Rising interest rates and a squeeze on incomes is unlikely to affect sales of luxury and performance cars this year because ‘owners have seen it all before’.
That’s the view of the founder and chief commercial officer of luxury car finance provider JBR Capital.
Speaking on Car Dealer Live, Darren Selig predicted sales of high-end cars will stay strong this year despite the rising cost of living.
‘I’ve seen rates rise, come down, and go back up again.
‘You see these headlines, “interest rates highest ever in the UK for 13 years”, “disaster looming”, and you’re talking about rates going from 0.1 per cent to what the Bank of England is predicting around 1.2 per cent at the end of this year, and around two per cent by the end of 2023.
‘That’s not great compared to point one per cent. However, back in 2006 and 2007, pre-global financial crisis, the base rate was at 5.75 per cent – 10 to 12 times where it is now.
‘It comes back to consumer sentiment – “how good am I feeling about my life and my earnings?”. In 2006, the market was extremely buoyant, and with base rates at 5.75 per cent then, consumer interest rates were about 10 to 13 per cent APR – people just accepted it.
‘I don’t think rates going up to 1.2 per cent by the end of this year is going to significantly impact the luxury sector market.
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‘A lot of people in the luxury sector have seen it all before.’
He added: ‘Customers at the higher end are always really conscious [of cost] – they want to deal at the lowest rate and have the best of everything.
‘Will they question it? Of course they will, but they will adjust very quickly.
‘The extra one per cent is not going to detract someone from buying a car.’
Where the market will be affected though, said Selig, is at the lower end.
‘When you’ve got people in the volume market being squeezed from every direction – rising energy costs, rising inflation and used car prices going up by 30 per cent – you have to assume that will have an impact on consumer confidence.
‘I think at the lower end people will think twice and say “how can I afford this?”.
In a wide-ranging interview – which you can watch at the top of this story – Selig chatted about luxury customers switching to the used car market out of impatience, supply chain issues and whether rich customers really are ready for electric performance cars.
Selig was speaking as JBR Capital revealed a new sustainability initiative that claims to greatly reduce the environmental impact of its clients’ cars.
JBR, working with Carbon Neutral Britain, will offset 5,000 miles of carbon emissions for each car finance for its clients through the purchase of carbon credits.