Topic: consumer confidence
Today, our Director of Automotive Industry and Economic Analysis, George Augustaitis, takes a look at how consumer sentiment is trending among CarGurus shoppers.
Before the onset of the COVID-19 pandemic, UK consumer confidence (as measured by the GfK UK Consumer Confidence Index) was trending upward. As of last week, it had dropped to -34, signaling that consumers are feeling significantly less optimistic about their financial security, their job security, their ability to find new employment if made redundant, and the economy overall.
The decline in consumer confidence is troubling but not surprising, as it is typical in a recession. However, the rapid decline in vacancies in the job market that we’ve seen due to COVID-19 has likely contributed further. According to the Recruitment and Employment Confederation (REC) and KPMG, the vacancies index fell to 47.8 in March, the first fall below the no-change 50 level since September 2009.
All of this means that consumers right now are less likely to make a large ticket purchase, as evidenced by the 52 pt. decline in the Major Purchase Index. When a consumer does not feel confident, they are less likely to make a large purchase like a vehicle, unless they need to. We see this in the decline in UK vehicle registrations, which fell 44% in March 2020 and 97.3% in April 2020, according to the Society of Motor Manufacturers (SMMT).