3 Min ReadAugust 22, 2024

Car Buyers Will Hit the Top of Their Budget

Car Buyers Will Hit the Top of Their Budget.

There’s no question that a car’s price, and very often its monthly payment, often determines the car people buy. But even as car prices seem higher than they’ve ever been, many buyers are happy to hit the top of their budget.

In a recent study*, CDK wanted to find out just how budget-conscious shoppers truly were. And while 93% of shoppers said they indeed had a set budget, 57% admitted the car they finally purchased was at the top end of their acceptable range.

Simply put: Car shoppers were willing to splurge on a vehicle that best met their needs and desires.

Was the vehicle you purchased within your budget?

Why Spending More Can Make Sense to Buyers

While less than 10% of car shoppers surveyed said they actually exceeded their budget, it’s clear that the majority of in-market consumers aren’t afraid of their top-end figure.

Just why might a shopper be willing to spend more? We can draw a variety of conclusions here.

For one, automakers generally offer fewer configurations of most popular models than they might have in the past. If a shopper values a premium audio system, they may have to step up a trim level or two — and perhaps add an additional option package — to get it. By this point, they’re likely well past the base price, and they may be nearing the top of their budget.

A third reason may be the broader economy, which is still reasonably strong. Consumer confidence, according to McKinsey, is still relatively high in mid-2024. About a third of consumers say they’re optimistic in the economy, while just over a fifth of consumers indicated pessimism.

McKinsey did note in its most recent State of U.S. Consumer Sentiment report that consumers intend to spend less on a vehicle purchase over the next few months, which could suggest a shift toward less-expensive vehicles.

What did customers tell the salesperson about their budget?

Generation Z and Young Millennial Buyers Are More Likely To Stick to a Budget

Our survey found that there’s a direct correlation between a shopper’s age and willingness to exceed a budget.

More than two-thirds of younger shoppers — those under 40 who identify as Gen Z or young millennials — said they had a fixed budget. Closer to half of shoppers over 40 said they were flexible with their budget. Older buyers may simply have more disposable income or savings to allocate toward a car purchase.

Flexible Shoppers Are Less Likely To Share Their Budget

Now, not every car shopper is willing to reveal their budget to the salesperson for a variety of reasons. It turns out that those with a pretty fixed budget were more likely to share. Nearly 85% of shoppers with a fixed budget, regardless of generation, said they provided the dealership’s salesperson with some details about how much they were comfortable spending on a car.

In contrast, those who had flexibility in terms of their budget were far less likely to share it with the salesperson. Nearly 40% of those with a flexible budget said they kept that fact to themselves.

If a customer is willing to open up about their budget, they may be less likely to consider a higher-end model. If they remain tight-lipped, they may be more amenable to a step-up model or trim level.

*Data collected from a shopping habits study of 1,048 new car buyers CDK conducted in the spring of 2024.

Related

Car Sales: Car Shoppers Still Want a Needs Assessment

The Test Drive’s Enduring Value for Dealers

How Dealers Can Win With Trade-In Value

Car Price Negotiation: Essential for Shoppers and Dealers

Share This

CDK Global
By CDK Global
Staff

Recent Insights

How Machine Learning Helps Dealerships Price and Manage Inventory.

How Machine Learning Helps Dealerships Price and Manage Inventory

Over half of dealers struggle to price used vehicles with confidence, and 62% say pricing prevents them from achieving financial...
3 Min ReadAug 28CDK Global
How Dealership Tech Training Improves Vehicle Delivery Experience and Customer Satisfaction.

How Dealership Tech Training Improves Vehicle Delivery Experience and Customer Satisfaction

Vehicle delivery isn't the end of the purchase process; it's the beginning of ownership, and it's essential that this journey...
4 Min ReadAug 26CDK Global
Are Dealers Moving to Where the Car Sales Are?

Are Dealers Moving to Where the Car Sales Are?

As we approach the midpoint of the 2020s, the U.S. auto retail landscape looks markedly different from just five years...
3 Min ReadAug 21CDK Global
Consultants Help Dealers Identify Improvements  to Increase Efficiency and Profit

Consultants Help Dealers Identify Improvements to Increase Efficiency and Profit

There is no denying the significant investment car dealers make with the software that runs their stores. But most dealerships...
4 Min ReadAug 19CDK Global
Leasing’s New Life as Monthly Payments Get Squeezed.

Leasing's New Life as Monthly Payments Get Squeezed

Leasing isn’t new. But as the market tightens and sale prices and MSRPs begin to rise there is renewed interest...
3 Min ReadAug 14CDK Global
C D K Research Uncovers the Truth About E V Ownership in 2025.

CDK Research Uncovers the Truth About EV Ownership in 2025

Electric vehicles have been a hot topic in the industry for nearly a decade. Today, the end of EV incentives...
2 Min ReadAug 7CDK Global
Four Requirements for Modern Dealer Appraisal Software in 2025.

4 Requirements for Modern Dealer Appraisal Software in 2025

Appraisals are an essential step in dealership processes. Even in today’s market where many dealers are offering top dollar for...
4 Min ReadAug 5CDK Global
Car Buying Process Rebounds in July

Car-Buying Process Rebounds in July

June saw the biggest drop and lowest score in the history of our Ease of Purchase scorecard. Luckily, there was...
3 Min ReadAug 4David Thomas
Three Ways Dealers Use Automotive Inventory Management Software.

3 Ways Dealers Use Automotive Inventory Management Software

Not too long ago, CDK conducted an informal survey of dealerships to see what inventory concerns plague them most. Some...
4 Min ReadJul 30CDK Global
How COVID 19 Strategies Can Help Dealers Pivot in 2025.

How COVID-19 Strategies Can Help Dealers Pivot in 2025

If the word of the year in 2020 was unprecedented, the word of 2025 may very well be tariff. Tariffs...
3 Min ReadJul 28CDK Global