couple hugging in car dealership
Is the booming car market a reason for consumers to smile?

March is usually seen as a time when you'll pay through the nose for a new car. But it could actually be the perfect time to buy, as Andrew English explains

The UK registration plate, which was first introduced in January 1904, has undergone three major changes: in 1932, the Fifties and in 2001 - when the controversial current scheme was introduced, bringing two plate changes a year, in March and September.

We Brits have had a bit of a love-hate relationship with the registration plate over the years, but the cachet of driving a car with the latest letter or number has never really gone away. And with March fast approaching, when cars with a 65 on their plate become old hat and the first 16-plate models hit the road, the UK market is booming like never before.

So, should I buy now?

I hate to sound like a sandwich-board man touting a sign for the lemming rush, but yes, and there are a lot of good reasons to say this.

The first is that if you abuy a new car with the latest registration plate on the front, it will be reflected in the residual price you get when you sell it, and if you are buying through a finance scheme that residual price will be reflected in the monthly payments.

What if I don't care about having the latest plate?

You can also get cheap deals on pre-registered cars and run-out models at this time, though remember that bargain price could well be reflected in the price you get back.

How do I secure the best deal?

It can all be a bit bewildering at first and you need to watch the small print, particularly the mileage allowance, deposit and final (or balloon ) payment, but there are plenty of bargains to be had due to the amount of competition in the market.

So, what to look out for when you walk into the showroom? All the old rules still apply. Bear in mind the total cost to change, which is the price you pay for your new car minus the price you get in trade-in on your old model.

Also be aware that interest rates continue to be low so the cost of a loan can be competitive, especially when arranged through your bank or building society, and although the convenience of a monthly payment Personal Contract Purchase (PCP) can look really appealing, do your sums carefully before committing.

Should I avoid diesel, given the emissions scandal?

While the oil price dropped and stayed below $30 (£20.87) a barrel towards the end of 2015, the effects were felt unevenly across the country, with wildly differing prices at the pumps. Diesel prices per litre didn’t fall as much as those for petrol and at the time of writing it’s possible to find unleaded at 88p per litre. With a slowdown in the Chinese economy and other developing nations, low but unstable fuel prices are likely to be a feature of the rest of this year.

And diesel isn’t just suffering from (relatively) higher prices. Much ink has been spilled debating the ongoing VW diesel emissions debacle, but in the immediate term it has slowed growth of VW’s UK sales and is also partially responsible for diesel falling from a 50 per cent new-car market share in 2014 to 48.5 per cent last year.

There are also fears that “Dieselgate” could spread, with French investigators recently visiting Renault’s HQ as part of an industry-wide investigation. It is developing news, but we can be sure that testing requirements are going to be made more rigorous with stiffer on-road testing, and the testing regime – and the testers – are also likely to come under closer scrutiny.

Those new, tougher controls and standards will push up prices for new cars – with diesels suffering most – so if you do the sort of driving that suits diesel cars (motorway miles) now may well be the best time to buy one before these new regulations come into force.

Which cars are most popular?

The top five bestsellers in 2015 were the usual suspects: the Ford Fiesta took top spot, with 133,434 registrations, the Vauxhall Corsa was second with 92,077, followed by the Ford Focus (83,816), Volkswagen Golf (73,409) and Nissan Qashqai (60,814).

The marques with declining sales were also easy to predict: Suzuki was down 8 per cent, Alfa Romeo dropped 8.22 per cent, Bentley fell by 6.3 per cent, Citroen and DS were down more than 4 per cent, and Seat declined by 11 per cent.

Winners, meanwhile, included Smart, up 94 per cent with its much improved new ForFour city car, and Porsche, up 32 per cent. Also ahead of the curve were BMW, Dacia, Hyundai, Jaguar Land Rover, Lexus, Mazda, Mercedes-Benz, Mitsubishi, Subaru and Renault. However, even these brands did well precisely because of the attractive deals they were prepared to offer, so don't think you should rule them out.

Is there anything else I should know?

If you are planning on buying a new car this March, make sure you’ve factored in the fuel consumption and CO2 emissions, because motoring is not going to get much cheaper than it is right now.

An illustration of the market “adjusting” for this are sales of alternative-fuel vehicles (AFVs), which grew by 40.3 per cent last year, taking 2.8 per cent of the total market and showing no signs of slowing. Plug-in hybrids take the lion’s share of the AFV market, and can be incredibly tax-efficient.

Also bear in mind that it's going to cost you more to insure your new car this year – and not just because of the increase in insurance premium tax, which came into effect last November. Apparently, the cost of claims has also increased, owing in part to the rising cost of medical care, but also because the low cost of fuel has encouraged more younger and older drivers on to the road – and these demographics tend to have more serious accidents.

Possible good news here is the introduction this year of legislation designed to weed out fraudulent claims, particularly those for dubious whiplash injuries – insurance fraud such as this is estimated to cost UK motorists about £50 per policy.

Good luck, and enjoy your 16-plate new car.

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