Car finance: why it is so important for brands AND buyers

Toyota AygoBuying anything outright is so yesterday. Everything is available for small monthly payments these days – few of us will happily pay over £500 for the latest new smartphone, for example, but £30 a month seems much more reasonable.

It’s the same with furniture… how many adverts are there on TV, tempting punters with a shiny new sofa for as little as £20 a month?

This is particularly true for young people. Older generations are perhaps a little more cautious about their monthly outgoings, and anecdotal experience suggests they would rather save up and buy something outright. But, young people are increasingly impatient – they want the latest thing and they want it now.

This applies as much to cars as it does the latest gadgets. Gone are the days when new drivers would spend their formative years running around in an ancient old banger, worth no more than a few hundred quid. Look at the new Toyota Aygo, a car that I drove in Amsterdam earlier this week, a car desperately trying to appeal to a youthful market.

The £89 a month Aygo… for starters

The base-spec X model will cost you £7,995 of your hard earned, if you wish to buy it outright. Which very few people will. Instead, they’ll pay a deposit of £2,034.54, following by 36 monthly payments of £89 a month.

But something that starts out at just £89 a month, quickly ends up costing a little bit more. Toyota’s quite open that it’ll use small ‘payment walks’ to tempt buyers into higher-spec models – for an extra £10 a month, for example, plus a slightly chunkier deposit – you can jump from any Aygo to the next derivative up.


This means the company reckons the majority of its sales will be the top-of-the-range expression, as most image-conscious young buyers will be tempted to pay £109 a month for luxuries like extra gloss black exterior bits and alloy wheels.

And, if you’d like one of the customisation packs to make your Aygo stand out (as most young buyers will, reckons Toyota), you can buy one from just £5 a month. Just like buying a new sofa or mobile phone, dividing it into monthly payments makes it seem like an inconsiderable amount.

Toyota: finance dominates for Aygo buyers

But this isn’t anything particularly new. What is interesting, is that 90% of private buyers of the outgoing Aygo has bought it via Toyota’s Access finance scheme. After a deposit, and three years’ small monthly payments, they get a choice of buying the car outright or giving it back to Toyota. And, the manufacturer claims, most customers are so happy with their Aygo they end up giving it back and getting a new one. Well, why wouldn’t you?

This has resulted in two things. Firstly, in 2013 Toyota sold a record 16,539 Aygos in the UK. That’s phenomenal for a car so close to the end of its lifespan. Secondly, most drivers of nearly-new Aygos will be looking to replace them in the next few years, and what are they likely to replace them with? Well, Toyota hopes they’re pretty much guaranteed sales for the new Aygo.

Aygo: it conquers

As the original Aygo was Toyota’s entry into the sector, the vast majority of sales were conquest – i.e. new buyers who hadn’t bought a Toyota before. In fact, currently the Aygo generates the most new buyers to Toyota, apart from the GT86 which obviously does a similar job of injecting new, younger buyers into a brand which is known for reliability and value for money rather than outright appeal.


Toyota hopes it’ll still get these new customers, but also traditional Aygo buyers will be tempted into the latest model for not a lot of money per month. The result? It’s talking about figures in the region of 80,000 a year across Europe – and increasing its market share from 5.2% to 6.0%. In a sector as competitive as this, that’s serious business. And it all comes down to finance.

Web editor at Drives a 1983 Austin Metro. Tweet me @MR_AndrewBrady.

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